COUNTRY
Indonesia
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COMPANY REGISTRATION INDONESIA
A comprehensive guide to Company registration in Indonesia. The country has the fourth-largest population in the world, yet there is less competition there than in some of its neighbors.
Its status as a G20 member has further elevated it as a prospective commercial location. The country of Indonesia is categorized as bureaucratic.
The Regional Indonesia Investment Coordinating Board, commonly known as BKPM, Badan Koordinasi Penanaman Modal, oversees and regulates foreign investments.
Companies in Indonesia are governed by Company Law.
REQUIREMENTS TO SETTING UP A INDONESIA LIMITED LIABILITY COMPANY (PT PMA)
TIMELINE OF REGISTRATION OF INDONESIA COMPANY
Shareholders and Shares
A minimum of two shareholders is required. The shareholders can be from any nationality and residency. Both individuals and corporations can be shareholders. The maximum amount of foreign ownership would depend on the type of business operation. Certain industries do not allow 100% foreign ownership.
Share Capital
The minimum paid-up capital requirement for a PT PMA is IDR 10 Billion or US$650,000. Once your company has been registered, the capital is expected to be sent to the company’s corporate bank account. Some sectors must meet the additional share capital requirements.
Directors
The company must appoint at least one resident director. The resident director must be an individual who normally resides in Indonesia.
Commissioner
The company must appoint at least one commissioner. Foreigners can be appointed as the commissioner of the company. The commissioner can own shares in the company but it is not mandatory.
The commissioner or board of commissioners acts as a supervisor, monitoring and supervising the board of directors. They are in charge of ensuring the director’s actions are following the articles of association.
If a company has more than one commissioner, one of them will be appointed to act as the president commissioner. The president commissioner is in charge of the board of commissioners.
Registered office address
The business must provide an office address for company registration in Indonesia. The address can be registered address that is in a commercial building.
TYPES OF LEGAL ENTITIES FOR FOREIGN INVESTORS IN INDONESIA
PT PMA (Limited Liability Company) – 100% Foreigner Shareholder
Perseroan Terbatas Penanaman Modal Asing (PT PMA) is also known as a limited liability company that can be fully foreign-owned. This is the best option if you’re a foreign investor that wants complete control over your company. The only legal organization in Indonesia that permits 100 percent foreign ownership is PT PMA.
The maximum number of shares that foreigners can possess is determined by the positive investment list that regulates the foreign shareholding restriction for each sector’s approved business activity.
PT PMDN (Limited Liability Company) – 100% Local Shareholder
Penanaman Modal Dalam Negeri (PT PMDA) represents a limited liability company with 100% local/domestic direct investment. Foreigners are not allowed to be appointed as shareholders, directors, or commissioners in PT PMDN.
Representative Office
There are three types of representative office options in Indonesia for foreign investors.
General Representative Office (KPPA)
A representative office is suitable for international investors and business owners who want to set up a support office in Indonesia.
Representative offices are allowed to undertake non-sales tasks including customer care assistance, engaging potential customers, and launching marketing and brand awareness campaigns.
It is common for foreign companies to set up a representative office to research the Indonesian market before starting any business operations there.
Business Trading Representative office (KP3A)
KP3A is only allowed to conduct trading business. A representative office cannot conduct both general and trading in profitable business ventures.
Construction Company Representative office (BUJKA)
A BUJKA is designed for international construction businesses, similar to KP3A’s. Large-scale construction projects are permitted for BUJKA’s, but only in conjunction with a local business known as Local PT.
Despite its limitations, a BUJKA is nevertheless a suitable way for international construction firms to establish themselves in Indonesia because it enables them to work together on construction projects without the need for a construction license (SIUJK).
