Best Guide to Doing Business in Indonesia

doing business in Indonesia

As an archipelagic country with abundant natural wealth, Indonesia has always been a target for investors in Doing business in Indonesia and invest here.

Indeed, for a long time, Indonesia has attracted the attention of foreign investors to invest. Not to mention, Indonesia has a large consumer market opportunity.

However, you need to know that Doing business in Indonesia is not as easy as you might think, there is a lot of preparation for business permits, a list of companies, and other requirements that must be met, especially in establishing a company foundation.

Challenges of Doing Business in Indonesia

Indonesian regulations do limit foreign ownership to establish a Doing business in Indonesia. This is a challenge in itself for foreign citizens who want to do business in Indonesia. So if you are interested in becoming investors and entrepreneurs Doing business in Indonesia, of course, you must be ready to face some of these challenges, namely:

1.   High minimum initial capital

To do business in Indonesia, don’t be surprised to hear that BKPM requires all foreign companies in the form of PT PMA to have a minimum investment plan of 10 billion rupiahs (+/- USD 800,000); amounting to 2.5 billion (+/- USD200,000), 25 percent of the total investment must be paid-up as the initial minimum capital.

2.   Prohibition against foreign ownership

One of the legal challenges that foreign investors have to face is that the government wants local businesses to thrive; the amount of investment that foreign Doing business in Indonesia can make is regulated in the Negative Investment List (DNI) or Indonesian Investment Law.

3.   Infrastructure is still lacking

Doing business in Indonesia is undeniably influenced by the rapid development of infrastructure development in Indonesia, it turns out that the quality and quantity of infrastructure in Indonesia is not yet optimal. The existing infrastructure is not evenly distributed in each region.

This results in development being limited to a few areas that have adequate infrastructure, for example, Java Island and several other areas.

4.  Update information about Doing business in Indonesia

In order not to run into obstacles later, you need to find a lot of information about business and business licensing regulations and their implementation mechanisms. Because Indonesia has been known for its laws and regulations that often change. These fast-paced changes are hampering the potential for businesses in Indonesia to thrive.

5.  Hiring foreign employees

Doing business in Indonesia according to the Indonesian Minister of Manpower, local residents are prioritized in terms of the recruitment of workers. If investors can easily work and get work permits, getting work permits for foreign employees will certainly be more challenging.

However, this does not mean that foreign citizens (WNA) do not have the opportunity to set up a business in Indonesia. In fact, there are also many expatriates who are successful in Doing business in Indonesia.

If you want to be part of Indonesia’s fast-growing economy, you need help getting started doing business in Indonesia. With BINKA Consulting, we will help you face the challenges of Doing business in Indonesia.

Procedures for Establishing Doing business in Indonesia

Similar to domestic investors or individuals who wish to establish a company, licensing must be carried out properly. Foreigners if want to Doing business in Indonesia must follow several applicable procedures in accordance with the rules set by the government.

Here are some procedures for establishing companies with foreign capital or those owned by foreigners (PT PMA) in full.

Preparation before establishing Doing business in Indonesia

Before Doing business in Indonesia, he established PT. PMA, there are several things that must be done by individuals or groups of foreign investors. First is knowing the Negative Investment List (DNI) that applies in Indonesia.

Regulations regarding restrictions on ownership by foreign investors are recorded in the Negative Investment List (DNI). The number of foreign investors Doing business in Indonesia is recorded in the DNI. Apart from that, DNI also regulates the percentage of ownership in foreign investment.

DNI has several categories, namely:

Doing business in Indonesia that are closed to foreigners, open with certain conditions, and open without any conditions. If the type of business is on the list of closed business fields at DNI, the license will not be granted.

A PT PMA that is recognized in Indonesia must have a minimum initial capital of around IDR 10 billion. Of this amount, about a quarter of 25% must be paid as initial capital. Finally, first, determine the domicile of the company. A PT PMA can be established if there is already a physical building, not a virtual office.

Doing business in Indonesia or PT. PMA

After you have done the above preparations correctly, do several procedures to make a permit letter, namely:

1. Apply for a temporary permit

This provisional permit application is made to determine whether the business sector to be taken is permitted by foreign investment or not. If allowed, the next stage can be continued.

