5 Essential Tips to Incorporate a Company in Indonesia

Everything you need to know before incorporating a foreign company in Indonesia.

Being the 16th biggest economy in the world (2019), Indonesia is an attractive market in which to start a company. Below are a few important points you need to know before you start the incorporation process.

1. Find out if your business field is available in Indonesia

An important step in setting up a foreign company in Indonesia is carefully deciding exactly which business field you want to focus on.
An important step in setting up a foreign company in Indonesia is carefully deciding exactly which business field you want to focus on.

Indonesia offers many business opportunities, so you might plan more flexible activities and be open to introducing more products down the line. But this can be a bit complicated.

Before starting the incorporation process, you should clearly decide what business field you’re going to register as. This is important because companies in Indonesia are grouped into business classifications or Klasifikasi Baku Lapangan Usaha Indonesia (KBLI) in Bahasa Indonesia. Your business field might be closed or restricted to foreign investors.

If you want to do business in Indonesia, you should research Indonesia’s Negative Investment List and see if your field is available. After that, you can contact an experienced consultant to help review the list with you and discuss options if your field isn’t open.

2. Prepare a company name

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Picking a company name is an important step while incorporating your company.

Other than accurately representing your business activities, your company name should also follow a few criteria including:

  • Must consist of three words
  • Cannot be similar to another company or organization
  • Cannot contain vulgar or obscene words

We recommend coming up with at least three options so you can have alternatives.

Having to choose a three-word company name might seem complicated, but it’s just for administrative purposes. You can come up with another term as your brand name, which you can then register as a trademark separately.

3. Make sure you have enough capital

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A company should be aware of Indonesia’s minimum capital requirements before starting to incorporate it.

Minimum capital is another usual concern for aspiring foreign investors. Many entrepreneurs plan to invest in Indonesia without having the proper funds or investment plan, which would severely complicate things.

A foreign company in Indonesia needs to submit at least ±IDR 2.5 billion of paid-up capital and plan to invest at least ±IDR 10 billion in total. This rule applies to foreign-owned companies (PT Penanaman Modal Asing or PT PMA), which is the type of foreign company that’s allowed to generate revenue.

The best thing to do is to prepare the necessary minimum capital. But if you’d still like to build a presence in Indonesia without that much money, you can consider opening a representative office.

4. Prepare a business address

Greenhouse Coworking Space in Jakarta, Indonesia aims to be environmentally-efficient by using natural materials, natural light, and waste recycling.
You need an official address to register a company in Indonesia. It can be a virtual office or a physical location in a commercial area.

Any business seeking to set up in Indonesia needs to submit an official address in a commercial area. This part of the process is usually more straightforward than the others, but can still delay your incorporation if you’re not aware of it.

However, this address is only for mailing and administrative purposes; it doesn’t have to be your actual working location. So, virtual office services are popular with businesses that work remotely. With a virtual office, you can register a commercial building as your official address without having a physical space there.

Keep in mind that some business fields aren’t allowed to use virtual offices. If this is the case, then your most practical options are getting a physical office or a dedicated desk in an office building.

5. Spare at least two months of time

To be safe, a foreign company should start incorporating two months before the time they plan to do business.
To be safe, a foreign company should start incorporating two months before the time they plan to do business.

There’s no getting around it. Market entry agencies can make things much simpler for you, but setting up any company in Indonesia isn’t quick. Coordinating between different government offices will still take a lot of time.

If you plan to invest in Indonesia, don’t expect to have your new company up and running by next week. To be safe, we advise you to spare at least two months for your business incorporation process.

However, it might take more time depending on the complexity of your business and if there are more licenses or permits you need. It’s important to be transparent with your timeline expectations when using a service provider so that you can work out the best way to meet your needs.

Okay, so what’s the next step?

It’s important to know these things before expanding to Indonesia, but it doesn’t stop there. You still have to consider a lot of stuff from regulations, funds, to logistics, and it might be hard to keep track of everything.

Using incorporation services will help you navigate the challenges and get details about important things to know. However, it’s still important to know the basics beforehand to get a better idea of the process and help you get things done quicker.

Greenhouse empowers you to book business incorporation services and connect with market entry consultants in your target markets.

We’ll connect you with experienced consultants on the ground who can help answer your questions about doing business in Indonesia.


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