Legal Requirements for Establishing a Regional Office in Indonesia

Establishing a regional office, known in Indonesia as a Representative Office (Kantor Perwakilan), can be a strategic move for foreign companies looking to expand their presence in Southeast Asia. While it offers a cost-effective way to explore the Indonesian market without full operational investment, it also comes with specific legal requirements that must be adhered to. This guide provides an overview of the key legal steps involved in setting up a representative office in Indonesia. For more detailed information, visit our Representative Office page.

A Representative Office in Indonesia serves as an extension of a foreign company, focusing primarily on activities such as market research, business liaison, and gathering information on potential business opportunities. However, it is important to note that a Representative Office is not permitted to engage in direct commercial activities, such as selling products or services, signing contracts on behalf of the parent company, or generating revenue. For more detailed guidelines, refer to our Representative Office page.

1. Non-Commercial Activities: The office is restricted to non-commercial activities, including promotion, management coordination, and business development.

2. Legal Entity: The Representative Office is not considered a separate legal entity from the parent company, meaning that it cannot own assets or enter into contracts independently.

3. Limited Scope: The office can only perform activities approved by the Indonesian Investment Coordinating Board (BKPM) and specified in its business license.

To legally establish a Representative Office in Indonesia, it is crucial to follow the official procedures set out by the Indonesian government. Below is a step-by-step guide to help you navigate the process:

1. Appoint a Representative: The foreign company must appoint an individual as the head of the Representative Office. This individual will be responsible for managing the office’s activities in Indonesia.

2. Prepare the Necessary Documents: Several key documents are required, including the parent company’s certificate of incorporation, the board resolution to establish a Representative Office, and a letter of appointment for the head of the office. These documents must be notarized and translated into Indonesian.

3. Obtain a Business License from BKPM: The next step is to apply for a business license from the BKPM. The application must include the notarized documents mentioned above and a detailed description of the intended activities of the Representative Office.

4. Register with Local Authorities: After obtaining the business license, the office must be registered with local authorities, including the tax office to obtain a Taxpayer Identification Number (NPWP) and, if applicable, with the Ministry of Trade for a Trade Business License (SIUP).

5. Open a Bank Account: The Representative Office will need to open a bank account in its name to facilitate its operations, including paying local employees and covering operational expenses.

6. Comply with Reporting Requirements: The head of the Representative Office must submit regular reports to the BKPM detailing the office’s activities and any changes in its operations.

Establishing a Representative Office in Indonesia can be a strategic move for foreign companies looking to explore the market and build relationships without fully committing to a local entity. However, it is important to comply with the legal requirementsto avoid any potential legal issues. By following the necessary steps and working with local experts, your Representative Office can successfully serve as a gateway to the Indonesian market. For further guidance on setting up a Representative Office, visit our Representative Office page or contact us directly for tailored support.