Company setup in Indonesia: 5 Things to Consider
Company Setup in Indonesia – In recent years, Indonesia has emerged as a prime location for business expansion. As the fourth most populated country in the world, Indonesia has also risen as one of the strongest economies in Southeast Asia. As we recover from the Covid-19 pandemic, more foreign companies are being established in Indonesia.
Company setup in Indonesia: Reasons why
There are several main reasons why Indonesia is an enticing investment destination for many countries. First, the involvement of Indonesia in various trade agreements with other countries which enables the opportunity of fruitful partnerships and new business allies. Second, Indonesia’s economy is constantly rising, especially its internet economy, which has grown substantially. Third, Indonesia has an emerging middle class with high potential not only as workers but also as consumers of products and users of services,
With all the potential advantages of doing business in Indonesia, it’s no wonder that setting up a company in Indonesia sparks interest for many parties. It is worth noting that the Indonesian government is fully supportive regarding foreign investments. However, there are regulations in effect that must be followed.
Things to consider on company setup in Indonesia
Before setting up your company in Indonesia, here are the most important things to consider:
1. Types of Company
There are several types of companies acknowledged by the laws in Indonesia:
- Individual companies, this type could be an excellent option should you wish to be the sole owner. In a company of this form, you will have rights over all the revenues obtained by the company. However, you will also be responsible for all the risk and potential loss
- Firm (Firma), this type of company puts a great emphasis on the active collaboration between the stakeholders. The main characteristic is that all stakeholders have equal responsibility in paying off company debts
- Limited Partnership (Persekutuan Komanditer), this type of company offers more flexibility, specifically it allows a division of roles between an active partner that is in charge of all things related with the company and a passive partner which is only storing the capital.
- Limited Liability Company (Perseroan Terbatas), this is the most common type of company for large businesses. For foreign companies, they will be under the name of PT PMA (Perseroan Terbatas Penanaman Modal Asing). As a type of company, it has a clearly defined structure and more secure terms. In a PT, the owners will not be obligated to use their personal wealth to cover the company’s loss. Other than PT, another common way taken by foreign companies is to simply establish a representative office in Indonesia.
2. Legal Documents
As a country adhering to law supremacy, an establishment of any company must be verified with the existence of legal documents. The process of setting up foreign companies in Indonesia requires plenty of documents, here are the key documents that must be prepared for a company setup in Indonesia:
- Deed of Establishment
- Business ID Number
- Tax ID Number
- Building Permit
Establishing a company, especially in a foreign country, will not cost you pennies. In Indonesia the minimum amount of paid-up capital for foreign companies stands at IDR 10 billion.
4. Market Research
Market Research is a process of determining the viability of a new product or service conducted with potential customers. Conducting market research is useful so that the company can discover the market demand, main competitors, export and import stats, distribution chain, and several other information.
Upon setting up your company in Indonesia, you will inevitably need employees to help with your day-to-day operations. With more than 200 million population, the country represents one of the largest talent pools you could imagine. Furthermore, the prediction is that in 2030, Indonesia will acquire a demographic bonus which means that the working-age population is significantly higher than the young people and the elderly. In theory, this could be super beneficial for companies, considering there will be more talents available at your disposal. Headhunter service and executive search service can be good options for this.
How can Double M help?
There are many things to consider for a Company Setup in Indonesia. With Double M’s help, you will be able to prepare legal documents, conduct market research and recruitment process that will help your company.
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