Do you want to setup Representative Office in Indonesia ?
Do you want to setup Business Activities and a Company in Indonesia ?
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Setting up Business Activities and a Company in Indonesia
To establish a business in Indonesia, if you do not require a local legal entity for the investment proposed, you could choose to appoint an Agent or Distributor, or set up a Representative Office. Many foreign investors at the early stage of entering the Indonesia market choose to set up an Agency Agreement or Representative Office, then later after the business starts to grow they will apply for a Foreign Direct Investment Company (FDI) status.
This is referred to most commonly in Indonesia by its Indonesian acronym PMA, or Penanaman Modal Asing.
A Representative Office can be established depending upon the line of business and the necessary licenses issued by the related government department. The limitation of a Representative Office is that they are not allowed to conduct direct sales and cannot issue Bills of Lading.
Representative offices are set up primarily for marketing, market research, or as buying or selling agents. The related government ministries are:
- Representative Office from Ministry of Industry & Trade – for bilateral trade
- Representative Office from Ministry of Public Work – for consultant or contractor
- Representative Office from Ministry of Mining – for mining activities
- Representative Office from Ministry of Finance – for banking
- Representative Office from Investment Board (BKPM) – regional representative
To establish a Representative Office with permission from the Ministry of Industry and Trade, the company’s head office needs to issue three letters:
- Letter of Intent – stating the intention of the company to establish a representative office
- Letter of Appointment – stating the appointment of the chief representative
- Letter of Statement – stating that the Chief Representative will follow Indonesian regulations
The three letters must be stamped by a notary public and approved by the Indonesian Embassy in the home country of the firm. Upon approval, the Indonesian Embassy will issue a Letter of Notification (Surat Keterangan). Upon completion of the four letters the process can continue to the related government ministry in Jakarta, to incorporate a fixed license for 2 years.
Other ministries require different types of letters.
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