Many people have chosen to start a business of their own in Indonesia. Those who do so ought to be aware of the rights which they are accorded. Such rights are provided by the Indonesian government to facilitate the development and growth of the Indonesian economy through increased business ownership and activity. Business owners in Indonesia ought to know their rights in order to defend themselves against unjust or illegal actions which may be taken against their person or business. However, not all business owners in Indonesia fully understand what rights they have as one and how they may use such rights. It is important for them to know about these rights because knowledge of their rights as a business owner will make their business more successful and marketable in the eyes of the public. Thus, this article contains information on the rights held by all Indonesian business owners.
Land Use and Ownership Rights
There are several laws in Indonesia which govern the use and ownership of land for business purposes in Indonesia. Chief among these is Act No. 5 of 1960. This law specifies the details about rights related to leases of land, building rights, cultivation rights, and rights related to use of land.
Any business owner, representative office, or company based in Indonesia has the right to lease another’s land. This is to be done through a pre-determined arrangement between both parties involved in the lease. Business owners in Indonesia also have building rights on land. This right is active for 30 years, can be extended by up to 20 years, and can be transferred to anyone able to sell or inherit land or secure a loan. Any Indonesian citizen who is a business owner or Indonesian company have these rights. Foreign business owners, on the other hand, are to place their building under a rights-to-build deed which will expire after a stipulated period. Cultivation rights are applicable to business owners who own a business within the agricultural sector. These rights last for 25 years and can be extended by up to 35 years. To apply for these rights, an applicant is to register at the Land Register of the National Land Agency (BPN). Cultivation rights can be used by a business owner to receive a loan. This is done by delivering a certificate of cultivation rights to the lender. Cultivation rights may be possessed by any Indonesian agricultural business or any Indonesian citizen who owns one. Rights of use are rights related to using land which may either be government-owned or privately owned. This land may either be used for construction or agricultural purposes. Local government authorization is required for the transfer of this land.
Rights of Business Owners Who Are Active Partners
Certain businesses in Indonesia are partnerships. The owners of partnerships include silent partners and active partners. Silent partners have fewer rights than do active partners. This is because silent partners only invest in the business’s operations; they are completely uninvolved in the running of the business itself. Conversely, active partners are involved in the management and operations of the business. They take a direct role in running the partnership. Active partners of an Indonesian partnership also have the right to engage in business transactions with third-party entities for the benefit of the business. This right is important because certain business activities require input and assistance from external sources. By exercising this right, active partners can leverage their business interactions conducted with third-party sources to increase the overall profitability and revenue of the partnership, make it easier for the business to receive a loan, increase the viability of any plans for future business expansion, and give the partnership a higher level of credibility.
If you are interested in starting a partnership or any other business entity in Indonesia, we at Paul Hype Page & Co can be of assistance to you. Our incorporation team will ensure that the process of starting your business will be completed as smoothly as possible. We will even help you attend to all your compliance needs as necessary.
Rights of Business Owners Who are Shareholders
Certain businesses in Indonesia allow the owner of the company to also hold shares in it. In such a case, the business owner receives the same rights to which all shareholders of the company are entitled. One of these rights is the ability to attend general meetings of shareholders (GMS) and vote when a vote is called during a GMS. Another right is the right to receive dividend payments and any other remaining assets if the company in question ever has to be dissolved. All shareholders, including shareholders who are business owners, also have the right to sue their company in a District Court if they believe that the company has caused them to suffer unjust losses through actions approved during a GMS or by the Board of Commissioners or Board of Directors. Most Indonesian companies’ Articles of Association also grant all shareholders, including those who are business owners, the right to refuse to refuse to purchase any shares held by other shareholders.
Intellectual Property Rights
All business owners in Indonesia are entitled to specific intellectual property rights. The Indonesian government has in recent years been increasing its emphasis on the protection of intellectual property. The government is constantly updating legislation related to intellectual property rights so that such rights in Indonesia will be in line with standards of such rights in the region as well as around the world.
Business owners in Indonesia can use any of four methods to protect their intellectual property rights. These methods are trademarks, patents, industrial designs, and copyrights. Trademarks are used by companies as a means of distinguishing all of those companies’ products from those of other companies. The Industrial Design Law is the piece of legislation which governs all trademarks in Indonesia. A registered trademark is protected for 10 years after it is first issued. Each renewal of this registration extends the protection period by 10 more years; the number of renewals allowed is unlimited. All trademarks in Indonesia are to be registered with the Directorate General of Intellectual Property Rights.
Patents are rights granted to business owners who have created a new product so that they may use it for either commercial or exclusive purposes. In Indonesia, either simple patents or standard patents may be received by a business owner. Simple patents take two to three years to process and have validity periods of 10 years. Standard patents take three to five years to process, have validity periods of 20 years, and provide greater levels of protection of intellectual property rights. In either case, applicants are to specify the scope of the protection which they desire as well as the technical description of the invention before they may receive a patent. In Indonesia, all patents are to be registered with the Directorate General of Intellectual Property Rights.
Rights regarding industrial designs are those given to business owners who intend to prevent others from using their business design for commercial purposes in an unauthorized manner. The Indonesian Design Act is the law which defines and governs all industrial designs in Indonesia. The first person to file for the right to an industrial design in Indonesia is the only person allowed to have that right. All rights related to industrial designs are to be registered with the Directorate General of Intellectual Property Rights; however, only new and unpublished industrial designs will be accepted while multiple designs will be rejected. Applications typically take between two to three years to be accepted, while protections are usually granted for 10 years.
Copyrights are rights which grant their owners the exclusive rights to the publishing or reproduction of certain works. Copyrights in Indonesia apply to works such as books, computer programs, pamphlets, music, art, photography, cinematographic works, translations, interpretations, and databases, among others. Therefore, business owners whose business produces any of these works should seek to obtain copyrights so that their intellectual property rights will be adequately protected.
There are many different rights which could and should be used by business owners all over Indonesia. Proper understanding and use of these rights will ensure that the business owner and business alike have the adequate legal protections. They also prevent anyone from making unethical profits from anything to which the business owner is entitled. In general, business owners in Indonesia have many rights which they are not to be denied.
Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.
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Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.
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Step 1- Listen to your Business plan and Relocation needs.
Step 2- Analysis your Tax Planning
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Step 4- Arrange for your Spouse and Children Visa
Step 5- Assist as your company to hire staffs and handle all HR matters
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