Activity Limit and Legal Basis for Open a Company in Indonesia

1. Limitation of Foreign Office Representative Office Activities

The activity of the office is limited to its role as supervisor, liaison, coordinator, and caring for the interests of the company or its affiliated companies in Indonesia and or outside Indonesia.
The office shall not seek any revenue from sources in Indonesia including it is not permissible to engage in engagement or sale transaction and purchase of goods or services with any company or individual in the country.
The office shall not participate in any form whatsoever in the management of any company, subsidiary or branch of company in Indonesia.

2. Application for License of Representative Office of Foreign Company Representative

Applications for obtaining a license for the offices of foreign companies “KPPA” and individual foreign nationals working for the office shall be submitted to the Head of the Investment Coordinating Board (“BKPM”).

Its establishment is consistent with the Regulation of the Head of the Capital Investment Coordinating Board No. 12/2009 on Guidelines and Procedures for Investment Application. Apply to BKPM by filling out the KPPA Model form as set forth in PERKA BKPM number 12/2009. The documents that need to be included are:

Articles of Association of foreign companies to be represented.
A letter of appointment from a foreign company to be represented.
Photocopy of passport (for foreigners) or KTP (for WNI) who will become Representative Executive.
A statement about the willingness to stay and work as a Representative Executive only, not to do any other business.
Power of attorney, if the application is not filed by the management of the foreign company.

In addition to BKPM, there are also representatives of foreign trading companies whose licenses are submitted to the Ministry of Trade. Representatives of foreign trading companies whose licenses are submitted to the Ministry of Trade are individual Indonesian Citizens or Foreign Citizens designated by Foreign Companies or Foreign Companies Association overseas as their representatives in Indonesia. In essence, all foreign entrepreneurs who are Open a company in Indonesia should follow all applicable regulations.

3. Activities of Foreign Company Representative

Representatives of foreign trading companies may undertake the following activities in Indonesia:

Undertake activities of introducing, promoting and promoting the marketing of goods produced by Foreign Companies or Foreign Companies Association overseas appointing them.
conducting market research and supervision of domestic sales in the framework of marketing of goods from Foreign Companies or Foreign Companies Association abroad appointing them;
Conducting market research on goods required by Foreign Companies or Foreign Companies Association abroad which designates them and links and provides explanations and instructions on terms of exporting goods to companies within the country.
To close the contract for and on behalf of the company appointing it to the domestic company for export.

Business License of Foreign Trade Company Representative “SIUP3A” is a term for License for foreign trade company representatives. SIUP3A shall be submitted to Responsible or Head of Head Office or Head of Representative Office of Foreign Trade Company Representative on behalf of the company (see article 8 of PERMENDAG 10/2006.

According to PERMENDAG 10/2006, applications for obtaining SIUP3A are submitted in writing by the Head of the Head Office or Branch Representative Office of a Foreign Trading Company or authorized appointed to the Director of Business Development and Company Registration. The petition is made and signed by the applicant on stamped paper. The documents that need to be included are:

1. Application from Head Office or Branch Office.
2. List of Application Entries that have been filled correctly and given sufficient stamp duty.
3. Approval Letter of Appointment of Representative of the original Foreign Trade Company.
4. Letter of Appointment.
5. Copy of Employment Permit for Foreign Workers for Foreign Workers.
6. Certificate of domicile from the office space certificate from the manager of the Building.
7. Pas Photo size 4 X 6 cm of 2 pieces.
8. Copy of Payment Proof of Deposit.

4. Legal Basis

The legal basis for Open a company in Indonesia and company representatives is set out in the following regulations:

Regulation of the Minister of Trade number 10/2006 concerning Provisions and Procedure for Issuance of Business License of Foreign Trade Company Representative.
Decision of the Head of the Capital Investment Coordinating Board Number 22/2001 on Implementation of Presidential Decree Number 90 of 2000 concerning Representative Offices of Foreign Companies.
Regulation of the Head of the Investment Coordinating Board Number 12 Year 2009 concerning the Guiding Principles and Procedures for Investment.

5. Terms

Establishment of Representative Office of Foreign Company (“KPPA”) can be done if fulfilling the following requirements:

The office is led by one or more foreign nationals or Indonesian citizens who act as office managers based on a letter of appointment made by a foreign company outside the territory of Indonesia.
The activity of the office is limited to its role as supervisor, liaison, coordinator, and management of the interests of the company or its affiliated companies in Indonesia and or outside Indonesia.
The office will not seek any revenue from sources in Indonesia, including it is not permissible to engage in engagement activities or sales transactions and purchase of goods or services with companies or individuals within the country.
The office will not participate in any form whatsoever in the management of any company, subsidiary or branch company in Indonesia.
Office Manager residing in Indonesia.
The location of KPPA shall be in the office building that has been provided.

For applications obtaining permits for establishment of KPPA, be submitted to the Head of Investment Coordinating Board, same as when Open a company in Indonesia. Registration is addressed to BKPM by filling out the KPPA Model form as set forth in Attachment of PERKA BKPM No.5 / 2013 Jo PERKA BKPM Number 12/2013 is XI.