If you are planning to incorporate a company in Indonesia, understanding the market and local culture while testing the demand for your business is important for business success. As such, many foreigners have adopted to set up a representative office in Indonesia as a key first step towards incorporation of a foreign-owned company (PT PMA).
Representative offices are typically established to help you gain a better understanding of the Indonesian market, become more familiar with potential clients in Indonesia, locate suitable distributors and commercial partners, and advertise the products or services offered.
Types of Representative Offices in Indonesia
There are a total of four different types of representative office which exist in Indonesia.
General representative office of a foreign company (KPPA)
Representative office of a foreign trading company (KP3A)
Representative office of a foreign construction service company (BUJKA)
Representative office of a foreign oil and gas company (KPPA MIGAS)
KPPA is a general representative office of a foreign company incorporated without the need to make a significant capital investment.
An application must be submitted to the Indonesian Investment Coordinating Board (BKPM). A director or management of the associated overseas company must submit such an application. It is also feasible to hire a lawyer to help you with this. KPPAs will be housed in provincial capital city office buildings with a license that has a three-year validity period which can be extended indefinitely.
KP3AS are established to promote products of their affiliated foreign companies in Indonesia, however they are not allowed to engage in any form of trading and sales activities. A KP3AS can be opened anywhere in Indonesia, the license needed consist of 3 variations of SIUP3A:
Temporary SIUP3A (2 months)
Head Office SIUP3A (1 year)
Branch Office SIUP3A and SIUP3A extension (3 years)
*Unless specified otherwise
Only foreign construction businesses with a B or B2 business certification are permitted to establish BUJKAs. In Indonesia, BUJKAs are permitted to carry out specific construction projects. You can only do so if you are working with a local construction company (BUJK). BUJKAs can also undertake market research and communicate with other businesses and organisations.
Other responsibilities that a BUJKA may accomplish include the procurement of building services and the hiring of staff members for office administration. The Ministry of Public Works must receive all essential petitions and papers pertaining to the establishment of a BUJKA.
Any international oil or gas business can establish a KPPA MIGAS. It will serve as the company’s permanent base of operations in Indonesia. A KPPA MIGAS and a KPPA have some characteristics.
One of these parallels is regulation: a KPPA MIGAS is regulated in the same way as a KPPA is regulated. A recommendation letter from the Ministry of Oil and Gas is required before establishing a KPPA MIGAS.
The BKPM will accept applications to establish a KPPA MIGAS. The permit for a KPPA MIGAS is valid for three years and can be renewed if necessary. A KPPA MIGAS does not have to be installed in any specific location.