Company Registration in Indonesia and Its Requirements

Company registration in Indonesia is the most crucial step for doing business in the country. In Indonesia, any individual or organization who seeks to do business must do it under the form of a company. Since it is a very crucial step, company registration in Indonesia is not quite a straightforward process. There are several types of company you can register, each having its own requirements and procedures. 

What is a Company Registration in Indonesia?

Company registration is a legal process of forming a brand new company or business entity in accordance with the laws and regulations of the country you are operating in. In Indonesia, company registration is the domain of the Ministry of Law and Human Rights. In that regard, the corresponding ministry will check all your company registration documents. They also have the jurisdiction to accept or reject your registration. 

What are the types of Company Registration in Indonesia?

Company registration in Indonesia consists of two different types, divided by the origins of the applicant: local company registration and foreign company registration. Each type of company has its own requirements (e.g documents) and stringent procedures. The requirements and procedures are two important aspects to ensure the successfulness of the registration. 

What are the Requirements of Company Registration in Indonesia?

As mentioned above, each type of company has its own requirements. Here are the requirements you must have for a company registration process in Indonesia:

1. Requirements of Local Company Registration in Indonesia

  1. Perseroan Terbatas (Limited Liability Company) registered by more than one person

There are certain requirements to meet, in order to register a Limited Liability Company, :

  • Established by a minimum of two people, bound by the Deed of Establishment written in Bahasa Indonesia, signed in the presence and assistance of a Notary.
  • All owners must all have an amount of shares in the company.
  • The company must have an Authorized Capital. The amount is according to the agreement of the owner.
  • The company must have a Paid Capital, which is at least in the minimum amount of 25% of the Authorized Capital.
  • Should the number of shareholders are reduced to less than 2 people, a replacement must be appointed within 6 months.
  • The minimum Authorized Capital for a PT is 51 million IDR registered in the Articles of Association within the Deed of Establishment.
  1. Perseroan Terbatas Perseorangan (Individual Limited Liability Company), registered by one person. 

In order to register an individual, local-owned company, the owner must meet the following criterias:

  • Registered under the name of one person, at least 17 years of age, Indonesian citizen (WNI).
  • That one person for the single shareholder and Director of the company.
  • The company must be a micro or low level enterprise.
  • The company must have an Authorized Capital, in which the amount is decided by the agreement of the owner.
  • The company must have a Paid Capital, which is 25% of the Authorized Capital, for a deposit in advance at the company’s establishment as PT Perorangan.

2. Requirements of Foreign Company Registration in Indonesia

There are four requirements that foreign owned companies must meet in order to register their companies in Indonesia:

  • Foreign-owned companies must be established as Perseroan Terbatas (PT) or Limited Liability Company.
  • Foreign-owned companies can only participate in large scale businesses. Furthermore, foreign-owned companies are prohibited to partake in sectors like: narcotics, gambling and casino, utilization and/or extraction of sea corals,and chemical weapons.
  • The minimum paid up capital value for foreign companies stands at IDR  10 billion, excluding land and buildings, as regulated by the government in the Standard Classification of Indonesian Business Fields (KBLI) 2020.
  • The minimum capital value for foreign companies stands at IDR 10 billion with exceptions for financial services, natural resources, and the manufacturing industry.

What are the Procedures of Company Registration in Indonesia?

Both types of company have their own specific procedures that you must comply with in order to fulfill the company registration process. 

Procedures of Local Company Registration in Indonesia

  1. Processing the Deed of Establishment/Akta Pendirian.

This is the official document stating the legal validity of the company, containing the Articles of Association which contains the proposed company name, capital, structure, and purpose of the company. With the assistance of a Notary, the documents will then be processed for approval by Ditjen AHU (Directorate General of General Laws) under the Ministry of Law and Human Rights. Upon the Approval the Ministry of Law and Human Rights will issue Surat Keputusan / Approval Notice of the establishment. The PT will be considered as a legal entity after acquiring the Approval by the Ministry.

