What is Company Registration in Indonesia?
In Indonesia, there is range of options to establish a business. Due to the country’s large and young population and some other factors such as rising consumption, abundant natural resources, and cheap labor, this country offers great opportunities to foreign investors. Therefore in Indonesia, foreign direct investment (FDI) realization tends to grow.
In Indonesia, incorporation of a foreign investment limited liability company is commonly known as PT PMA. Through this legal entity, commercial activities can be conducted in Indonesia.
In Indonesia, foreign investment referred as “an investment activity conducted by a foreign investor for the purpose of running a business within the territory of country”. This type of company can be either 100 percent foreign-owned or partially foreign-owned.
Indonesian Limited Liability Company (PT PMA)
It is mainly suitable for those who want to generate revenues, profit or directly engage in sales in Indonesia.
Representative Office (KPPA)
It is suitable for those who want to explore business opportunities through market research, networking, etc. without engaging in commercial transactions.
ADVANTAGES OF AN INDONESIAN LIMITED LIABILITY COMPANY (PT PMA)
- One can officially start their business in Indonesia and have the same rights and responsibilities like a local company.
- In Indonesia, company can participate in all tenders.
- One can apply for import and other business licenses and can also apply for product registration thus have better conditions for importing goods.
- Foreign employees can apply for a work visa (called KITAS) based on the name of the company.
- Foreign clients and visitors can directly obtain a business visa sponsored by the company.
CHARACTERISTICS OF AN INDONESIAN LIMITED LIABILITY COMPANY (PT PMA)
To register a company in Sharjah, certain requirements must be met by the foreign investors.
In Sharjah, Foreign investor may open a company if 51% of the company is owned by UAE national.
However, in free zones full foreign ownership is allowed. In Sharjah, foreign companies may also open branches.
Here are the following type of licenses which are required to register a business in Sharjah Depending on the type of company:
- Limited Liability Company can be owned up to 100%. Maximum foreign ownership depends upon the business classification which is mentioned in the Negative Investment List.
- Depending upon the business industry, foreign ownership can be between 0 to 100%.
- There is a requirement of minimum 2 shareholders and these shareholders can be individuals or companies.
- Indonesian Investment Coordinating Board (BKPM) requires from foreign investors to present an investment plan of a minimum US$1 million (equivalent for IDR 10 billion), out of which 25% needs to be paid up capital.
- Before the completion of the incorporation process, foreign companies cannot open a bank account. There is a requirement of submitting a notary statement letter regarding the amount which will be transferred once the completion of the incorporation process.
- On the basis of the new regulation, there is a need to have a financial audit by all new foreign company before applying for a permanent business license and also other connected licenses such as import license etc. which are critical for a lot of companies.
- The main aim of the new regulation is that they want to ensure that all foreign investors realized their investment plan and not only submitted an investment plan to Investment Coordinating Board (BKPM) just only on paper.
- There is a requirement of special licenses in case of business activities such as the operation of restaurants or hotels.
- Foreign entities and entrepreneurs who intend to establish local company owned by foreign investors shall go through the procedures according to Indonesian laws and regulations based on Law No. 25 / 2007 regarding Capital Investment and Law No. 40 / 2007 regarding the Limited Liability Company.
INDONESIAN LIMITED LIABILITY COMPANY (PT PMA) INCORPORATION PROCESS
In Indonesia, entire company incorporation process takes around 6 to 8 weeks.
- The first step is concerned with the approval of company name at the Ministry of Law and Human Rights.
- After this, an approval of Principal License at the Indonesian Investment Coordinating Board (BKPM)is required.
- Article of Association will be prepared by Notary.
- Establishment Deed will be obtained at the Ministry of Law and Human Rights.
- Certificate of Domicile will be obtained at the local government office.
- After this, Taxpayer registration number will be obtained.
- Company Registration Certificate will be obtained from the local government.
- Manpower Report and Company Welfare Report from sub-department of the Ministry of Manpower.