A representative office is an office set up by a company, usually in a foreign country. Representative offices handle the parent company’s business in its location.  Indonesia has several types of representative offices and one type is the general representative office (KPPA).

Some business functions KPPAs can do include:

• ◉ Open a local bank account
• ◉ Hire employees (both local and foreign)
  • * KPPAs can apply for work permits for foreign employees so they can work and stay in Indonesia legally.
• ◉ Conduct back office activities, for example:
  • * Accounting
  • * Data Entry
  • * Payroll management

Another reason for a company to open a representative office is to create business relationships and better understand a foreign market it wishes to enter. Opening a KPPA is a suitable option for companies who want to do market research or conduct feasibility studies in Indonesia.

Restrictions for KPPA

This type of legal entity may only conduct activities for the interest of its parent company or companies affiliated with the parent company. There are limits to the activities a KPPA can do.

KPPAs cannot:

• ◉ Conduct activities that generate income in Indonesia
• ◉ Cannot issue invoices
• ◉ Cannot own land or property

Should you wish to do any of the above activities, you will have to open a limited liability company with direct foreign investment (PT PMA).

Requirements and Prerequisites to Open a KPPA

There is no minimum capital requirement for KPPAs so the parent company can open one with any reasonable amount relevant to the planned business activities of the office. However, the parent company must meet the following prerequisites to set up a KPPA in Indonesia:

• ◉ The parent company must be a legal entity that exists outside of Indonesia
• ◉ The appointment of a Chief of Representative Office (CRO)
  • * The appointed CRO may be an Indonesian national or a foreigner as long as he or she is a resident of Indonesia.
  • * If the CRO is a foreigner, his or her KPA can apply for a work permit upon completion of the establishment of the representative office.
• ◉ A registered office address
  • * The KPPA must be in a dedicated commercial office address in the capital city of an Indonesian province.

Timeline to set up a KPPA in Indonesia

Setting up a KPPA is simpler and does not take as long as setting up a limited liability company. In the table below, you will see a list of the documents obtained in the process to set up the KPPA along with how long it takes for Emerhub to gather them.

Documents obtained	Timeline in working days
KPPA license	1
Tax registry	3
TOTAL	4