A guide to opening a Representative Office in Indonesia

Starting a representative office is the quickest and also the very best way of having a legal and market presence in Indonesia. regardless of having more limitations as compared to restricted liability companies, it additionally has its benefits.

In this article, we’re going to carry out the advantages of setting up a consultant office in Indonesia and provide a top level view of various kinds of representative offices available.

What is a representative office?

A representative office is an office set up with the aid of a company positioned outside of Indonesia (determine organization) to attend to its business in Indonesia.

The primary prerequisite for starting a consultant office in Indonesia is which you need to already have a current legal entity overseas.

A consultant office can also act as a supervisor, liaison, coordinator, and additionally as a representative of the parent organization’s interests in Indonesia. but, as representative offices aren’t allowed to generate any earnings in Indonesia, all commercial transactions need to be treated through the parent organization.

Additionally, notice that a representative office isn’t always similar to a department. presently, Indonesia does not permit foreign organizations to open branch offices in Indonesia.

In case you are trying to set up a local entity that may earn revenue, very own land and property or import products to Indonesia, you want to set up a foreign direct investment company (PT PMA).

5 main benefits of setting up a representative office in Indonesia

Even though a representative office isn’t always an alternative to a limited liability company (PT PMA), there are many advantages of getting a representative office in Indonesia for which many foreign organizations select it over a PT PMA.

#1 Can deal with sales and delivery

A representative office is permitted to represent sales of its very own services and products. The problem is which you need to charge your customers under the name of your parent organisation.

In many cases, your Indonesian customers will accept it and you could postpone starting a PT PMA till you’ve got a strong client portfolio.

#2 Allowed to hire personnel

Another perk of getting a representative office in Indonesia is that further to having market presence, you could additionally hire personnel, each local and foreign.

#3 Entitled to a limited stay permit (KITAS)

But, be aware that in order to be capable of legally stay and work in Indonesia, all overseas nationals need a limited stay permit (KITAS).

#4 No capital requirement

Foreign-owned companies are required to have a minimum paid up capital of at least IDR 2.5 billion (~US$ 175,000).

Representative offices, alternatively, do not have any capital. consequently, the same capital requirements that bound foreign organizations do not apply.

For a few investors, this additionally means that they could establish a market presence in Indonesia at very low charges and nevertheless do the whole thing through the law.

#5 Allowed to open a bank account

As soon as your representative office is set up, you may open a bank account so that you can enable a better and quicker way of transactions within Indonesia and among the parent organization.

Much like a PT PMA, a representative office also can apply for a KITAS for its overseas executives.

Types of representative offices in Indonesia

In Indonesia, there are four kinds of representative offices:

    • KPPA – a well known representative office
    • KP3A – representative office for buying and selling
    • BUJKA – representative office for overseas production companies
    • KPPA Migas – representative office for overseas oil and gas organizations

General representative office (KPPA)

The activities of a well known representative office are restricted to taking care of the interests of the parent organization and companies affiliated with the parent organization.

Since representative offices can’t earn any sales in Indonesia, they’re not allowed to trouble any invoices either.

The office of a KPPA should be located in a business high rise construction in the capital of an Indonesian Province.

KPPA’s license is legitimate for up to three years and may be extended as per Letter of Appointment.

A popular representative office is a suitable alternative in case you would really like to conduct feasibility research in Indonesia to check the market and later installation a PT PMA.

Process of setting up a KPPA in Indonesia 
Documents obtained Timeline in working days 
KPPA license 7 
Domicile Letter from the local subdistrict 3 
Tax registry 2 
TDP/Company registry 1 

Representative office for trading (KP3A)

A representative office for buying and selling may also turn out to be the parent organization’s selling, production, and shopping for agent in Indonesia. it could also manage the establishment of the parent organization’s branch offices in any of the Indonesian towns.

But, as also for different kinds of representative offices, a KP3A isn’t always allowed to issue any invoices and all transactions should be under the parent company’s name.

A KP3A may be placed within the capitals of either a province or a regency/town all over Indonesia.

The temporary license of a KP3A is valid for two months, permanent license for 1 year. it’s also possible to later expand the license and the extended license can be valid as per Letter of Appointment.

A KP3A is a suitable alternative if the parent company is a manufacturer or a product owner with a plan to set up a community of agents and distributors in Indonesia.

Process of setting up a KP3A 
Documents obtained Timeline in working days 
Representative Office of Foreign Trade Company Temporary License/SIUP3A Temporary 5 
Domicile Letter from the local subdistrict 3 
Tax registry 2 
TDP/Company registry 1 
Representative Office of Foreign Trade Company Permanent license/SIUP3A Permanent 5 

Representative office for foreign construction companies (BUJKA)

A BUJKA is a representative office for foreign construction service organizations. through a BUJKA, you could:

    • Contact humans, companies, and government establishments and additionally collect information regarding available construction tasks all over Indonesia
    • Take part in tenders
    • Hire overseas professionals and Indonesian team of workers to assist your operation
    • Open a bank account in Indonesia

In other words, you could bypass an extended and expensive bureaucratic procedure by setting up a BUJKA rather than starting a construction company in Indonesia.

To supply construction services, but a BUJKA desires to set up a joint venture with a local construction service organisation (BUJK). A BUJK should be a restricted liability organization (PT) and should 100% Indonesian residents and organizations as its shareholders.

Other conditions for BUJKAs are:

Must be labeled as a “big” construction service organization by way of the national construction services development Board (LPJK)

Should have a license of construction service business (IUJK) issued by the Public Works Department.

The office of a BUJKA, but isn’t always particular by law. The license is valid for 3 years and extendable for BUJKA.

Very good for overseas construction organizations who’re planning to make bigger their activities to Indonesia.

Process of setting up a BUJKA in Indonesia 
Documents obtained Timeline in working days 
SBU, KTA and SKA Initial licenses from Constructions associationWith Straits Partners 1 month
Review of application and issuance of Government Levy to be paid 10 
Representative Office of Construction Company License/ BUJKA 7 
The local subdistrict Letter Domicile3 
Tax registry 2 
TDP/Company registry 1 

Representative office for foreign oil and gas companies (KPPA Migas)

Foreign oil and gas companies also are allowed to set up a representative office and use it for having a everlasting establishment in Indonesia below the subsector of oil and gas.

But, take notice that if you want to set up a KPPA Migas, you want a recommendation letter from the Ministry of Oil and gas previous to filing the application to the BKPM.

The KPPA Migas license valid for three years and may be extended later on. The area of the office isn’t always specially regulated by the law.

Process of setting up a KPPA Migas in Indonesia 
Documents obtained Timeline in working days 
Recommendation letter from the Ministry of Oil and Gas 14 
KPPA Migas license 7 
Domicile Letter from the local subdistrict 3 
Tax registry 2 
TDP/Company registry 1 

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