2. Registration of investment at BKPM

When registering with the Investment Coordinating Board (BKPM), prepare the following documents :

  • Certificate from the Embassy of the investor’s country of origin located in Indonesia.
  • Scan passports.
  • The company’s Articles of Association (AD) are in English, if the AD is still in Indonesian, it must be translated by a sworn translator.
  • Scan the Company Establishment Deed.
  • Scan NPWP.
  • The stamped original power of attorney was signed by the board of directors of the company.

3. Apply for a principal license for PT. PMA

Doing business in Indonesia after the registration is accepted, PT. PMA must also prepare documents for a principal license consisting of:

  • Scan passports for foreigners.
  • Scan KTP and NPWP specifically for Indonesian citizens.
  • Scan PBB place of business.
  • Scan the contract letter.
  • Certificate of domicile.
  • Photo of the person in charge of the business 3 × 4, 2 sheets.

Together with the files above prepare too:

  • The company name will be used.
  • The registered position and line of business.
  • The amount of authorized capital and paid-up capital.
  • Share composition in detail.
  • The composition of the company management.

All documents that have been collected and transferred can be uploaded to the official website of BKPM. In approximately 12 weeks there will be an official response.

4. Apply for a business license Doing business in Indonesia

Prepare documents consisting of LHPP, a copy of the company establishment deed, registration records, a copy of the NPWP, proof of land use, a copy of the IMB, UUG / SITU, a copy of the LKPM, and a copy of the AMDAL.

Business Visa Application Requirements in Indonesia

Doing business in Indonesia also not only fulfills all the requirements above, it is no less important to have a Business Visa.

  1. To ensure a smooth application for a business visa, prepare the following documents in advance:
  2. Passport photo with a minimum validity of 18 months
  3. Bank account with a minimum of USD 1500
  4. Flight tickets to Jakarta or other cities with clear departure dates
  5. Other documents depending on the sponsoring company
  6. A return ticket to your home country which shows you will be leaving Indonesia within 60 days from the date of arrival in Indonesia

Avoid fatal mistakes when applying for a Business Visa

When you are going to Doing business in Indonesia, always avoid making mistakes that are often found when applying for a business visa, namely:

# Information in the application form does not match the document

Make sure all the information on the application form matches the document. For example, information on passport numbers, date of birth, etc.

# Apply for a business visa just before you will travel

Do not delay your business visa application until it is near your travel date.

# Provided incorrect sponsor details

Sponsor details Doing business in Indonesia are very important in the application of applying for a Business Visa because they are one of the determinants of the success of the Visa application.

Fill in the information completely and present valid and relevant sponsorship if will be doing business in Indonesia

Business Visa Sponsorship Services

For applying for a Business Visa, you are required to provide a sponsor letter from an Indonesian company. Companies legally registered in Indonesia, whether foreign companies (PT PMA), local companies (PT), or representative offices, can become sponsors doing business in Indonesia.

If you cannot find a sponsor for doing business in Indonesia, you must have a business visa yourself, you can contact us to use our sponsorship service.

Business Visa Consulting

BINKA Consulting provides business visa licensing for doing business in Indonesia. We ensure that your purpose of applying for a business visa is following the requirements of the business visa itself, and also checks all documents so that the Visa application runs smoothly.

Why should you choose BINKA Consulting?

Foreign Investment Approval

The Indonesian government strongly supports the direct participation of foreigners in national development. Most sectors are now fully open to foreign investors doing business in Indonesia, except for a few reserved sectors and some are regulated by special conditions.

For foreign investment, the institution that grants the license is the Investment Coordinating Board (BKPM), but what a foreign company can do and the process for getting approval is complex and constantly changing.

Our foreign investment personnel has extensive experience advising and assisting clients investing BINKA Consulting provides business visa licensing for doing business in Indonesia in the process of obtaining government permits. We also provide legal advice on foreign investment structures to maximize control and minimize taxes.

Professional & Reliable Service

If you are interested in doing business in Indonesia, then we are ready to provide services for managing your company establishment permit in Indonesia, BINKA Consulting can help you provide updated information regarding the latest regulations in Indonesia. You don’t have to worry about complex Indonesian regulations.

Our team from BINKA Consulting consists of professionals in their fields, including legal consultants; lawyer; and payroll, accounting, and tax professionals

Contact Us Free Consultation with experienced and professional staff

Fill in the form below and get complete information about a business visa.

We will also be happy to meet you at our offices in Jakarta, Semarang, and Bali, and other cities in Indonesia.

We will help you to fulfill all your doing business in Indonesia your need.

For further questions, free consultation with us, BINKA Consulting

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