Company Registration

Company registration is crucial in Indonesia as it legitimizes your business, providing it with a legal status and recognition under Indonesian law. It allows you to operate within the regulatory framework, ensuring compliance with local laws and regulations. Furthermore, it opens up opportunities for business growth and expansion, as registered companies are more likely to attract investors and partners. It also facilitates the process of obtaining necessary permits, licenses, and visas. Moreover, registered companies can enjoy tax benefits and incentives offered by the Indonesian government, contributing to the financial health and sustainability of the business. Thus, company registration is a vital step in establishing a successful business in Indonesia.

Indonesia, with its robust business climate and one of the fastest-growing economies in Southeast Asia, offers several advantages for establishing a business:

Indonesia places a high emphasis on education and training, leading to a well-educated and skilled workforce. The number of public training institutions such as technical schools, polytechnics, industrial training institutes, and skill development centers has increased to meet the expanding needs and qualifications of various industries.

Indonesia boasts one of the most extensive telecommunications networks in Asia, with widespread fiber access, except in rural areas, thanks to a substantial fixed and wireless infrastructure. This provides businesses with a plethora of options for delivering online services. Numerous online marketplaces are incredibly beneficial and profitable for internet businesses or service providers. Any company targeting the Indonesian market can greatly benefit from digital marketing.

Indonesians are known for their pro-business attitude and market-oriented economy. This is precisely what businesses need to maximize their profit and growth potential. The government offers attractive tax laws and fiscal incentives that enable businesses to compete in the global economy and attract foreign investment.

Indonesia’s ethnically diverse and multicultural population, which includes Javanese, Sundanese, and Batak, as well as a growing expatriate community from around the world, gives it a competitive edge in international trade. Bahasa Indonesia is the official language, but English is widely spoken, especially in business, allowing any Indonesian company to communicate effectively with its clients and investors. This multicultural society makes Indonesia an attractive destination for establishing a business.

Indonesia has different types of company entities from which to pick. They are as follows:

A Limited Liability Company, or Perseroan Terbatas (PT), is the most common type of business entity in Indonesia. It is a legal entity that is separate from its shareholders, and it has its own rights and responsibilities under Indonesian law. Foreigners are allowed to hold up to 100% of the shares in a PT, depending on the business classification. The Indonesian Investment Coordinating Board (BKPM) must approve 100% foreign ownership in certain business sectors. This is a way to protect local interests and prevent them from facing intense competition.

A Representative Office (Kantor Perwakilan Perusahaan Asing, KPAP) in Indonesia is a non-trading entity that allows foreign companies and their expatriates to have a presence in Indonesia and explore business opportunities in the country. A KPAP gives foreign companies 3-5 years to decide whether Indonesia is the right place for them to stay and grow their business by establishing a PT or a branch. The permit for the establishment of a KPAP is based on the merits of each case. A KPAP is not subject to taxation

A Foreign Company Branch (Kantor Cabang Perusahaan Asing, KCBA) is not a separate legal entity. It is a branch of the foreign parent company and must conduct the same business activities as the parent company. To open a branch in Indonesia, at least one resident representative must be present. The foreign parent company is liable and responsible for any liabilities incurred by the Indonesian branch. A KCBA’s operations must be the same as those of the foreign parent company, and a branch is suitable for foreign companies that wish to extend their business in Indonesia on a short-term basis

In Indonesia, new business registrations are valid for one year and cannot be renewed more than five times. Individuals should note that, despite being registered with the Ministry of Law and Human Rights, any licenses, permits, or permission letters required for the business must be obtained by the individual on their own.

The Indonesian Company Law allows for the incorporation of two types of companies:

In Indonesia, a business may be registered with the Ministry of Law and Human Rights using either a personal name or a trade name, depending on the discretion of the individual registering the firm. If the individual is registering a business under their own name, they do not need to apply for a business name.

1. Individuals must complete the Business Registration Form, which includes the business name, start date, primary location of business, address of the business branch, if any, information about the owners and partners, the type of business carried out, and a copy of the Partnership Agreement, if applicable.

2. If there are many business owners engaged, each owner and partner must sign the completed form.

3. The application form must be submitted in person or via the Ministry of Law and Human Rights’ website’s online services.

4. A photocopy of the individual’s identity card, permits, licenses, or supporting letters for the kind of business, and approval of the supporting letter from the relevant agency, if necessary by the Registrar of Business, must be supplied with the forms.

Individuals must satisfy the following conditions in order to successfully register a business in Malaysia:

Starting a business in Indonesia also requires a valid business license. Licenses, registrations, permissions, and approvals are all integral parts of it. A business license from the relevant Indonesian authority applicable to the area and business activity can be obtained. Before a company can legally commence operations, it must first obtain a license, which could be a general license, an industry/sector specific license, or an activity specific license. Business licenses are required by law and are managed by a variety of government organizations, statutory bodies, and local governments. Registrations, approvals, licenses, and permits are all examples of business licensing. Compliance standards vary depending on the sector, business activity, and region. Business licenses in Indonesia are divided into three logical categories, namely:

The Certificate of Registration in Indonesia establishes the existence of the business. The Ministry of Law and Human Rights issues a copy of the Certificate of Incorporation, which certifies that a company is duly established under Indonesia’s Company Law.

Upon completion of the incorporation procedures and submission of the full Incorporation Documents, the Ministry of Law and Human Rights shall issue the Certificate of Incorporation. The Certificate of Incorporation is written in the native language (Bahasa Indonesia), and a verified registry copy is available. This certificate serves as a legal proof of the company’s existence and its compliance with Indonesian law.

The Company Law is the Indonesian legislation that governs every company registered in the country. To lawfully operate your firm, you must follow all of the rules outlined in the Company Law.

The Ministry of Law and Human Rights is the government agency in charge of supervising corporate and commercial matters in Indonesia. It performs all of the responsibilities of both a business registry and a company registry.

The Ministry of Law and Human Rights is responsible for a variety of tasks, but its primary function is to operate as an agency that incorporates corporations and registered enterprises. The Ministry also allows wide public access to business and company information. It is Indonesia’s top authority on improving corporate governance.