Individuals or entities wishing to establish a company in Indonesia have a variety of options, below is a short overview of the most commonly used.
Generally, business entities in Indonesia are formed through a limited liability company. There are different types of limited liability companies under Indonesian law, however, the ones that may be most relevant in your situation are:
a. Indonesian Limited Liability Company
An ordinary limited liability company (normally known in Bahasa Indonesia as Perseroan Terbatas or in its abbreviated term as “PT”), under which, the shareholders must all be Indonesian citizens and/or legal entities; or,
b. Foreign Investment Limited Liability Company
A foreign investment limited liability company (normally known in Bahasa Indonesia as Perusahaan Penanaman Modal Asing or in its abbreviated term as “PMA”), under which, the shareholders may consist of foreign individuals and/or legal entities and local individuals and/or legal entities, depending on the planned business activities of the company.
There are different features that apply to PT and PMA entities and these may need to be taken into account in deciding the form of limited liability company for the proposed business, which include, but are not limited to- company licenses, time-frame for establishment, minimum capital investment requirements, reporting requirement, etc.
The choice for the Proposed Business in the form of a PT or PMA will depend on whether the foreign investors wish to be registered as shareholders in the company.
If you are interested in further consultation regarding establishing a PT or PMA, please contact us.
In addition, for some individuals, an Indonesian limited liability company is not always the best option, and instead it would be better to establish a Representative Office (RO). EBC Business Consulting can assist with finding you and office space with the appropriate licenses and permits and in the appropriate Regency as required by law. Below are the most common forms of ROs available for consideration.
c. General Representative Office
The activities of a general representative office (“General RO”) are limited to taking care of the interests of the parent company and companies affiliated with the parent company. Since General ROs cannot earn any revenue in Indonesia, they are not allowed to issue any invoices in Indonesia.
The office of a General RO must be located in a commercial building in the capital of an Indonesian Province, for Bali, this would be in an appropriately zoned commercial building in Denpasar, Bali, Indonesia. A General RO’s license is valid for a fixed minimal term, but can be extended with government approval. A general RO is a suitable option if you would like to explore the market in Indonesia and perhaps later establish a limited liability company as more fully described below.
d. Representative Trade Office
An RO for trading purposes (“Trade RO”) may be used as a foreign parent company’s selling, manufacturing, and buying agent in Indonesia. However, it can also handle the establishment of the parent company’s branch offices in Indonesian. As with all General ROs, a Trade RO is not allowed to issue any invoices or generate income in Indonesia, and all transactions must be under the parent company’s name.
The office of a Trade RO also must be located in a commercial building in the capital of an Indonesian Province. A Trade RO’s license is valid for a fixed minimal term, but can be extended with government approval.
A Trade RO is a suitable option if the parent company is a manufacturer or a product owner with a plan to establish a network of agents and distributors in Indonesia and/or, later, establish an Indonesian limited liability company.
ROs generally cannot a do business or generate income in Indonesia. ROs are not to be used to circumvent Indonesia’s foreign investment regulations.
We can also assist with the set-up of other entities such as CVs please contact us should you be interested in learning more about the formation of such entities.
With the implementation of online registration and reporting procedures in Indonesia, the time-frame for company approval and establishment has become much more efficient and expeditious. Please contact us for an initial consultation to discuss your individualized interests and needs.
Get a head start in business.
We have a selection of available established companies for resale. Subscribe for our up to date listings of business opportunities delivered straight to your inbox.
We do not share your information with any third party without your express permission. You are free to unsubscribe from EBC Business Consultants’ emails at any time.