Are you thinking about starting a business in Indonesia, but have no idea how or what your options are? Then check out this useful article with LetsMoveIndonesia’s Company Establishment Specialist – Mega Rizkiani. In this article Mega answers some of the most common questions related to starting a business and gives her hints and tips to ensure your Business Establishment goes smoothly and successfully.
First and foremost; what are the different types of business entities one can establish in Indonesia?
There are a number of different business entities in Indonesia, however the most common are Local Company, commonly known as a PT, a foreign-owned company, commonly known as a PMA and finally a Representative Office which is great for new businesses who are looking to test the market in Indonesia.
How do you know which is the right entity for your business?
We would recommend setting up a PT if you are an Indonesian citizen, have local partners or do not have a large amount of investment capital. We would recommend setting up a PMA if you are a foreigner and would like to have 100% ownership of your business. Finally, we would recommend establishing a Representative Office if you are planning to do market research before opening up an official office. The additional benefit being – you can convert it to a PT or PMA at a later date.
What are the advantages and drawbacks between setting up a PMA V a PT?
The advantage of setting up a PT is that it is much simpler to establish, the requirements are less strict and the paid-up capital required to register the business is substantially less than a PMA. The only negative for expatriates is that the share should be 100% local, although additional addendums to protect yourself can be arranged.
The PMA advantages are that the company can be fully owned by a Foreign owner which gives the company safety and the ability to run it exactly as they want. The negatives, however, include that a large amount of capital required to start the business and there are restrictions on the business sectors you can operate in.
What is paid up capital and how does that affect the business set up?
Paid up capital is the amount of money the shareholder invests into the business. The amount varies depending on whether the business is a PT or a PMA and the proposed size of the business.
There are 2 ways to prove the paid-up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
The paid-up capital amounts are as follows:
Small: Above IDR 50.000.000 – 500.000.000
Medium: Above IDR 500.000.000 – 10.000.000.000
Large: Above IDR 10.000.000.000
Please note, that if you want to employ foreigners, in a PT, the company size must be at least Medium with a paid in capital above IDR 1.100.000.000.
Being a foreign-owned company the investment value is significantly higher than that of a PT. The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
Once the Company is established, what do you need to do next?
After the Company is established, there are several compliance areas which the Company must adhere to. For example, the Company should apply for BPJS (Social Security and Health Security), open a Bank Account, make a Company Regulation (if employees exceed 10 people), apply for a KITAS for Foreign Employees, apply for a company Trademark to the Ministry of Law & Human Rights to name a just few.
Are there any ongoing monthly costs related to the business establishment or any documents that need extending each year?
The only costs after the Company are established is for the Renewal Domicile Letter which generally has a validity of 1 year.
Other potential costs may arise if you wish to make revisions regarding the Domicile of Company, Board of Director, Board of Commissioner, Paid Up Capital or the Purpose of Company.
How much does it cost to set up a business in Indonesia and how long does it take?
The cost to set up a business in Indonesia can vary depending on which agency you choose to use. At LetsMoveIndonesia we charge 13 Million IDR to set up a PT, 23 Million IDR to set up a PMA and 20 Million IDR to set up a Representative Office. Both a PT and a PMA take approximately 30 days to establish, however, a Representative Office can take on average between 1 – 2 months.
Our Business Establishment customers save on average between 4 – 7 Million IDR by using LetsMoveIndonesia – A substantial saving for anybody!
At LetsMoveIndonesia, what services do you offer and what sets yours apart from other agencies?
At LetsMoveIndonesia we offer a variety of services all designed to help make the Company Establishment process smooth and stress-free. We can assist you to make a PT, PMA, Representative Office as well as assist apply for a trademark, review and draft legal contracts, draft company regulation and assist with general meetings with Shareholders, Directors & Commissioners. In addition, we help our customers find office space and help negotiate the rental price (which is a free service).
What sets us apart from the competitors is the fact we are the only Agency in the Jakarta that advertises our prices both on and offline. We are strong believers in ethical practices, which is why we give honest and clear information for the world to see. We are not afraid to advertise our prices, why would you trust an agency that is?
The other strength that sets us apart from the rest, is that our office is located in Bellagio Mall. We are the only Agency in Jakarta where our customers can walk in and meet us face to face if they have a query or would like to ask us a question.
If I need help setting up a business or have any questions, how can I contact you?
If you would like to set up a business or would like a free consultation – then feel free to contact me, either by T: +62 21 300 297 27 E: email@example.com or visit me in the LetsMoveIndonesia office, located in The Bellagio Mall, Mega Kuningan – The only walk in Visa & Company Establishment Agency in Jakarta!
About Mega: Mega Rizkiani is a graduate of Law from the Diponegoro University. She has over 3 years’ experience setting up businesses and has helped hundreds of people turn their dreams into a reality. In addition to Company Establishment, she can also help review and draft agreements, draft company regulations, register trademarks, set up business licenses, revise company documents as well as offer legal consultations.