When considering establishing a business in Indonesia, one of the key questions foreign investors often ask is whether they need a local partner. Understanding the regulations regarding local partnerships is crucial to ensure compliance and smooth business operations. This guide provides clear and reliable information on the necessity of having a local partner for your business in Indonesia.
Do I Need a Local Partner to Establish a Business in Indonesia?
The requirement for a local partner in Indonesia depends on the type of business entity and the industry sector:
PT PMA (Foreign-Owned Limited Liability Company)
Ownership: Foreign investors can fully own a PT PMA, but some sectors have foreign ownership restrictions as per the Positive Investment List (Daftar Investasi Positif).
Local Partner: Not required in sectors open to 100% foreign ownership. However, in sectors with ownership limits, a local partner is necessary to comply with the maximum allowable foreign ownership percentage.
Representative Office (KPPA)
Ownership: A representative office is an extension of a foreign company and does not require local ownership.
Local Partner: Not required, but local staff may be hired to manage operations.
Branch Office
Ownership: Branch offices are permitted in specific sectors, such as banking and construction.
Local Partner: Not required for sectors where branch offices are allowed, but local engagement and compliance are necessary.
Joint Venture
Ownership: A joint venture involves a partnership between foreign and local investors, typically required in sectors with foreign ownership limitations.
Local Partner: Required, as the joint venture structure inherently involves collaboration with a local entity to meet regulatory requirements.
Consult with Abhitech as Your EOR Provider
Determining whether you need a local partner and navigating the associated regulations can be complex. Abhitech, as an experienced Employer of Record (EOR) service provider, can assist in this process by:
- For PT PMA (Foreign-Owned Limited Liability Company): Abhitech can help navigate ownership regulations and identify sectors open to 100% foreign ownership, eliminating the requirement for a local partner.
- For Representative Offices (KPPA) and Branch Offices: Abhitech ensures compliance without the need for a local partner, simplifying the setup process and facilitating operations.
- For Joint Ventures: Abhitech facilitates partnership agreements, ensuring smooth collaboration with local entities while meeting regulatory requirements.
By leveraging Abhitech’s expertise, foreign investors can establish their presence in Indonesia efficiently and confidently, regardless of the need for a local partner. Get Started!
Indonesia Investment Coordinating Board (BKPM): Provides detailed information on foreign investment regulations, including ownership restrictions.
BKPM
Ministry of Law and Human Rights: Offers guidelines on business entity establishment and ownership requirements.
Ministry of Law and Human Rights
Investment Coordinating Board’s Positive Investment List: Lists sectors and their respective foreign ownership limitations.
Positive Investment List
For personalized guidance and assistance, contact Abhitech to ensure your business setup in Indonesia is handled efficiently and in full compliance with local laws.
