This article gives you a step by step overview of starting a consulting company in Indonesia. Since there have been several important changes in the last few years it’s important that foreign companies prepare themselves before starting the company registration process in Indonesia.
Minimum Requirements for Foreign-Owned Companies in Indonesia
There are three minimum requirements that apply to all foreign-owned companies in Indonesia, including consulting companies. You would need to:
Submit an Investment plan of at least Rp.10 billion (approximately 750,000 USD). This amount includes both fixed and working capital.
State Rp. 2,5 billion (approximately 190,000 USD) as paid up capital from the shareholders.
Have at least 2 shareholders. Both companies and individuals can be shareholders.
All foreign-owned companies have to submit an Investment Plan to get the approval from the Investment Coordinating Board (BKPM).
Straits Partners will provide you with the template and advise you on what and how to present so that your presentation would get accepted by the BKPM.
Stages of Registering a Consulting Company in Indonesia
Previously mentioned minimum requirements apply to all foreign-owned companies. However, consulting companies and other service sector businesses are additionally obliged to explain their investment plan in front of the BKPM.
Stage 1: Presentation at the BKPM
After you have fulfilled the minimum requirements one of the shareholders must give a detailed presentation in front of the BKPM in Jakarta. This is part of BKPM’s regulations on service sector businesses.
The presentation should explain your:
Planned business activities (BKPM must verify that your business doesn’t fall under Negative Investment List)
Business model and client acquisition strategy
Although this article is focusing on establishing a consulting company, other service sector businesses are also required to give a presentation in front of the BKPM. This affects software, real estate, tourism, event organizing, IT, and other professional service companies.
Importance of the BKPM Presentation
Presenting your business plan to the BKPM is the first and most crucial stage of setting up a consulting company in Indonesia. The decision whether to accept or reject your application depends on the opinion of the BKPM officer receiving the presentation.
The reason for the presentation is that in the past a lot of the foreign owned companies were registered as consulting businesses even if their eventual business activities were different. It used to be the go-to business classification for consultants to make the company registration process easier.
Therefore your presentation must convince BKPM that you have a plausible investment plan. We strongly advise you to go through a dry run with Straits Partners before to make sure you focus on the right aspects and don’t say anything that might jeopardize your application.
However, even if your first presentation gets rejected you can apply again. It means you have to revise your presentation and it will delay the application process but it’s not a final rejection.
Stage 2: Incorporation
Once the presentation is accepted the Investment Board will give an initial approval by issuing the Principal License (Ijin Prinsip). It allows you to invest in Indonesia but not yet to operate.
During this stage you will complete the establishment of a legal entity (PT PMA). Now you may perform the following:
Open a corporate bank account in Indonesia. Straits Partners provides a bank account opening service in 1 day. The presence of the Board of Directors in the bank is not necessary.
Buy property or other assets on behalf of your company
Start other preparations for your operation, such as hiring staff, preparing office renovations, etc.
Proceed to acquire work and stay permits for foreign workers in your company
Stage 3: Acquiring a Business License (Ijin Usaha)
Reaching this stage means that your PT PMA is ready to enter commercial activities.
The BKPM requires companies to apply for a Business License (IU) as soon as they are entering business activities not when their investment plan has been fully realized.
The validity of a Business License:
|Amount of Paid Up Capital||Validity|
|Rp. 2,5 billion (~ 190,000 USD)||1 year, extendable yearly|
|Rp. 10 billion IDR (~ 750,000 USD) *||Indefinite|
Rp. 10 billion capital can be proven by the statement letter of the shareholders. In case the capital is not actually transferred it becomes the liability of shareholders.
Consulting company registration timeline
The process of setting up a foreign-owned company in Indonesia can generally take up to 3 months. We have put together an illustration to demonstrate the complete business setup for consulting companies in Indonesia:
Consulting companies used to be a convenient option to start a foreign owned company in Indonesia regardless of its actual business activities. Nowadays BKPM is a lot more strict and requires companies to present their investment plan.
As long as your business activities are related to consulting and you can show a realistic plan of investing Rp. 10 billion you will get your application accepted. Straits Partners has extensive experience in setting up consulting businesses (we are one ourselves) and will be supporting you throughout the process.
Feel free to reach out to us at [email protected]