Indonesia Business Incorporation and Bank Account Opening

Indonesia Business Incorporation and Bank Account Opening

(A Simple Guide to Business Investment in the Indonesian Market)

Why Indonesia?

1. Fourth most populous country in the world. Average GDP about 5% before the pandemic.
2. Good political and economic stability with the fastest growing economies in Asia.
3. Popular market to invest in South-East Asia with various sectors available to foreigners
4. Good economic response against Covid Crisis (-2, 1% in 2020 by IMF)
   1. Incorporation of a Company in Indonesia
      Many investors believe that Company Incorporation in Indonesia might take a lot of investment from a well-known fact that a foreign company established in Indonesia is required to have Authorized Capital of IDR 10 billion. The process of establishment does not require the exact capital to be directly invested/transferred to the company financial bank account. Process is allowed to be performed in parallel with the operational business activities.
      1. Common Misconception
         • Allowed Nominee Agreement
           • Usually, to avoid investing such big amount of capital, many search for local nominees to be the shareholders of company, BUT nominee agreement is not acknowledged by the governed law and shall not be a solution to any issues regarding the investment process.
         • L Local Shareholder is a must
           • A local shareholder is required for starting a company. In reality, many business lines are open to full foreign ownership. The newly regulated Omnibus Law is expected to ease up the process of foreign ownership in Indonesia.
      2. Comparison of Companies
         • Local Companies
           1. Several Classification of Capital: with lower initial Capital Requirements
              • Small, Medium and Large.
           2. Allowed to only have local citizen/local company as Shareholders. However, may hire foreign Director and/or Workers.
           3. Incorporation starts at the base of IDR 50 million as Authorized Capital.
           4. It is not a subject to restrictions upon Investment in Indonesia; as for some foreign invested companies.
         • Foreign-Owned Companies
           1. Minimum Authorized Capital: IDR 10 billion
              • Opportunity to work with governmental agencies
           2. Has Investment Plan of IDR 10 billion per business classifications. Most sectors are open for fully owned Foreign Investment
           3. Allowed to hire Foreign Directors and/or Workers at the minimum size of Capital Requirementsl
           4. Simplified business licensing. A solution to established company willing to branch out in the South East Asia market
      3. Requirements of Company Incorporation
         1. One Director and one Commissioner of the Company
         2. Minimum Authorized Capital & Paid-Up Capital for minimum 2 Shareholders
         3. Determination of Business Classification: 5 digits of Business Classification
         4. Investment Plan to each business classification. Investment Plan Capita
         5. Acquire registered address of the company
         6. Provide all ID as requirements to process the establishmentt
      4. Other Business Entities
         • KPPA or Kantor Perwakilan Perusahaan Asing also know as Representative Office or Trade Representative Office
           • May be one of the options to choose before establishing your own company in Indonesia..
           • Representative Office serves its name as the representative of your own established mother company overseas. Its main role is to perform market research and act as agent of the mother company in Indonesia. The steps and requirements simpler than those of the company establishment.

           Note:

           Representative or Trade Representative Office is restricted to generate income under its own name in Indonesia; but only to provide assistance to the mother company

         • BUJKA or Badan Usaha Jasa Konstruksi Asing also known as Foreign Construction Business Entity
           • • Is the option for foreign construction company to start its project in Indonesia. This form is similar to foreign representative office with the limited actions and requirement to partner with the governmental agencies and local construction company.

           Note:

           Both Business Entities may, peuvent,

           • • – have the option to create/establish a Foreign-Owned Company by  disbanding the previous form of Representative Office;
             • – hire foreign workers/representative in Indonesia with   no capital requirements needed.
      5. Procedures of Company Incorporation
         How to Register a Company in Indonesia
         1. Choose your business structure
            • Decide which business structure is suitable for you. Then put in place company services such as corporate Company Secretary, human resources, Working days/hours, Ongoing fillings and bookkeeping
         2. Choose a unique company name
            • You are required to provide 3 options for your company name in English, Indonesian or both. The 3 options will save you the Trouble of having to rethink if one of the options has already Been used. Register the company name at the Ministry of Law and Human Rights.
         3. Have a registered officel
            • As soon as you are confirmed with your business formation, kindly ensure that you have a registered office and a Mailing address.
         4. Register for a business license
            • The process of getting a business license varies with each business type. You are required to apply for a certificate of business registration and company registration documents from the offices of the Ministry of Trade
   2. Bank Account Opening in Indonesia
      1. Complete and appropriately signed application form.
      2. Provide all supporting documents to be given upon application.

      Required documents 

      1. Articles of Association of the Company
      2. Establishment Deed & Approval from Ministry of Law and Human Rights
      3. Copy of Tax ID number of the Company
      4. Copy of Business Id Number and Business License (which have been obtained through OSS
      5. Copy of ID: Board of Directors, Shareholders & Authorized Signers

      The process of opening a corporate bank account in Indonesia vary slightly from bank to bank. In nearly all banks, you can start opening a bank account after PT PMA registration is complete.

Tax Compliance

Several of recognized taxes in Indonesia are:

• Corporate Income Tax
  
• Withholding Tax and Personal Income Tax Rate

For any information on how to incorporate your company in Indonesia, please contact our team by email at info@opkofinance.com or by phone at +852 2654 8800.