Indonesia's increasing economic strength and improving environment for the conducting of business activities have caused many foreign business owners to choose to relocate their business there. Thus, the country is now home to a great many relocated foreign businesses.
In 2016, Indonesia’s President Joko Widodo announced the opening up of 35 business sectors which would henceforth allow complete foreign ownership. The announcement caused more foreign companies to decide to relocate to Indonesia. Since then, the relocation of foreign companies has been an increasingly common phenomenon in Indonesia. Due to the government’s recent strategy of attractinga entry of foreign businesses with new tax rates, relocating companies to Indonesia has become ever more popular.
Reasons Why Foreign Companies Relocate to Indonesia
There are many reasons why foreign companies relocate to other countries, including Indonesia. These reasons will differ among various business owners. However, there are certain reasons which are more common causes of an owner or employer deciding to relocate a company to Indonesia. These reasons include the following:
If the economy of a country is not thriving, the companies which are conducting business in that country will certainly be negatively affected. A weakened economy naturally leads to reduced profits which are generated by the firm. However, such is certainly not the case in Indonesia, a country with a growing and increasingly vibrant economy. Evidence of Indonesia’s economic might can be seen in the global economic rankings. Indonesia’s economy ranks as the largest in Southeast Asia. It is also the 16th-largest economy in the world. Therefore, the fact that many foreign companies have chosen to relocate to Indonesia should not come as a surprise.
Relocating a business can be a significant source of financial consumption. However, operational costs are relatively low in Indonesia when compared to those of other countries. Labor is also relatively cheap when compared to labor prices of other countries; this also encourages many people to relocate their companies to Indonesia. The relatively low cost of infrastructure in Indonesia also reduces operational costs and makes operations more efficient. This also drives many to relocate their companies to Indonesia.
Large Consumer Population and Labor Force
The population of the country in which a business operates plays a role in its business success. Businesses in countries with low populations are forced to deal with the challenge of a small market. If the majority of the population is not of working age, the company will also suffer because hiring employees becomes more difficult due to the lack of ready labor. Neither of these is a problem in Indonesia, a country with a massive population and enormous labor force. The country can easily provide both a large market and an ample labor force. Therefore, many entrepreneurs have become interested in relocating their company to Indonesia.
Every business owner intends to make profits. However, if there are no viable business opportunities, it is impossible for a business owner to establish a business, let alone make a profit. Thus, entrepreneurs will search for an environment in which there are many business opportunities which will benefit their ventures. Indonesia is a country full of business opportunities; thus, many foreign companies choose to relocate there.
How to Relocate a Foreign Company to Indonesia
Relocating a foreign company does not have to be difficult as long as the company owner follows all of the legal requirements. However, although following legal requirements is not difficult, doing so is often time-consuming.. For instance, some documentations in Indonesia may take up to six months to be fully processed. Furthermore, relocating a foreign company to Indonesia may only be done by one who owns a work permit and visa as well as any necessary business registration documents and licenses.
Should you be in need of a work permit or visa which is valid in Indonesia, we at Paul Hype Page & Co can assist you. We will handle all the details of your work permit application for you. With our help, your work permit will be received much sooner than usual and in a completely legal and legitimate manner.
Although possession of a work permit and visa are a requirement for the relocation, it is not necessary for the company owner to live in Indonesia just because the owner has chosen to relocate the company to Indonesia. This is because the owner of the company is permitted to hire a person who will be tasked with managing the company as well as visiting the country and the organization whenever such may be deemed necessary.
The entire process can be somewhat confusing for some, especially for those who are new to Indonesia and not particularly familiar with the language or the environment. However, this issue can easily be overcome. This is because there are many relocation businesses with Indonesia which are tasked with the role of assisting foreign business owners in relocating their business to the country. They also assist these owners with the obtaining of the documentation for running a foreign business in Indonesia as well as the general registration of those firms.