Foreign Investment

Business Environment1 Comment

You Are Here:Foreign Investment

Foreign investment in Indonesia can be a critical situation for a beginner or newcomers in Indonesia who lack profound experience with the country and do not have useful contacts or a network to rely on. According to the World Bank’s Doing Business Index, Indonesia is the ‘underdog’ business country which is not a business-friendly country for cultural behaviors and bureaucracy system. JavaConnections under PT Jawa Pilar Dunia will take a challenge of this matter, giving the right paths and solutions.

There are two legal entities that are permitted for foreigners in Indonesia: (1) a foreign investment limited liability company (in Indonesian: Perseroan Terbatas Penanaman Modal Asing, or, PT PMA), and (2) a representative office (in Indonesian Kantor Perwakilan Perusahaan Asing, or, KPPA). This section aims to provide you all required information about the establishment of:
• Foreign Investment Company (PT PMA)
• Representative Office (KPPA)

A. Foreign Investment Company
Allowed Activities
-All business activities related to the sector it is engaged in and received approval for from BKPM.
Best Option for
-Companies that want to engage in commercial activities in Indonesia.
Foreign Ownership Restriction
-Foreign ownership varies between 0% – 100% depending on the Negative Investment List.
Minimum Capital
-IDR 10 billion (paid up capital at least 25% of investment plan).
-Operates as an independent limited liability company within the business classification.
Disadvantages – Large capital requirement
Issuing Work Permits and Visas for Foreigners
-All shareholders, directors and commissioners eligible for work permit, unlimited amount of business visa sponsorship, work permits can be issued to foreign experts.
-Monthly withholding tax report, quarterly/semi-annual investment report.
Time to Establish – 10 weeks
Estimated Costs: ± USD $3,500

B. Representative Office
Allowed Activities
-Only for market research & local representation
Best Option for
-Companies that want to engage in market research, networking, etc. It is strictly forbidden to generate profit and revenue or engage in sales directly
Foreign Ownership Restriction – No restriction
Minimum Capital – No requirement
-No capital requirement
-Takes less time to establish
-Cannot engage in commercial activities,
Valid for a maximum period of 5 years
Issuing Work Permits and Visas for Foreigners
-Work permit for the chief representative, unlimited business visa sponsorship, 3 Indonesians for every expat hired
-Monthly withholding tax report, annual activity report to the BKPM
Time to Establish – 6 weeks
Estimated Costs: ± USD $2,000

foreign investment, investment, indonesia investment, investment to indonesia

About the author:

One thought to “Foreign Investment”

Leave a Reply

Your email address will not be published. Required fields are marked *