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Indonesia
Representative Office Setup is the fastest way to get a legal presence in
Indonesia and it is easier than setting up a limited liability company. But it
comes with more limitations.
Note
that in the Indonesian context representative office is not the same as a
branch office. So if you are looking to establish a local entity that is free
to earn revenue, import products etc. then you need to set up a foreign direct
investment (PT PMA) company. In this article we explore the benefits of
representative office and in which cases you should prefer it over Limited
Liability Company.
What
is a representative office?
First of
all, there are two types of representative offices in Indonesia – a general
representative office (Kantor Perwakilan Perusahaan Asing – KPPA) and
representative office for trading (SIUP3A). In the context of this article we
talk about the former.
Indonesia
Representative office is defined as an office set up by a foreign company or
company located outside of Indonesia in order to take care of its business
interest in Indonesia. This can also involve the preparations for establishing
a foreign owned company in the future.
Therefore
in order to qualify for a Indonesia representative office, you must have an
existing legal entity already. This will also be the entity through which all
the financial transactions will be handled and in this article we call it the
parent company.
Roles
and limitations of a representative office
- Office
activities are limited to its role as a supervisor, liaison, coordinator and
representative of the interest of the parent company
- Office
is not allowed to generate income, all transactions will be handled by the
parent company
Benefits
of representative office
As you
could see from the role of representative office, it is not a substitute to
opening a limited liability company (PT PMA) as it won’t be able to act as a
separate entity. However, there are several reasons why many foreign companies
choose a representative office over PT PMA.
1. No
capital requirement
Foreign
owned companies are required to have investment plans for at least US$1.2
million and paid up capital of US$300,000. This is not a small amount and in
many cases the investors want to test the market first before making such
capital commitments. As representative office you won’t have any capital and
therefore the capital requirements don’t apply. For some investors it also
means that they won’t have to play with the minimum capital and do everything
by the law.
2.
Handle the sales and delivery
As a
representative office you are still allowed to do the sales and delivery of
your products/services. The restriction is that you need to charge your clients
from your parent company. In many cases your Indonesian clients will accept it
and you can delay opening a PT PMA until you have gained a strong client
portfolio.
3. You
are still entitled to non-permanent stay permit (KITAS)
Just
like a PT PMA, representative office can apply non permanent stay permits
(KITAS) to its foreign experts. You will be able to legally stay and work in
Indonesia.
Contact
us
If
you have further queries, please contact Tannet
24
hours Malaysia hotline：603-21418908;
24
hours Hong Kong hotline：852-27837818;
24
hours Hong Kong hotline：86-755-
36990589;
Email:
mytannet@gmail.com
TANNET GROUP : http://www.tannet-group.net, http://en.tannet.com.my