- Looking for a virtual office in Indonesia?
- Can foreign companies use a virtual office?
- Are there companies that have to use physical office spaces?
- The business fields that can’t use virtual offices include:
- What if I can’t use a virtual office?
Looking for a virtual office in Indonesia?
A virtual office is a service that allows you to register office buildings as your official business address while still having your daily operations somewhere else. It’s very popular in Indonesia, especially for businesses that are just starting out. The Indonesian government specifically allows and regulates virtual offices to make it easier for people to set up companies.
To set up a legal entity, businesses in Indonesia have to register in a designated commercial area and not – for example – residences. With virtual offices, businesses can fulfill this rule while also saving costs compared to using physical offices. This is especially helpful to smaller businesses or those that focus more on fieldwork rather than office work.
For this reason, virtual office services are popular with local companies in Indonesia’s commercial areas, like Jakarta. However, not all companies can use this service and the regulations often change. Below, we’ll outline whether your company is allowed to use a virtual office in Indonesia, and what are the alternatives.
Can foreign companies use a virtual office?
Until recently, foreign companies or PT PMA weren’t allowed to use virtual offices in Indonesia. They have to register a physical address in a designated commercial area.
However, Jakarta’s regional government released a new regulation about this in May 2019. This new regulation implicitly allows foreign companies to use virtual office services from vendors with value-added tax (VAT) certificates.
Note how we said “implicitly” – the new regulation didn’t explicitly rule about PT PMA, and – like many Indonesian regulations – it’s very likely that this is going to change again. For foreign companies, virtual offices are in a legal gray area right now.
Until then, we advise that a virtual office might not be the best option yet for foreign companies.
Are there companies that have to use physical office spaces?
Even though most types of local companies are free to use virtual offices, the Indonesian government requires some categories to set up legal entities with physical office spaces.
The business fields that can’t use virtual offices include:
If a business wants to set up a legal entity as an e-commerce company in Indonesia, they have to use physical office spaces. While Indonesia’s government supports the development of e-commerce, these companies need a physical business location to ensure accountability to their customers and lessen the risk of fraud.
A construction company in Indonesia needs special operating permits which they can’t get if they use a virtual office. There are logistical concerns, too; if a company operates heavy machinery, they need to store and distribute them in designated areas to prevent public disturbances.
Like construction, tourism businesses also need special permits which they can only get after a survey by the government’s Ministry of Tourism. Tourist attractions and entertainment facilities also need physical locations that pass all the government’s practical, sanitary, and safety regulations.
Any company that transports people or goods also need an actual, physical office. Because transport companies are often responsible for moving other people’s property, they need a physical location that their customers can refer to if necessary.
Because property or real estate companies frequently involve moving large amounts of money, they also need to operate with physical offices. Having an actual place where they operate helps ensure accountability for the government and their stakeholders.
Besides their clients, event organizing companies frequently work with many other service providers like couriers, caterers, entertainers, and logistics. Having a physical office space helps these other stakeholders coordinate with event organizers more smoothly and monitor project progress.
What if I can’t use a virtual office?
If your type of company is restricted in some way, the best long-term option is a physical office space. A serviced office allows you to enjoy all the legal and practical benefits of your own office, with more flexibility and fewer costs. If you’re still worried about long-term spending, you can try a place like Greenhouse that charges per person and not by room or square meter.
If you feel that office spaces aren’t a suitable investment, a good alternative would be a dedicated desk in a coworking space. This fulfills the physical space requirement while also being a flexible and cost-efficient solution like virtual offices.
However, this depends on many factors like your current budget, business plan, and business field. We advise you to consult with experienced vendors before deciding what service to use.
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.