With a large population, stable economic growth and regulations continually being eased, Indonesia is increasingly becoming more attractive for foreign businesses. Indonesia has seen an increase in foreign investment over the past 10 years, and with this continued growth comes continued opportunity for businesses to expand in the area. Let us explore the different entities available for an Indonesia company incorporation wishing to do business in this country.
In Indonesia a limited liability company (LLC) is known as a Perseroan Terbatas (PT). This type of entity is only available to local entrepreneurs and it is one of the most common types of business entities available in terms of Indonesia company incorporation. The characteristics of this type of entity are as follows:
Wholly or partially foreign owned limited liability companies are called Penanaman Modal Asing (PMA). These entities are governed by the Foreign Capital Investment Law and they are required to get approval from the Capital Investment Coordinating Board before it is permitted to conduct business in the country. A PMA has the following characteristics:
A representative office (rep office) is a suitable way for foreign enterprises to enter the market in Indonesia without the long term commitment and administrative hurdles that come with establishing an Indonesia company incorporation like a LLC. However, the powers of a representative office are limited, as rep offices are not permitted to conduct commercial activities. Rep offices are only permitted to conduct the following activities:
A rep office is only permitted to operate for a period of 2 years and additional requirements may be imposed, dependent on the nature of the activities, additional requirements may be imposed.
Although there are various options available, choosing the right entity that fits your Indonesia company incorporation needs may be a challenging task. Aside from the administrative challenges, there is also adequate costs involved. Companies looking to enter the Indonesian market should carefully consider each of the abovementioned entities, as well as other more flexible options like a Professional Employer Organization (PEO).
Taking your Indonesia company incorporation business to the market does not have to be met with an endless array of unexpected challenges. As one of the most well established Professional Employer Organizations in Asia, INS Global has the capacity to assist your enterprise in selecting the most appropriate entity, that is able to meet your business needs. Our experts have experience across a multitude of HR disciplines, such as employment solutions, recruitment, payroll and tax administration. Contact us today and let us help your enterprise get started in Indonesia today.