  1. Acquiring Nomor Pokok Wajib Pajak (NPWP) or Tax ID Number

As a business that is going to generate revenue, your PT will have the obligation to pay tax to the Indonesian government. Furthermore, to get your NPWP number, you can submit an online application on the website of the Directorate General of Tax (Direktorat Jenderal Pajak). 

  1. Acquiring Nomor Induk Berusaha (NIB) or Business ID Number

NIB or Business ID Number is an identification that needs to be owned by prospective businesses. Therefore, After acquiring a Business ID number, your PT will be able to apply for more permits like Business Permit or Commercial Permit. The Business ID number is issued by the Indonesia Investment Coordinating Board (BKPM) through their Online Submission System (OSS). Therefore the OSS system will also cover the issuance of certain business licenses and location permits to legalize the operation of the PT.

2. Procedures of Foreign Company Registration in Indonesia

There are two procedures for foreign company registration in Indonesia:

  1. Preparations of Establishment Documents:

Company details:

  • A company name selection that consists of minimum 3 (three) words.
  • Authorized Capital and Paid-Up Capital Value (for a Foreign-Owned Company, the minimum is IDR 10 billion).
  • Address of the Company that links to the Tax ID registry.
  • Determination of Company’s structures, at the minimum of 1 (one) Director, 1 (one) Commissioner, and 2 (two) Shareholders and its ownership percentage
  • The Business Activities in accordance with the Business Classification Code as regulated in Indonesia.
  1. Electronic Letter of Completion, stating that the applicant has collected all the necessary documents
  2. Deed of Establishment (Akta Pendirian), a document that verifies the establishment of the company. This document will be uploaded to the Legal Entity Administration System (SABH) by the Notary.
  3. The Deed of Establishment will be submitted to the SABH in accordance with the Company Establishment Form and uploaded to the system by the Notary.
  1. The publication of the Certificate of PT Registration (Sertifikat Pendaftaran PT)

Upon submission, the documents uploaded for the application will be verified and processed by the Ministry of Law and Human Rights. As a result, when the submission is accepted, the certificate will be issued and the Company would acquire the legal entity status afterwards.

How can Double M help?

Company Registration in Indonesia can be complex. Therefore Management Consulting will immensely help your business operations. Double M offers you exceptional Management Consulting services in Indonesia. Should you have any inquiries, please contact us.

Franchise Registration in Indonesia

Franchise Registration in Indonesia is a hugely popular business practice in recent years. In concept, a franchise business consists of a business deal between the original owner (franchisor) and the license holder (franchisee) that seeks to expand the same business to new locations. With this type of business model, both parties could reap the benefits. 

Criteria of Franchise Registration

According to the Ministry of Trade Regulation No. 71 of 2019, there are several criterias of a franchise business, such as

  • proven record that the franchise is already profitable
  • has a written standard for marketing goods and/or services; 
  • easy to teach and apply
  • there is continuous support
  • registered Intellectual Property Rights (IPR).  

Basic Requirements of Franchise Registration Indonesia

In accordance with Government Rule Number 42 of 2007, there are several basic requirements necessary for a franchise business. First, it must  have a distinct unique selling point, proven track record of generating profit, proper Standard Operating Procedures of the products or services, continuous support from the franchisor, and Intellectual Property Rights documents. 

Pre-Contract Requirements of Franchise Registration in Indonesia

There are several documents you must prepare for the pre-contract stage to do Franchise Registration, such as:

  1. Identity of franchise owners
  2. General legal documents
  3. Business history
  4. Business structure
  5. Balance sheet audit for the past 2 years
  6. Numbers and names of existing franchises

Administrative Requirements to do Franchise Registration

There are several administrative requirements for Franchise Registration, such as:

  1. Registration Form
  2. Copy and original ID Card of the Franchisee
  3. Copy of franchise prospectus
  4. Copy of franchise agreement
  5. Copy of business license
  6. Copy of HAKI Registration
  7. Details of manpower plans
  8. Composition of franchised raw materials
  9. Copy of Article of Association
  10. Copy of individual and company Tax ID Number
  11. Copy of BPJS Health and BPJS Manpower Membership Card

Technical Requirements of Franchise Registration

There are several technical requirements to register a Franchise, such as:

  1. Recommendation letter from Ministry of Trade
  2. 80% percent of production tools and products themselves must be produced in Indonesia
  3. Franchisees must collaborate with local Micro, Small, and Medium Enterprises.