COMPARISON OF DIFFERENT TYPES OF LEGAL ENTITIES IN INDONESIA
| Type of Legal Entity | Description | Requirements | Share Capital | Benefits |
| PT PMA | Limited liability company that allows foreign ownership of up to 100% if the business activity is within the positive investment list. Such a structure is ideal for investors who wish to set up a business in Indonesia in industries that are open to foreign investments. | Minimum two shareholders (corporate or individual). Must have at least one commissioner and at least one local director. | A minimum investment of IDR 10 billion. | Foreign investors will have complete control of the business. The company is eligible to sponsor work and stay permits for foreign employees. |
| PT PMDN | Promotes profitable business activity but no foreign shareholding | Must be 100% locally owned and must have one local director and commissioner. | No minimum share capital requirements. | Minimum registration requirements and designed for locals. |
| General Representative Office (KPPA) | The General representative office is not allowed to generate any income. Allows foreign ownership up to 100%; Such a structure is ideal for companies experimenting before establishing a full-fledged firm. Works best for activities other than sales. | No shareholder or director is necessary. Must appoint One chief executive officer. | No capital is necessary. | Lower cost of entry to Indonesia. A representative office is eligible to sponsor work and stay permits for foreign employees. |
| Business Trading Representative office (KP3A) | The business trading representative office is not allowed to engage in any purchasing or selling activities. It allows foreign ownership up to 100%; Ideal for coordinating, promoting, and conducting market research. | No shareholder or director is necessary. Must appoint One chief executive officer. | No capital is necessary. | Lower cost of entry to Indonesia. A representative office is eligible to sponsor work and stay permits for foreign employees. Can open a Branch Office in any part of Indonesia. |
| Construction Company Representative office (BUJKA) | BUJKA allows foreign companies to work on large-scale construction projects within a joint operation with a Local PT. Ideal for multinational construction businesses with a larger footprint. | Can be fully foreign-owned. Must appoint One chief executive officer. | No capital is necessary. | Able to collaborate with a local PT on a construction project without obtaining a construction license (SIUJK). A representative office is eligible to sponsor work and stay permits for foreign employees. Can open a Branch Office in any part of Indonesia. |
STEPS FOR REGISTERING A COMPANY IN INDONESIA
Registering a company in Indonesia will involve multiple departments and documents. Our guide below covers the general steps.
PRE-REGISTRATION PREPARATION
Before setting up the company, Relin Consultants recommends that the shareholders engage a professional firm such as Relin Consultants to assist to determine the appropriate type of legal entity, ensure all the basic requirements can be fulfilled, and the company’s business activity is not included within the negative investment list. The company can also submit a name reservation application to ensure that the company name is available.
Step 1
Once the company name approval is successful. The company must prepare a copy of the articles of association and other incorporation forms that must be signed by all shareholders and directors and it must be notarized. Once the notarisation is complete, the company can proceed to submit the registration to the Ministry of Law and Human Rights for approval.
The Indonesian ministry will issue a deed of establishment confirming that the authorities have registered your company as a legal entity. The ministry will process
Examples of documents required for registration are listed below.
- Passport copy of the shareholder if the shareholder is a real person.
- If the shareholder is a corporate entity, a legal business document or passport copy of the director is needed.
- Registered office address of the business.
- A deed of purchase or leased agreement should be submitted if a physical office space is purchased.
Step 2
Once the legal entity is officially registered. The business must apply for the following approval from different authorities before it can commence operations.
Apply for a domicile certificate (SKDP)
If a business is located outside of Jakarta. The business must proceed to apply for a domicile certificate from the regional government department. A letter of domicile also known as Surat Keterangan Domisili Perusahaan or SKDP is a letter from the local government that certifies your company’s residential address.
Apply for Business Trading License (SIUP)
SIUP refers to the permanent business trading license from the ministry of trade. This license is necessary for non-facility businesses. The personal information of the business owner and the nature of the business activities will be included in the license.
Apply for Taxpayer Registration Number (NPWP)
The business must register with the local tax office the business is incorporating in, to obtain a tax identification number also known as NPWP. NPWP is required for all tax filings and financial reporting requirements purpose.
Apply for the Business identification number (NIB)
The NIB is a 13-digit number that is provided by the authorities as an identification number of the business. This number is needed for applying for business licenses, commercial licenses, and operational licenses.
Business identification numbers (NIB) can be applied through the Online Single Submission (OSS) system.
If a business conducts any activities that violate the terms of NIBs, the NIBs can be canceled or revoked.
The NIB also acts as the company registration certificate (TDP), Letter of Domicile (SKDP) for businesses domiciled in Jakarta, import identification number (API), customs access, and proof of participation in the social security for health (BPJS Kesehatan), and manpower (BPJS Ketenagakerjaan) programs.
The above will be the final step in the registration process. After all the above steps are completed, the business will have all the required documents to proceed to open an Indonesian corporate bank account with an Indonesian bank.
POST-REGISTRATION FORMALITIES INVOLVED IN INDONESIA
Shareholder Meetings
Annual General Meetings must be held no later than six months after the end of the financial year. A limited Liability Company must do this. The company is allowed to hold EGM at its discretion.
Board of Directors Meeting
A limited liability company is not required to hold board meetings unless it was specified in the company’s articles of association.
Corporate Tax
In Indonesia, the standard rate of corporate tax is 22%. The tax authorities must receive the annual tax return before the deadlines. This can be done through the MOLHR online system for taxes. You can refer to Indonesia’s corporate taxation page for additional information.
Business Registration Compliances
Limited liability companies must complete their initial registration with the ministry of trade within three months of incorporation. The company need to undergo a renewal, which is done every five years.
