Planning on relocating your foreign company to Indonesia?
In this article, we will walk you through the essentials of company relocation to Indonesia, including key requirements, suitable legal entities, and step by step process.
Legal Entity Types for Foreign Companies Relocating to Indonesia
When relocating a foreign company to Indonesia, selecting the appropriate legal entity is an important decision that will impact your operations, tax obligations, and compliance requirements.
Here are the main legal entities available for foreign businesses relocating to Indonesia:
1. PT PMA (Perseroan Terbatas Penanaman Modal Asing)
A PT PMA is a limited liability company with foreign investment. This is the most popular and most flexible option for foreign investors. That is because it is a separate legal entity and allows for a wide range of business activities in Indonesia subject to positive investment list.
A PT PMA:
- Can be 100% foreign-owned in many sectors
- Requires minimum capital requirement of at least IDR 2.5 billion (approx. USD 150,0001)
- Requires at least one resident director
2. Branch Office
A branch office is an extension of the foreign parent company and is not a separate legal entity. This type of legal entity is commonly used for specific sectors such as construction, oil and gas, and banking.
Key features of a branch office in Indonesia include:
- Directly controlled by the parent company
- Limited to certain business activities
- Full liability of the parent company
3. Representative Office (KPPA)
A representative office allows foreign companies to establish a presence in Indonesia without engaging in direct commercial activities. That means, a representative office cannot generate revenue as it is only for activities such as research and business relations.
Key features include:
- Suitable for market research and promotion
- Cannot conduct commercial transactions
- Limited duration (usually 3 years, renewable)
Key Requirements for Foreign Companies Relocating to Indonesia as per Legal Entity
| Requirement | PT PMA | Representative Office | Branch Office |
|---|---|---|---|
| Minimum Capital | IDR 2.5 billion (approximately USD 150,000*) | No requirement | No specific requirement (may vary based on industry) |
| Corporate Officers | At least one resident director, commissioner required | A resident Chief Representative Officer (CRO) is required | A resident representative is required |
| Ownership | Can be 100% foreign-owned, some restrictions | Not a separate entity | Extension of parent company |
| Business Activities | Wide range of activities allowed | Non-commercial activities only | Limited activities |
| License Duration | Unlimited | 3 years, renewable | Aligned with project duration |
Step-by-Step Process of Foreign Company Relocation to Indonesia
Relocating a foreign company to Indonesia involves a series of steps to ensure you meet all the requirements and comply with local laws.
While the exact process of foreign company relocation may vary depending on your chosen legal entity, here's a general guide focusing on the most common option, establishing a PT PMA:
1. Company Name Reservation and Approval
After deciding on the legal entity, the first step towards relocation of your foreign company to Indonesia is reserving a unique company name with the Ministry of Law and Human Rights.
You must ensure the name is available and complies with Indonesian regulations. For instance, it must consist of at least three different words and be unique, not resembling existing company names. For foreign companies (PT PMA), the name can be in English or other languages.
You can use Emerhub’s Indonesia Company Name Check to see if the business name is available and meets the requirements.
2. Preparing Required Documents for MoHLR approval
Once the company name is approved, the next step is to draft and notarize the Deed of Establishment, which includes the Articles of Association (Anggaran Dasar).
This document outlines the company's structure, purpose, shareholders, and operational procedures.
For company incorporation, you will need to prepare the following additional documents:
- Copies of valid passports or ID cards for all shareholders and directors
- Tax identification numbers (NPWP) for Indonesian shareholders and directors
- Proof of domicile for the company's registered address (can be a lease agreement or domicile letter)
- Capital statement letter confirming the commitment to the minimum capital requirement of IDR 2.5 billion for PT PMA
- Power of attorney if using a third party for company registration
- Completed company registration forms as required by the notary
Emerhub’s local experts will handle this process on your behalf. We will gather and prepare the required documents and secure approval from the Ministry of Law and Human Rights.
3. Meet the Post-Establishment Requirements
After obtaining approval from the Ministry of Law and Human Rights, you'll need to fulfill several post-establishment requirements to ensure your company is fully compliant and operational:
- Obtain a Business Identification Number (NIB) through the Online Single Submission system
- Apply for necessary business licenses and permits specific to your industry such as trading license.
- Register for taxation (NPWP) and social security programs (BPJS)
Emerhub can assist you in navigating these requirements, ensuring all necessary registrations and licenses are obtained efficiently and in compliance with Indonesian regulations.
4. Secure Visas and Work Permits for Your Foreign Team
The final step in relocating your company involves securing the appropriate visas and work permits for your foreign employees.
In this regard, you will need to do the following:
- Apply for RPTKA (Expatriate Placement Plan) approval from the Ministry of Manpower
- Obtain IMTA (Work Permit) for foreign employees
- Apply for VITAS (Limited Stay Visa) and KITAS (Temporary Stay Permit) for foreign workers
If you or any of the shareholders plan on coming to Indonesia for the purpose of company incorporation, you can obtain a business visa or pre-investor visa. That would allow you to enter Indonesia and set up your business operations.
Emerhub's experienced team will manage the entire visa and work permit application process, ensuring you and your foreign employees can legally work and reside in Indonesia.
Relocate Your Foreign Company to Indonesia with Emerhub
Emerhub has been helping foreign investors and companies to expand their operations in Southeast Asia and other markets since 2011.
Our local team of experts in Indonesia understands the complexities of the relocation process and can guide you through every step, from company name reservation to securing work permits for your foreign employees.
Fill out the form below to book a free consultation with our business advisors.