Procedures of Franchise Registration in Indonesia

To make it easier for business people throughout Indonesia to start a business, since 2018 the government has implemented Online Single Submission (OSS). With this system, business people can take care of various business licenses, intellectual property rights and also manage franchise businesses. The following is a brief procedure for obtaining a franchise business license using the OSS method:

  1. Register via https://oss.go.id/oss/ and fill in the information on the list menu, and validate the account email and user ID and password to log-in.
  2. Get NIB (Business Identification Number)
  3. Issuance of a Franchise Registration Certificate (STPW)
  4. Fulfillment of Commitment Requirements such as fulfilling prospectuses and franchise agreements
  5. Issuance of STPW by the Directorate of Business Development and Distribution Actors of the Ministry of Trade and/or the Investment Service and also by Regency and City PTSP

How can Double M help?

Franchise Registration in Indonesia is an excellent way to expand your business operations in the country. Double M strives to help our clients throughout the whole registration procedure. Should you have any inquiries, please contact us.

PSE in Indonesia – What to Know

PSE in Indonesia – In order to regulate and keep online-based businesses in check, the Ministry of Communications and Informatics (Kominfo) introduced the PSE certification, which stands for Penyelenggara Sistem Elektronik. The certification process itself has been implemented since 2015. However, it caused a controversy in 2022 when several high profile businesses were blocked temporarily because they hadn’t obtained or renewed their PSE in Indonesia. 

That case taught us that having a PSE certificate is crucially important for online businesses in Indonesia, and the failure to comply may lead to the stoppage of your operations. As a result, it is important to know what PSE is and how you can obtain it. 

Types of PSE in Indonesia

According to the Government Law of 2019 Number 71, there are several types of PSE:

  1. Public PSE

Public PSE certification is given to electronic systems provided by institutions organized by the country, such as public health services (BPJS). Usually, these governmental electronic systems have go.id as their web domains. 

  1. Private PSE

Private PSE certification is for non government electronic systems, such as WhatsApp, Twitter, Facebook, Instagram, etc.

After understanding the different types of of PSE, it is also important to understand that PSE certification is mandatory for:

  1. Companies that sell products and offer services to the public though applications or websites.
  2. Companies that conduct online transactions.
  3. Companies that manage fund deposits.
  4. Companies that manage financial translation data.
  5. Companies that send digital goods to their customers

Requirements of PSE in Indonesia

  1. Registration form in the https://layanan.kominfo.go.id/register website, along with the following details
  • Business ID Number and Business License
  • Letter of Domicile
  • Identity of the Person in Charge (PiC)
  • Individual or Company Tax ID Number
  • Profile of Electronic System Provider
  • Detailed Technical Brief of the Electronic System
  • Web domain of the Electronic System and security certificate

Registration Procedures of PSE

  1. Account Registration

Before obtaining a PSE certificate, you must first register an account at the Kominfo website, filling information such as your personal and company identity and technicalities of your electrical system. 

  1. Documents Verification

The authorities at Kominfo will verify the documents after the submission. 

  1. Issuance of PSE Certificate

After your documents are verified successfully, you will obtain a registration number which will be used to keep track of your registration process. When everything is finalized, you will obtain the PSE certificate.

How can Double M help?

Obtaining a PSE certificate is an intricate and thorough process. We will be helping you through the procedures. Should you have any inquiries, please contact us.

Manufacturing Companies in Indonesia – Further Collaboration with Japan

Manufacturing Companies in Indonesia – Indonesia and Japan and are putting plans in motion to further collaborate in establishing manufacturing companies in Indonesia. This joint venture will also put emphasis on the usage of electric vehicles (EV). The Minister of Industry Agus Gumiwang Kartasasmita said on a written statement, Thursday (8/9/2022)

Manufacturing Companies in Indonesia – Partnership between Indonesia and Japan

“In this working relation with Japan, I hope to obtain their specific knowledge and advanced technology which  can be used in Indonesia’ future strategic programs, especially natural commodity downstreaming, research and development of electric vehicles, and health and food sector”, the Minister said.