PROS AND CONS OF REGISTRATION A COMPANY IN INDONESIA
PROS
Diverse Culture
Indonesia has a diverse cultural history. Due to the migration of many ethnic groups, the nation has different civilizations. An investor can conduct business in Indonesia with ease.
Growing Economy
After China and India, Indonesia has the largest domestic market in Asia. The service industry has recently been developed by the Indonesian government. As a result, several types of services are flourishing in Indonesia. Indonesia’s GDP is at 6.1% and is constantly increasing. This demonstrates Indonesia’s favorable status for foreign investment.
Special Economic Zones (SEZ)
In Indonesia, various SEZs have been developed. These SEZs offer a variety of advantages to investors, including tax incentives, subsidies, and for manufacturing advantages. There are tax exceptions available, like a VAT exemption and a lower corporate income tax rate.
Affordable Labour
When compared to other Asian nations, Indonesia has relatively low labor costs. In addition, Indonesia has a diverse labor force, which presents different opportunities.
CONS
Mobile-only Nation
In Indonesia, the proprietor might have to conduct business using smartphones. According to the reports, only 18% to 20% of households own a computer. Most of the population uses smartphones to do business. This might affect businesses that are dependable on the applications of a desktop or a laptop.
Corruption
There have been increased efforts from the government to curb corruption in Indonesia, but corruption still exists as the local officials are given wide discretionary power and resources.
INCORPORATE YOUR COMPANY IN INDONESIA WITH RELIN CONSULTANTS
Relin Consultants is a company registration service provider in Indonesia. Our consultants can provide you with in-depth knowledge and insights about the registration process in Indonesia.
Our team at Relin Consultants will help you prepare all the required documents for the registration of your company. All the formalities regarding incorporating your business in Indonesia will be completed efficiently.
Reach out to us to know more about the process of registering your business in Indonesia.
FAQs
Can foreigners own companies in Indonesia?
Yes, foreigners can own companies in Indonesia if the business activities are approved under the positive investment list. There are a few exceptions such as if a business activity is seen as a threat to national security or small business areas to protect them from foreign competition.
What is a PMA company in Indonesia?
PT PMA is a limited liability company that allows foreign direct investment. PT PMAs are foreign-owned businesses (limited liability companies with foreign ownership). A business becomes a PMA if it has any foreign ownership.
What is the meaning of PT in Indonesia?
A limited liability company is called PT in Indonesia. PT PMDN is a limited liability company that is 100% domestic owned and PT PMA is a limited liability company with foreign ownership.
What is a CV company in Indonesia?
A Sole Proprietorship is called a CV and it is only for Indonesian nationals.
How do I check if a company is registered in Indonesia?
You can check if the company is registered in Indonesia by visiting the company registry.
Once you fill in the details and submit the payment, you will receive the information within 1 to 3 business days. The company registry will charge USD$80 for this service.
How much does it cost to set up a company in Indonesia?
The cost of Indonesia company registration will depend on the type of company and the shareholder’s requirements. A higher share capital company with more requirements will cost more as the paperwork and procedure involved are a lot more.
What is the Indonesian company registration number?
The NIB is a 13-digit number that is provided by the authorities as an identification number of the business. This number is needed for applying for business licenses, commercial licenses, and operational licenses.
How to check a company registration number in Indonesia?
The company registration number is also called NIB. It is a 13-digit number provided by the authorities. The company will receive its NIB once it completes the application via the OSS System.
What is the procedure involved in liquidating or dissolving a PMA company in Indonesia?
The procedures involved in liquidating or dissolving a PMA in Indonesia are listed below.
Step 1: Conduct a general meeting of shareholders approving the liquidation and nomination of the liquidator.
Step 2: Notify all the creditors by announcing the liquidation and the plan for distributing assets in a newspaper and notify the Indonesia Ministry of Law and Human Rights.
Step 3: Cancelation/revocation of all company licenses (including business licenses and tax numbers). The local tax office will conduct a tax audit for the purpose of revocation of the tax number).
Step 4: Make payments to creditors and distribute the additional liquidation proceeds to shareholders (if any).
Step 5: Conduct a general meeting of shareholders granting acquittal and discharge of the liquidator.
Step 6: Notify the Ministry of Law and Human Rights on the final outcome of the liquidation. The Ministry of Law and Human Rights will proceed to revoke the company’s name from the company registry if no further objection. The company will be de-registered as a legal entity, after receiving the notification.
Step 7: The company must announcement of the result of liquidation in a local newspaper.
How long does it take to liquidate a PMA company in Indonesia?
On average, a liquidation or deregistration in Indonesia can take up to approximately 2 (two) years to complete.
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