Other BriefingsIndonesia Representative Offices: What They Can and Cannot Do
Foreign companies can establish several types of representative offices in Indonesia, principally the Foreign Company Representative Office (KPPA), Foreign Trade Company Representative Office (KP3A), and representative office of a Foreign Construction Services Business Entity (KP BUJKA). The KPPA covers general corporate representation, the KP3A applies to trade representation, while the KP BUJKA applies specifically to qualifying foreign construction-services businesses. Each is subject to different rules governing the activities it can conduct in Indonesia. Indonesia’s current OSS framework expressly recognizes these representative-office forms.
What a KPPA can and cannot do
A KPPA provides a foreign company with a non-incorporated presence in Indonesia for representative functions. It can act as a supervisor, liaison, or coordinator and manage the interests of the foreign parent company or its affiliates in Indonesia. It can also undertake preparatory activities connected with establishing and developing a foreign investment company.
The KPPA cannot derive income from sources in Indonesia or enter into agreements or transactions involving the sale or purchase of commercial goods or services with Indonesian companies or individuals. It also cannot participate in the management of a company, subsidiary, or branch in Indonesia.
The office can consequently represent and coordinate the foreign parent’s interests but cannot become the entity through which the parent conducts commercial transactions in Indonesia.
Under the current risk-based licensing framework, representative offices are administered through the Online Single Submission (OSS) system. Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025 replaced BKPM Regulations Nos. 3, 4, and 5 of 2021 and remains in force.
What a KP3A can and cannot do
A KP3A provides a foreign trading company with an Indonesian presence for activities permitted under the country’s trade-representation framework.
Its role remains distinct from that of an Indonesian trading company. Establishing a KP3A does not give the foreign principal unrestricted authority to conduct domestic commercial activities in Indonesia. Activities undertaken through the office must remain within the scope permitted for the relevant representative-office category, while activities requiring Indonesian business authorization must be conducted through an appropriately licensed structure.
Indonesia also distinguishes between conventional foreign trade representative offices and representative offices operating in the electronic-commerce sector. The current OSS framework separately recognizes a KP3A in the PMSE sector, or trade through electronic systems, alongside the conventional KP3A.
What a KP BUJKA can and cannot do
A KP BUJKA differs from the other representative-office structures because it allows a qualifying foreign construction-services business to undertake construction-services business activities in Indonesia.
The structure is available to foreign construction-services businesses that satisfy the applicable qualification and certification requirements. For construction-services activities undertaken in Indonesia, the KP BUJKA must establish a joint operation (Kerja Sama Operasi, or KSO) with a qualifying Indonesian construction-services business.
The division of project work is regulated. For construction work and integrated construction work, at least 50 percent of the value of the work must be performed in Indonesia, while at least 30 percent must be performed by the Indonesian KSO partner. For construction consultancy services, all work must be performed in Indonesia and at least 50 percent of the value must be undertaken by the Indonesian partner.
A KP BUJKA is also subject to requirements concerning activity reporting, Indonesian employment, use of domestic materials and construction technology, and technology transfer.
Unlike a KPPA, a KP BUJKA can undertake qualifying construction-services business activities in Indonesia, but only within the applicable construction licensing and KSO framework.
When planned activities exceed representative office limits
Where a foreign company’s intended activities cannot be conducted through the relevant representative-office category, an incorporated structure may be necessary. A foreign-owned limited liability company (PT PMA) can conduct approved commercial activities in Indonesia, subject to the foreign investment and business licensing rules applicable to its business sector.
Establish Your Indonesian Presence with Dezan Shira & Associates
Dezan Shira & Associates can assess whether a company’s proposed activities fall within the permitted scope of a KPPA, KP3A, or KP BUJKA and assist with establishing and licensing the appropriate presence in Indonesia.
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