How to register a company in Indonesia?

Key things to decide before registering a company in Indonesia:

1. What will my business do in Indonesia?
2. Who will be the shareholders?
3. Where in Indonesia will the company operate?
4.  What are the legal restrictions on conducting my planned activities?

Planned business activities

Before setting up a legal entity in Indonesia, you should be clear about your planned business activities. Based on that, there are various options for your company, such as:

• Setting up a limited liability company (PT PMA)
• Establishing a representative office
• Hiring employees using an Employer Of Record
• Importing shipments via Importer of Record

Depending on the size of your operations and the complexity of the regulations governing your industry, there might also be additional options such as special purpose vehicles (SPVs), acquisitions, etc.

Each of those scenarios has its advantages and disadvantages. Consult with Emerhub and we will find the solution for your business needs.

Allowed foreign ownership

First of all, any company registered in Indonesia with any foreign ownership is considered a foreign-owned company or a PT PMA. The “PMA” stands for the “foreign direct investment” and is not used in the company’s legal name,

Only PT PMA companies are subject to foreign ownership restrictions as representative offices are, as the name says, representing the parent company in Indonesia.

The regulations governing the company registrations are based on the business classifications (KBLI). A large number of business activities are regulated by the Negative Investment List (DNI) which restrict or even forbid foreign ownership and set additional requirements.

The location of the company

Indonesia is a de-centralized country and a lot of the decisions are done at the local municipality level. This leads to slightly different regulations in different areas. For example, in Jakarta, you are not allowed to register your company in a residential building while in Bali the local licenses extend the registration process for an extra month.

Besides the regulatory differences, you will also need to be clear on your location because you will report your taxes and employees in the local municipality.

How much time should you prepare for company registration in Indonesia?

While it depends on your planned activities, here is the rough timeline you can expect for each of the scenarios:

• Limited liability company in Jakarta – 1-2 weeks
• Limited liability company in Bali – 4-8 weeks
• Representative office – 4-6 weeks
• Employer of record – immediately
• Importer of record – immediately

Company registration times have decreased dramatically in Indonesia in the last few years. For example, if you set up a company in Jakarta using our virtual office, your company will be completed in 3-4 working days.

Key mistakes to avoid when setting up a company

See Emerhub’s post on the common mistakes made by foreign companies in Indonesia. When it comes to company registrations specifically, there are a few common mistakes.

• Registering a company to be able to hire locally – set up a representative office if you are ready to manage the payroll or use employer of record without having to handle any bureaucracy
• Registering a company for trading or construction – there are specific representative types available for both of them – KP3A for trading companies and BUJKA for large construction firms
• Registering a company to live in Indonesia – if the main purpose is to get a residence permit, you can save the cost and effort of operating a legal entity by registering yourself as an employee under an employer of record.

• Tell us about your planned business activities in Indonesia

• We collect all the required information and file the application

• Your company is registered in 2-4 weeks

• Receive additional industry-specific licenses (if required)