Reasons Why Indonesia is an Ideal Location for Offshore Company Formation

What is an offshore company? This typically refers to conducting business in another place other than in the person’s jurisdiction. Operating business offshore has a lot of innumerable benefits like tax optimization, asset protection and low administration costs.

Maximising the profits and expanding the business are the goals of a company. Entrepreneurs want their products or services reach out to a wide range of target audience in the most cost-effective manner. That is why building their businesses offshore is one of the favoured methods by investors.

Places such as Indonesia is becoming an excellent choice for foreign investment. With the country’s GDP growth of 5.06% during the first quarter of 2018, it fortifies the investor’s inclination to invest in Indonesia.

So, this blog will show you the benefits of forming an offshore business in Indonesia.

Why Form An Offshore Company in Indonesia?

Indonesia’s growing economic power made the country an excellent place for offshore business formation. Here are some of the few reasons why set up a foreign company in Indonesia:

  1. More business sectors open to foreigners – With the amended Negative List, foreigners have an increased ownership in an offshore company.
  2. Youth domestic climate- The large young demographics of Indonesia provide investors access to a dynamic workforce.
  3. Favourable business climate-Indonesians uphold the value of respect, so company owners are assured that daily operations will run smoothly even without their presence.

Moreover, the Indonesian government is looking to setup tax haven locations in two of its islands. This incentivises many businesses to operate in the Indonesian jurisdiction whilst strengthening their economy.

Dubbed as the emerging tiger, Indonesia’s growing economy offers attractive opportunities to the international business community.

3 Reasons to Form a Company in Indonesia

There are many benefits to start forming a company in Indonesia. Here are the top 3 reasons why Indonesia is an excellent place for foreign business setup:

More Business Sectors Open to Foreigners

Foreign ownership in Indonesia is regulated by their Negative Investment List (Law No. 44). The amendments made to the law during 2016 increased foreign company ownership in some sectors. For example, a bar now has a 100% maximum foreign ownership. One-star and two-star hotels have maximum foreign capital ownership by 67% from 51%.

Youthful Domestic Market

Having the 4th largest population in the world, investors will have access to a huge pool of vigorous workforce. At the same time, the consumerist class is growing which means businesses will be able to reach a wide market for products and services.

Favourable Business Climate

Harmony is essential for a conducive workspace. For offshore companies, business owners may have trouble managing employees due to being out of the country. But, Indonesians are well-mannered and respectful to employers and workmates. This means that foreign entrepreneurs will not have to worry about managing daily tasks thereby, reducing administrative tasks and obligations.

The relatively low capital requirement, maintenance cost and asset protection are some of the benefits of setting up a business in offshore tax havens. With Indonesia’s culture, population and government initiatives, it is turning the country into one of the ideal choices for foreign company formation.

Addressing Challenges of Offshore Company Formation in Indonesia

Entering a new market can be a daunting task. Foreign investors and entrepreneurs will encounter some challenges such as:

  • Complying with local laws and regulations
  • Staffing
  • Communication barrier and cultural differences

However, there are company formation agencies that offer services that will help a company have a smooth transition to an offshore location. They offer business advisory solutions, executive recruitment guide, and bank account opening. These professionals will help foreign start-ups and companies to have a straightforward incorporation process in Indonesia.

For more idea about offshore companies, download our FREE e-book guide.


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