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How to Start a Business in Indonesia for Foreign People

How to Start a Business in Indonesia for Foreign People?

Do you have relatives, relatives, and friends of foreigners who are wondering how to start a business in Indonesia? We want to share a little about building a business in Indonesia, what are the conditions and what form of business is most appropriate to run by foreign citizens.

Having your own business is already a dream of many people, is this also your dream? Quoting from Andi Warhol “Making money is art and working is art and good business is the best art”. You can have your own rules, manage your own money, share profits, and give jobs to others; we can manage everything as we want. But well, it is not also a common secret if doing business is not easy.

Consciously or unconsciously, Indonesia is a lucrative market share and potential for businessmen. Its population of more than 240 million people occupies the 4th position of the most populous countries in the world. Population dominated by the age of 20 to 60 years, which is 60% of the total population.

Indonesia is also the only country in Southeast Asia that is a member of the G-20, with a 5.05% GDP growth in Q4 of 2015. With such a positive economic atmosphere, Indonesia offers promising opportunities to open businesses. So do not be surprised if many foreigners are interested in how to start a business in Indonesia.

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Company Registration in Indonesia

The first step to start a business in Indonesia is to choose the type of company you want to establish. Broadly speaking there are 3 companies:

  1. Foreign Direct Investment as a Limited Liability Company, or commonly called PT PMA,
  2. Local Company, or local company. The most popular types are Limited Liability Company or PT, and
  3. Representative Office.

With PT PMA, you will be free to conduct all business activities in Indonesia. PT is a company whose founders are at least 2 local Indonesians who are responsible to shareholders, limited from corporate debt. As for the representative office, access is limited to promotional activities and research only, this form of company does not allow to generate profits in Indonesia and all transactions that take place must be done directly by the parent company.

Characteristics of PT PMA

  1. Shares may be owned up to 100% by Foreign Citizens. The range of foreign ownership is from 0 to 100% depending on the area of ​​his business.
  2. It requires at least 2 shareholders.
  3. Requires investment planning of at least US $ 1,000,000
  4. Requires a specific license, depending on the area of ​​business.
  5. Business entities, investors or foreign individuals who wish to open or own a company in Indonesia must pass the procedures in accordance with Indonesian law and regulation no. 25/2007 regarding foreign capital and no. 40/2007 concerning Limited Liability Company.
  6. The entire process of registering and establishing a company takes from 8 to 10 weeks.
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Characteristics of Local Company

  1. Companies can do business in 3 different business lines.
  2. Minimum capital paid for SMALL Trade License is from Rp 50.000.000, – to Rp 600.000.000.
  3. Minimum capital paid for MIDDLE Trade License is from Rp 600.000.000, – to Rp 10.000.000.000, -.
  4. The minimum capital paid for the LARGE Trade Business License is above Rp 10.000.000.000, -.
  5. Requires at least 2 local shareholders of Indonesia, 1 director, and 1 commissioner.
  6. The entire process of registering and establishing a company takes from 8 to 10 weeks.

Characteristics of Representative Office

  1. Formed branch offices of overseas companies holding offices or foreign companies.
  2. Activities are limited to promotional and research activities only.
  3. No shareholder required.
  4. Does not require directors and commissioners.
  5. Does not require capital investment.
  6. Limited sponsorship of Temporary Stay Permit Card or KITAS (at least Chief of Representative Office and Assistant of Chief of Representative Office).
  7. The whole process of registering and establishing a company takes from 5 to 8 weeks.

Let’s Start the Business!

The toughest stages of work are to figure out how to begin. So look at many smart people struggling with various ideas, planning, and others, until finally forget the action, although one step.

Nothing is more important than how to start a business in Indonesia from a first step. Successful entrepreneurs require careful planning, creativity and hard work.

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Now ask yourself these 20 questions, to help ensure you think about the right financial and business details.

  1. Why am I starting a business?
  2. What business do I want?
  3. Ready my ideal customer?
  4. What products or services does my business provide?
  5. Am I ready to spend the time and money needed to get my business started?
  6. What distinguishes my business idea and the products or services I will provide from others in the marketplace?
  7. Where will my business be located?
  8. How many employees do I need?
  9. What kind of supplier do I need?
  10. How much money do I need to get started?
  11. Do I need to get a loan?
  12. How long will it take before my product or service is available?
  13. How long can I start making a profit?
  14. Who is my competitor?
  15. How will I value my product compared to my competition?
  16. How do I create the legal structure of my business?
  17. What taxes should I pay?
  18. What insurance do I need?
  19. How do I manage my business?
  20. How do I advertise my business?

How to start a business in Indonesia and work as an entrepreneur is not just achieving the target. The most important thing is when you are able to appreciate every step you take and enjoy the entire journey experienced.

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