Establishing a business in Indonesia can be a lucrative opportunity due to its growing economy and large consumer base. However, understanding the legal requirements is crucial for a smooth setup process.
This guide provides a comprehensive overview of these requirements, ensuring you are well-prepared to embark on your business journey in Indonesia.
Here are the steps and legal requirements you need to follow:
- Choose a Business Entity
The most common type for foreign investors is a Limited Liability Company (PT), specifically a PT PMA which allows foreign ownership.
- Company Name
Your company name must comply with regulations and be unique. This process is done through the Ministry of Law and Human Rights’ (Kemenkumham) online system (AHU).
- Deed of Establishment and Articles of Association
A notary must create your Deed of Establishment in Indonesian, which includes the Articles of Association. This deed must be approved by Kemenkumham.
- Business Identification Number (NIB)
The NIB is issued by the Indonesia Investment Coordinating Board (BKPM) through the Online Single Submission (OSS) system. The NIB serves as the company’s identity and includes the business license and tax registration number.
- Business Licenses
Depending on your business sector, you may need specific licenses, such as:
- PMA principal license from BKPM.
- Location permit, environmental permit, and building permit from local government.
- The operational permit from the relevant ministry or agency.
- Minimum Capital Requirements
The company must meet the minimum capital requirements. For PMAs, the minimum authorized capital is usually IDR 10 billion, with a minimum paid-up capital of IDR 2.5 billion.
- Tax Identification Number (NPWP) and Business Registration Certificate (SKT)
You must register with the local tax office to get an NPWP and SKT.
- Employment
Comply with Indonesian labor laws, including Law No. 13 of 2003 on Manpower, and ensure the use of foreign workers follows regulations.
- Investment Activity Report (LKPM)
PMAs must regularly submit LKPM to BKPM as required.
Navigating these legal requirements can be complex and time-consuming. This is where Abhitech, as an Employer of Record (EOR) service provider, plays a crucial role. Abhitech simplifies the process by:
Company Establishment: Abhitech can facilitate the establishment process by assisting with the preparation of necessary documents, such as the Deed of Establishment and Articles of Association, ensuring compliance with Indonesian legal requirements.
Business Identification Number (NIB): Abhitech can guide clients through the process of obtaining the NIB via the Online Single Submission (OSS) system, ensuring smooth registration and compliance with Indonesian regulations.
Business Licenses: Abhitech can help clients navigate the complex landscape of business licenses by providing guidance on obtaining the necessary permits from both central and local government authorities.
Minimum Capital Requirements: Abhitech can assist clients in understanding and meeting the minimum capital requirements for their business entity, ensuring compliance with Indonesian regulations.
Tax and Employment Compliance: Abhitech can help clients register for Tax Identification Numbers (NPWP) and Business Registration Certificates (SKT), as well as ensure compliance with Indonesian labor laws and regulations regarding the employment of both local and foreign workers.
Investment Activity Report (LKPM): Abhitech can support clients in preparing and submitting Investment Activity Reports (LKPM) to the Indonesia Investment Coordinating Board (BKPM), ensuring ongoing compliance with reporting requirements.
By leveraging Abhitech’s expertise and experience in global workforce management, legal compliance, and establishment services in Indonesia, businesses can navigate the complexities of establishing a presence in Indonesia with confidence and ease.
Abhitech’s commitment to confidentiality, security, and risk mitigation further ensures that clients can focus on their core business activities while entrusting the establishment process to capable hands.
References
Indonesia Investment Coordinating Board (BKPM). (n.d.). Guide to Investment in Indonesia. Retrieved from BKPM
Ministry of Law and Human Rights (Kemenkumham). (n.d.). Online Legal Entity Administration System. Retrieved from AHU Online
Ministry of Investment/BKPM. (n.d.). Online Single Submission (OSS). Retrieved from OSS
Law No. 40 of 2007 on Limited Liability Companies.
Law No. 25 of 2007 on Investment.
For personalized guidance and assistance, contact Abhitech to ensure your business setup in Indonesia is handled efficiently and in full compliance with local laws.
