How to Set Up a Representative Office in Indonesia
As an alternative to establishing a Limited Liability Company or investing in an existing local company, foreign investors are permitted to open a Representative Office in Indonesia. In this article we discuss the key steps for establishing a Representative Office in Indonesia.
It is necessary to meet certain business conditions before a Representative Office could be established. Firstly, the location of a Representative Office must be in the capital of an Indonesian province.For example, if an investor chooses to establish the office in West Java, then it must be domiciled in the province’s capital Bandung. This is evidenced by the lease agreement to be submitted to the Investment Coordinating Board (BKPM).
Secondly, a Representative Office is prohibited from conducting business activities in Indonesia. The permitted activities are limited to:
- Introducing, promoting and marketing the goods produced by a parent company, as well as providing information, or directions for use and importation of goods to companies/users in Indonesia;
- Conducting market research in Indonesia for domestic sales of goods produced by a parent company;
- Conducting market research on the items required by companies/users in Indonesia as well as providing information about the terms of the export of goods to companies in Indonesia;
- Closing and signing of contracts for and on behalf of the company that is appointed by the parent company in Indonesia for export of goods.
There are several key steps for establishing a Representative Office in Indonesia. First, the following documents are to be prepared:
- Article of Association (AoA) of Overseas Parent Company, duly legalized by notary and relevant embassy;
- Copy of passport of Head of the Representative Office in Indonesia;
- Letter Of Intent (Copy legalized by notary and relevant embassy);
- Letter Of Appointment (Copy legalized by notary and relevant embassy);
- Letter stating that the Representative Office will not engage in business activities in Indonesia;
- Lease Agreement;
- Details of Indonesian Workers to be hired; and
- Power Of Attorney, if authorized.
The aforementioned documents must be submitted to BKPM to obtain a Representative Office (KPPA) license from BKPM.The KPPA license is issued with the validity period of 3 (three) years. When the validity period expires, the investor can extend the license, or dissolve the KPPA and / or establish a new FDI company;
After obtaining the KPPA license, the next step is to submit a Certificate of company domicile to the Village Office in accordance with the company’s domicile.
The next step is to register the Representative Office as a Taxpayer with the Tax Office in accordance with the company’s domicile. The company will receive a Tax Registration number (NPWP) and Registered Certificate (SKT) from the Tax Office.
Finally, the Representative Office must be registered with the Regional Government through the Investment and One Stop Services (DPMPTSP) of the Mayor / Regency Office in accordance with the company’s domicile. Following this, a Company Registration (TDP) certificate will be issued by the Regional Government.