There are two main ways how foreign individuals and companies can set up a presence here in Indonesia. That is as a foreign investment limited liability company and as a representative office. This article outlines the requirements foreigners need for registering for business Indonesia.

Foreign Investment Limited Liability Company

Under the Indonesian Investment law, foreign investors who wish to engage in profit-generating activities in Indonesia can set up a foreign investment limited liability company. This type of company is locally termed as Perseroan Terbatas Penanaman Modal Asing or PT PMA company. This allows the foreign investor to fully incorporate a business and perform qualified activities in Indonesia.

This type of company can be partially or fully owned. Additionally, foreign investors can fully participate in business activities. However, businesses allowed to incorporate PT PMA are limited. Therefore, few businesses in certain industries are closed for foreign investment or limited only to a certain percentage.

To be eligible for this type of entity, the company must comply with the following minimum requirements.

• Minimum capital requirement of IDR10 billion or US$800,000.00 (at least 25% paid-up);
• Minimum of 2 shareholders (corporate or individual);
• At least one local director;
• At least one commissioner (can be a foreign citizen, but if s/he does not have a work permit yet, a local candidate has to be appointed to represent the company during the incorporation process).

Representative Office

Foreign companies who only want to perform non-income-generating activities in Indonesia can set up a representative office. These activities include promoting company services, engaging in market feasibility, or to establish a local contact office. This type of entity has no legal status and is prohibited from carrying out business activities that will generate income.

Further, as the entity is merely a local representative of a foreign company incorporated abroad, the state does not require them to incorporate. However, they need to acquire a license to operate in Indonesia.

Here are the minimum requirements to register a representative office in Indonesia.

• Letter of Appointment from parent company;
• Articles of Association of the parent company;
• Copy of valid passport or copy of identification card number and tax number of Indonesian of proposed RO Head;
• Copy of Registration in Chamber of Commerce of the parent company
• Power of Attorney to sign the application (if through a representative)
• Letter of Intent
• Letter of Statement from the RO Head that states that they are will to stay and only work in the position as RO Head without conducting other business in Indonesia

Professional Incorporation Services in Indonesia

Are you a foreign entrepreneur planning to expand your business in Indonesia? Incorporate a company in Indonesia with our professional incorporation services in 3E Accounting Indonesia. We specialise in company formation and business registration in Indonesia, whether for locals or foreigners. Contact us today to avail our expert services.