This partnership is just one of many agendas that will be discussed and ratified in the Indonesia-Japan Economic Partnership Agreement, which was announced during the G20 Conference in Bali. 

In return, Indonesia is committed to offer trade deals for goods or spare parts in the manufacturing industry. It is hoped that this can create a win-win solution for both nations and smoothen the deal between one another. 

Business Relations between Indonesia and Japan

The business relations between Indonesia and Japan are getting stronger by the day. In recent weeks, Japan has committed around IDR 37 trillion to manufacturing companies in Indonesia, specifically in the electric vehicle category. It is reported that the funds are coming from two of the most renowned Japanese automotive manufacturers, Toyota Motors and Mitsubishi Motors.

Future Business Prospects in Indonesia and Japan

It is widely believed that the electric vehicle industry will be booming from 2022 onwards. In relation to the Indonesian government’s latest fuel policy, the people of Indonesia are expected to switch from fuel-powered vehicles to electric vehicles. The current demands are very high and they are expected to rise even further.
By looking at the upwards trend of manufacturing companies in Indonesia, it looks like environment-friendly product registration will be the most popular service moving forward. Japan has paved the way and it also presents excellent investment opportunities for other countries in the world.

How can Double M help?

Indonesia is opening many opportunities for collaboration in the manufacturing industry. With Double M’s help, you can find suitable business partners or even establish your own manufacturing company in Indonesia

Digital Transformation New Era of Business

Digital Transformation – New era business seems to be the need of every business stakeholder, both small and large scale. The changes due to Covid 19 have made many business sectors shift and focus on digitalization. In 2021 alone, the technology industry has increased by Rp. 2.1 trillion and continues to grow.

So this opportunity must be fully exploited and optimized. Then, does your company understand digital transformation? If not, see the full explanation.

Understanding Digital Transformation

In simple terms, digital transformation is more about using technology to change the market business, previously already running or creating a new business. The Enterprises Project explains that digital transformation is affecting fundamental changes in the overall ongoing business operation.

At this stage, companies starting to implement digitization will provide more value to their clients or consumers. Through these stages, digital transformation is much easier, especially in terms of effectiveness and efficiency.

So, the concept is not only about using technology but rather about existing optimization.

In the future, digital transformation will continue to develop and cover various existing aspects, but currently, the technologies that are in demand by the public are the Internet of Things, Cloud, and big data.

Why Should You Get Started?

There are many reasons when a company should embark on a digital transformation. One of them is that many global companies are implementing the system. Almost all start-up companies start optimizing and abandoning old business models to develop existing businesses.

Several big brands have also implemented a comprehensive digitalization system, thus focusing more on new business models. Companies that have implemented digitalization will be far superior, especially in operational efficiency. If your company wants to achieve this target, start welcoming the digital era.

Reasons for Digital Transformation

The International Data Group (IDG) explained that the important thing for digital transformation is IT security enhancement, customer retention, and more controlled costs. Here is more discussion.

1. Technology Security

The presence of digital transformation does provide many benefits and opportunities for new businesses. But behind the advantages provided, technology has a big risk in terms of existing security. Cyber ​​security is an important point that must be optimized and carried out thoroughly.

Thus, digital transformation must improve existing technology to be able to compete and remain productive without problems.

2. Consumer Retention

Times have changed, technology has a significant impact on all these conditions. Can compete in change, digitalization has the right role. Especially in improving customer experience.

The conventional way is no longer the right choice, adaptation is a new key to unlocking the desired target market. For this reason, digital transformation provides the right picture in expanding the company’s business for the better. Moreover, if you use modern technology, the behavior of your customer  both offline and online can be more easily understood.

3. Cost Control

Digital transformation has a positive impact, especially in controlling costs in the business being run. This is interesting for business people to see because it provides the right impact to optimize the running of the company for much better performance. Therefore, the business you run is much more optimal.

If you want cost efficiency, digital transformation is one of the most attractive for you to maximize.

Forms of Digital Transformation

The MIT Sloan Management Review website explains that there are three business models related. What they are? Read the full explanation.

