Register Company in Indonesia
Indonesia is a country that has seen its fair share of natural disasters. But that doesn’t mean that it is a country that is lacking in business potential. What makes the business environment in Indonesia a challenging one is not just the natural disaster the country faces, but that starting a business is, in itself, a complex and time-consuming process, especially for foreign investors.
The success of registering a company in Indonesia is subjected to prior approval by the Indonesian authorities. So right away, your business could be faced with a potential obstacle before it has even begun. This is in addition to the large minimum paid up capital that needs to be paid, which amounts to the sum of USD$ 300,000.
The other challenges that are awaiting investors who may be thinking about registering a business in Indonesia include foreign ownership restrictions and local investment law which stipulates that hiring locals for the business is a priority.
But still, Indonesia is a country with potential, and the potential lies in its large population, rising consumption, abundant natural resources and cheap labour.
The types of business entities available for registering a company in Indonesia
Registering a company in Indonesia leaves foreign investors with four types of business entities to choose from:
- The Indonesian LLC – This is the most common entity which is used by the locals and requires a minimum of one director to begin the registration process. This option requires that there be two local Indonesia shareholders, and one Commissioner, which can be a non-resident. The paid-up capital in this option would boil down to the size of the business involved.
- The Foreign Owned LLC – In this option, businesses can be either partially owned or wholly-owned and controlled by the foreign investor directly. This entity option is governed by the Foreign Capital Investment Law. Approval is required from the Capital Investment Coordinating Board before business can be conducted in the country, and investors would need to get this approval if they want to proceed to the next step.
- The Nominee LLC – This business entity option requires Indonesian nominees to initially set up an LLC on behalf of the foreign companies. This option depends on solely on whether investors will be able to secure a reliable and trustworthy nominee to assist them in registering the business, which can be a tricky situation unless you already have somebody you can trust absolutely. Otherwise, investors are taking a huge risk in entrusting their business to another party and it is always better to be in full control by yourself. This is the riskiest option out of the four for investors.
- The Representative Office – This business entity option is the most convenient way for foreign companies to gain market share in Indonesia. But while it is the most convenient, it does come with some drawbacks. One of the drawbacks to this option is that companies will only be permitted to do promotional activities, market research and act as a buying and selling agent for the parent company. The activities that companies who are registered under this entity can do are limited and restricted.
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