Company Set Up In Indonesia
Many foreign companies are looking for a company set up in Indonesia. Indonesia’s promising economic prediction has led many foreign companies to show interest in the market. Despite the pandemic, the country’s Gross Domestic Product is still expected to rise. As a country with abundant natural resources, the country has a wide range of available industries. It is no wonder that the country is the leading economy of the Southeast Asia region.
The Indonesian Investment Coordinating Board is constantly looking to attract more foreign investment in the country. More foreign investments in the country will further help to boost the economy. Nevertheless, there are several strict requirements to be met by foreign companies.
Who needs a company set up in Indonesia?
When companies have reached a saturated market, they will look for a different market to increase their profitability. Most companies in a developed country have the interest to expand to a developing economic market. This is because emerging markets have a strong demand for goods and services. The high demand portrays huge potential for profit-making to the company.
Nonetheless, investing in a new country can be a daunting process. Starting from the legal procedures down to the actual operations. However, with the right preparation and facilities, the process shouldn’t be too difficult.
Understanding the Legal Basis for Company Set Up
A lot of foreign companies mistakenly engage in lawyer service to do a company set up in Indonesia. It is important to know that Indonesia still adopts the Netherlands notary system. Therefore, notaries are the ones doing any documentation of assets and companies. Notaries are also able to handle everything from incorporating a company to legalizing a plot of land. Therefore, finding a trustable notary service is crucial. Companies like MESO provide trustable notary services at affordable price.
Notaries also provide complete information to acquire business permits in Indonesia. They can also provide advice for companies during or before a company setup. In addition, it is important to keep in mind that lawyers are specifically needed to defend cases in court. Thus, if a lawyer claims that they could help with company incorporation, it’s much more recommended to hire a notary instead.
Types of Foreign Companies in Indonesia
There are two types of companies when incorporating a foreign company in Indonesia. There are PT PMA (foreign direct investment company) and Representative Company. A company must first determine which kind of foreign company they need for their business. As a PT PMA, the company can conduct business transactions as well as marketing activities.
On the other hand, representative offices are only allowed to do marketing activities. For instance, building partnership with suppliers, buyers and distributors or building brand awareness. The main company abroad has to handle all transactions. The representative office solely acts as a marketing channel.
More Reads: Foreign Direct Investment Company and Legal
Requirements for Company Set Up
– Renting an Office Address
One of the requirements of setting up a foreign company is having an office address. To prove the address the company must submit a domicile letter. The location of the office address must match the designated industrial zone that the business applies for. Therefore, if the company is applying for a trading permit, a green zone location is compulsory.
It is also not advisable to rent a whole office unit. Instead, renting a private office is much more recommended. The company will be able to enjoy the full benefits of office services without having to worry about investing in facilities, décor, and furniture. Although it may sound trivial, setting up an office is both troublesome and costly. Not to mention maintenance and sorting vendors. Also, renting a private office is much cheaper than a whole office. A private office will also allow the company to save money on receptionists, location manager, and cleaners team.
– Organizational Structure and Identities
Another requirement for a company set-up is to provide a clear organizational structure. The company must determine the commissioners and director of the company. Having a foreign national as a director will require the company to apply for extra permits. These permits are KITAS or working permit as well as a domicile letter from their residence. If the company chooses to use an Indonesian national to sit in the position, they will not require a work permit nor proof of residential letter.
The government set this regulation to prevent illegal immigration to the country. The company must also submit the identities of their commissioners and directors for documentation. This is also to prevent any criminal acts from happening in the country.
– Investment for Company Set Up
The last requirement that is not the least important is investment money. A foreign company applying for a company set up in Indonesia must prepare a least 1 million USD as their capital. This is to show that the company is serious about doing business in the country. The proof of fund must also be submitted to get the full legal documents. It is also important to note that the capital must be stored in a local bank account.
In short, when a company is looking to expand their business to Indonesia it is important to consider several points. One of them is to look for a notary rather than lawyers. After consulting with the notary, the company needs to determine if the company is going to be a representative office or a foreign investment company. Lastly, the company must prepare the necessary documents to meet the requirements.
If you are looking to set up a company in Indonesia, feel free to contact MESO Serviced and Virtual Office via our Live Chat on our website or send us an e-mail. Our team professional and experienced team will be glad to help.