Starting Business in Indonesia

Foreign Investment Company

In accordance with the provisions of Law Number 25 of 2007 on Investment Law 25/2007, it is regulated that Foreign Investment (PMA) is an investment activity to conduct business in the territory of the Republic of Indonesia which is conducted by foreign investors either individual foreign citizens, foreign business entities, and/or foreign governments that fully utilize foreign capital or joint ventures with domestic investors.

Representative Offices of Foreign Companies (KPPA)

Based on Regulation of the Investment Coordinating Board 4/2021, Representative Offices of Foreign Companies (Kantor Perwakilan Perusahaan Asing/KPPA) are Indonesian citizens or foreign individuals or business entities which are representatives of foreign business actors, with the approval of the establishment of offices in the territory of the Unitary State of the Republic of Indonesia as well limitation provisions shall apply as:

1. Supervisor, liaison officer, coordinator, and manage the interests of the company or its affiliated companies;

2. Prepare the establishment and business development of PMA companies in Indonesia or other countries and Indonesia;

3. Located in an office building in the provincial capital.

4. Not seeking any income from sources in Indonesia, including not being allowed to carry out

   any activities or engage in any engagements/transactions for the sale and purchase of

   commercial goods or services with domestic companies or individuals;

5. Must not participate in any form in the management of any company, subsidiary, or branch

   of a company in Indonesia.

Representative Offices of Foreign Construction Service Business Entities (BUJKA)

Other representative offices, as regulated under Regulation of the Government 5/2021, are representative offices of Foreign Construction Service Business Entities (Badan Usaha Jasa Konstruksi Asing/BUJKA) which are representative offices in the form of legal entities from abroad with approval for the establishment of offices within the territory of the Unitary State of the Republic of Indonesia in the field of construction business. BUJKA may carry out construction activities in the field of construction consultancy services, construction works, and integrated construction works, however, must meet the requirements of large qualifications.

Representative Offices of Foreign Electricity Support Service Companies (JPTLA)

Representative Office of Foreign Electricity Support Service is a foreign representative office established by a business entity or individual of foreign electricity support service as regulated in Regulation of the Government Number 25 of 2021 on Organization of Energy and Mineral Resources Sector (Regulation of the Government 25/2021). Business licensing for foreign electricity support services shall be granted for the type of consultancy business in the field of:

1. Electricity Installation

2. Construction and installation of Electricity Installation c. Maintenance of Electricity Installations

Representative Offices of Foreign Trade Companies (KP3A)

Trade Representative Offices of Foreign Companies (Kantor Perwakilan Perdagangan Perusahaan Asing/KP3A) are described in Regulation of the Minister of Trade of the Republic of Indonesia no. 10/M-DAG/PER/3/2006 (Regulation of the Minister of Trade 10/M-DAG/PER/3/2006) is a representative of foreign trading companies that may perform activities including:

1. Introduce, promote and advance the marketing of goods produced by foreign companies or by associations of foreign companies which appoint them, as well as to provide information or instructions for the use and import of goods to domestic companies/users;

2. Undertake market research and supervision of domestic sales in relation to the marketing of goods from foreign companies or jointly appointed foreign companies;

3. Conduct market research for goods required by foreign companies;

4. Close contracts for and on behalf of the appointing companies with domestic companies for export purposes.

Representative Offices of Foreign Companies in The Field of Trading Through Electronic System (KP3A PMSE)

Through Regulation of the Minister of Trade Number 31 of 2023 on Business Licensing, Advertising, Development and Supervision of Business Actors in Trading through Electronic Systems (Regulation of the Minister of Trade 31/2023), it has been clarified that a Representative Office of Foreign Trading Company in the field of trade through Electronic Systems (KP3A for the E-Commerce sector) ) is an office led by 1 (one) or more persons of individuals WNI or WNA who are appointed by an Organizer of Trade through Electronic Systems (Penyelenggara Perdagangan Melalui Sistem Elektronik/PPMSE) abroad as their representatives in Indonesia who may act as and on behalf of foreign PPMSE.

Permanent Establishments

A permanent establishment is a foreign individual or legal entity that operates business in Indonesia and is a foreign tax subject or non-resident taxpayer. One example of a foreign business entity with a permanent establishment is a representative office established to conduct business activities in the oil and gas sector.