1. Improve Customer Experience

Customer experience is a crucial point in improving the progress of the managed business. To make it easier to understand, the help of technology provides many advantages. If your company begins to consider digital transformation, it can increase the number of customers.

These affect more scalable and broad customer touchpoints. This form of business is starting to be in great demand by business people.

2. Ease of Operational Process

Operations that are getting easier and more practical make it easier for employees to improve their work performance. The impact that is present is that the business that is run will grow faster. Digital transformation requires employees to be able to master and operate various equipment in the managed business.

Especially in digital tools and using data to make various business policies.

3. Business Model Changes

A significant aspect is changing the direction of the business and focusing on digital products. So that they offer provided will use technology for a wider product range.

Advantages of Digital Transformation

1. High Mobility

Almost all walks of life are not far from smartphones and other devices connected to the internet. Companies must adapt to these changes. Excels in providing business models that can attract new markets.

Through a broad market, digitization provides many benefits for business progress.

2. More Secure Data

Makes companies more aware of some of the data in their business. Commitment to data security builds business trust. Thus, data is an important asset.

3. Increase Productivity

The work process carried out will be much easier in increasing work productivity. This is because technology and several tools are present so that everything will be much easier to obtain. Pulling again the cost of employees can be reduced.

4. Able to Compete With Other Businesses

Amid digitalization, your company can provide added value to existing businesses and compete in other industries. However, behind this position, you can adapt and use some of the latest tools.

How can Double M help ?

Double M is providing market entry solution services in South East Asia. Should you have any inquiry, please contact us at info@double-m.co

Indonesia Machinery Industry

The manufacturing industry is one of the major components of the Indonesian economy. The manufacturing industry is accounted for 21% of Indonesia’s total GDP in 2019. Manufacturing industry grew by 2% in the period of 2015-2019. Food and beverage manufacture is the largest in this sector and accounted for 34% in 2019. Due to the size of the manufacturing industry, the role of supporting industries such as the provision of capital goods and machinery becomes crucial.

Figure 1. GDP from Manufacturing Industry (constant 2010 price and USD)

Source: Indonesia Central Statistics Bureau

Despite of its important role, Indonesia is still dependent on imports of capital goods and machinery. This is due to insufficient capacity of domestic the machinery and equipment industry. Based on data from Indonesia Central Statistics Bureau (BPS) in 2019, the machinery and equipment industry was 0.3% of total GDP or only 1% of the total manufacturing industry.

Figure 2. GDP from Machinery and Equipment Industry (constant 2010 price and USD)

Source: Indonesia Central Statistics Bureau

In 2019, the import value of machines and electronics reached $47 billion. During the period 2015-2019, imports of these commodities grew by 4%. China is the largest supplier with a total of $20 billion in 2019, followed by Japan with $5,7 billion.

Figure 3. Import of Machinery and Electronics

Source: ASEAN Data Stats

Due to the dependence, the import of capital goods and machinery is becoming one of the key indicators of Indonesia’s economic performance. The decrease in imports of capital goods will impact the component of Gross Fixed Capital Formation. This indicator measure how much investment in machinery and production equipment, thus indicating slower economic growth.

The government of Indonesia imposes import duties that vary between 0% to 15% and VAT of 10%. However, to encourage the development of industry and foreign investment, the government provides an exemption of VAT and import duties. Companies importing machinery for production purposes can apply for this exemption. The requirements for this exemption are regulated in Regulation of the Minister of Finance number 3 and number 10 of 2015.

Despite this exemption, the government is planning to reduce the dependence in the future. Machinery and equipment industry is one of the priorities in the National Industrial Development Master Plan 2015-2035. The government targets within 20 years, the domestic machinery industry is able to develop and domestically produce 5 types of equipment:

  • Computer Numerical Control (CNC) Machine.
  • Industrial Tools.
  • CNC Controller.
  • Flexible Machining Center.
  • Automation for electronic production and food processing.

In addition, to boost the investment in this sector, the government put machinery and main components of the machinery manufacturing industry as 1 of 18 strategic sectors which have been granted tax holiday facility. The tax holiday is given in the form of Corporate Income Tax reduction ranging between 25% to 100% depends on the size of the investment.

