Foreign investors continue to look for ideal places to set up an offshore business. And recently, Indonesia is one of the popular choices among other offshore countries. This can be credited to the government’s constant efforts to amend and improves the country’s business framework to attract foreign businesses.
The country’s big population provides many business opportunities because it allows different niche markets to proliferate. Also, there will be a higher annual spending since more Indonesians are joining the consumer class. Thus, it makes Indonesia as a worthwhile choice for offshore company setup.
Before commencing on a business venture in a new market, it is essential to have the knowledge about company formation and business structures. This blog will guide investors regarding foreign business setup in one of the world’s emerging markets.
Basic Facts about Foreign Company Formation in Indonesia
Registering an offshore company means understanding the different business entities and even learning about the minimum investment amounts. This knowledge can be used to shape future business plans in the country.
Indonesia has two business entities open to foreigners: foreign investment limited liability company (PT PMA) and Representative office (KPPA). A PT PMA is ideal for companies who want to engage in commercial activities in Indonesia. While foreign investors who seek to engage in market research, networking or feasibility studies, opting for a representative office is the ideal business presence.
Many companies are registering under the PT PMA because they can engage in profit-making activities. To set up a company under this business structure, it is essential to know the documents, governing laws, and investment amount.
Details of Representative office can be present in this article too.
Checklist for PT PMA Company Formation
Foreign investors opting for a PT PMA setup should consider these three things during the registration process:
Governing laws
*PDF files retrieved from Indonesia-investments.com and Apindo
Investment amounts
- Minimum investment is IDR 10billion (USD 710,775)
- Minimum paid-up capital of at least IDR 2.5billion (USD 142,000)
- Each shareholder must have a participation share of IDR 10million (USD 710.19)
Documents
- Principle License (Izin Prinsip)
- Deed of Establishment (containing the Articles of Association) legalized by a Public Notary
- Domicile Letter from the local district authority
- Tax Identification Number (NPWP) and taxable entrepreneur confirmation (PKP)
- Company Registration Certificate (TDP)
Preparing the necessary documents, investment amount and understanding the governing laws will help foreigners have a seamless registration procedure.
Choosing Indonesia for Offshore Company Formation
With Indonesia’s economic having a positive in the first quarter of 2018 [Indonesia-investments], this signals the government’s continual efforts to strengthen foreign investments.
On April 2018, Simplified Tax holidays had rolled out in Indonesia, a new regulation granting a 100 percent Corporate Income Tax (CIT) cut to new FDI-backed businesses. This further demonstrates the government’s intent.
If you have thoughts about setting up your business in Indonesia, it is important to consult with a company formation agent. Leveraging on their expertise to ensure a smooth company set up.
If you want to have a further comprehensive idea in regards to offshore business, you can also download our Free E-book now.
References:
12 Reasons why to do business in Indonesia, Smartcolaw.com
Your Journey Through Indonesia [PDF], PWC.com
How to Establish a Foreign Company (PT PMA) in Indonesia, Indonesia-investments.com