LA LIGA

Project Outline

La Liga is the Spanish professional football league, which is among the most prestigious football leagues in the world as the Premier League or Bundesliga.

We have been working with La Liga and their Country Manager since several years by supporting them with working permits for their staff in Indonesia. Recently, we have started to provide them legal support as they are preparing to run a Youth Football League in Indonesia.


Testimonial

“From La Liga in Indonesia, we have worked and collaborated on various official projects and procedures with Double M. The result has always been the same: professionalism, speed and excellent execution. At Double M they are always available and ready to help without obligation. It is convenient to have close partners with such extensive knowledge of the local market”.

Rodrigo Gallego Abad – Indonesia Delegate     

NES Global Talent

Project Outline

NES Global Talent is the largest provider of workforce in oil & gas sector, with more than 60 offices in the 5 continents

NES Global Talent is a British Company, specialized in HR Consultancy and outsourcing for the Oil and Gas Industry. They are the world leader on their Industry, having offices in 33 countries. 

In Indonesia, Double M provides them with payroll services, HR consultation and Tax support (specially in Income tax, foreign income, BPJS, etc). 


Testimonial

When I joined NES Global Talent in Indonesia we were already working with a regional vendor to advise on local payroll and tax matters. We were however in search of a more efficient payroll process, without compromising on compliance. Subsequently, we changed to DoubleM who introduced us to a completely new process which is much more sophisticated. In addition, DoubleM supports us on the rare occasions that there is a client query related to payroll or labor law, by allowing their specialists to join the meetings with our consultants.”

Henrique Castro – Indonesia Country Manager

COREN GROUP – NOVAFRIGSA

Project Outline

Coren Group is the largest livestock integrator and food processor in Spain. Spain has been the first country in the EU and the fourth in the world to be approved by Indonesian authorities for the export of beef. This is the result of Double M’s work with their network and political contacts.

Novafrigsa and Artesanos Gallegos as well as the Slaughterhouse Artesanos Gallegos de la Carne have obtained halal certification by the halal official entity in Indonesia, as well as their slaughterhouses have been approved to export to Indonesia.

After these approvals, Double M has been leading the sales initiatives in Indonesia since 2016 for both slaughterhouses. The results are 3000 tons of meat sales for 2019, and 5000 tons are expected in 2020.

With the success in the sales aspect, Grupo Coren decided to establish a subsidiary in Indonesia in partnership with Double M. Coren group has trusted Double M to manage the subsidiary, handling all administration (accounting, tax, HR, legal, etc), sales, and operations. Currently, the company is running successfully and is one of the ten biggest meat importers and distributors in Indonesia.


Testimonial

“Our experience with Double M has been unbeatable, both for its professionalism and for its human quality. Their knowledge of the Indonesian market is not reduced to a mere description of statistical data but, has shown that they are perfectly integrated into Indonesian culture knowing in detail their way of thinking and doing business. The dedication they have shown to understand some complex businesses in which they did not have much experience initially has made them specialists in our sector, with good contacts both in the administration of the country and with the other local operators. In summary, for a Spanish company it is lucky to be able to count on Double M, a trustworthy consulting firm specialized in a country as different from ours as Indonesia “

Dino Grobas – President Director of Novafrifgsa S.A.

Keralty Health (Sanitas)

Project Outline

Keralty health is a company which belongs to Sanitas Group, a healthcare and insurance conglomerate with Headquarters in Colombia. They are a Worldwide leader in the healthcare and insurance companies.  

In this case, Double M has assisted Keralty by stablishing their representative office in Indonesia (KP3A), and the we have run all their local administrative affairs (Accounting, tax and payrolls). 

Joaquin, the country manager from Sanitas, has the following opinion about how is working with PT DMG Investment Services


Testimonial

Double M has successfully assisted us during the process of establishing the Representative Office of Keralty in Indonesia as well as other kinds of services such as tax compliance, payroll calculation and accounting reporting, so it’s being a valuable resource for our project.”  

Joaquin Colunga – Country Manager Indonesia