KPPA Supervision and Liaison Services: Guide to Establishing a Foreign Representative Office in Indonesia

Corporate Secretary Service Indonesia – Foreign Company (PT PMA) Representative Office (KPPA): The work of the KPPA (Foreign Representative Office) in assisting foreign companies to get started in Indonesia is of vital importance. These services also help to make sure businesses meet and operate within local laws. If you are considering to establish a representative office in Indonesia, you need to be aware of the requirements and how to process it. Below is a complete explanation on KPPA supervision and liaison services along with how to set up a KPPA in Indonesia.

What is KPPA?

A KPPA is a foreign companies’ representative local branch in Indonesia. It acts as a surveillance, communicating and coordination as between the foreign national company with it stakes in the Indonesian market. Kmos First-class -KPPA facilitates to have the existence of a local entity in Indonesia and to have the activities which are non-business purpose to be taken care uninvolved however with the business operations essentially support as:administration, coordination and bussiness development.

Google LLC, LINE Corporation and other foreign companies have representative offices in Indonesia that oversee their operations, even though they do not make retail sales or conduct revenue-generating activities here. The KPPA is mainly concerned with pre-operation activities to initiate a full-fledged operation through a PT PMA.

KPPA Activity Limitations

KPPA supervision and liaison activities are explicitly prescribed and restricted under Indonesian law. Pursuant to BKPM Regulation No. 1 of 2020, KPPA activities are subject to the following requirements:

• Guidance and Co-ordination: KPPA also serve as the guide and co-ordinator between the latter’s parent company abroad, and its local activities.
• Non-Commercial Activities Income (2.6): The KPPA may not receive income derived from local sources, nor engage in commercial import or export activities for products and services in Indonesia.
• Non-Management Position: KPPA cannot be involved in the management of an Indonesian company, subsidiary or branch.
• Location of The Office: KPPA will be established from an office situated in Office building in provincial capital.

Knowing these restrictions is important so that your KPPA can operate in accordance to the law in Indonesia.

Forms or Legalising a KPPA in Indonesia

There are several terms set by the Indonesian government to make a KPPA possible. These include:

• Management of Office: The office should be managed by one or more individuals authorized by the foreign company. Those foreigners may be foreigners, or they may be Indonesian citizens.
• Activity Restrictions: KPPA has very narrow duties; administrative, supervisory and liaison activities for the parent.
• Office Premises: The KPPA shall be located in an established office building in a provincial capital.
• Manager of the Office: The office manager should be resident in Indonesia for his/her term.

Read Also: Indonesia Liaison Office: Role, Duties, and Skills You Must Know

Procedures for Establishment of KPPA in Indonesia

The Procedure for setting up a KPPA comprises several steps. Here is a step by step breakdown:

Step 1: License Application

Then, make your application of a KPPA license to the Head of BKPM. Prepare the following supporting documents:

• Foreign company’s Articles of Association.
• Offer letter from the foreign company to the representative.
• Copy of Passport for foreign managers/ID card for Indonesian managers.
• A Personal Oath sworn by the KPPA’s office manager to live and serve only the KPPA.
• You Will Also Need A Power of Attorney (should some one else file on behalf of the company).

Step 2: KPPA License Issuance

The license KPPA will be handed over to you by the Head of BKPM (or an authorised intermediary), upon approval of your application. This license will also be published to the aliases:

• Minister of Finance
• Minister of Labor and Transmigration
• Home country Chief Representative for Indonesia
• Governor/Regent/Mayor

Step 3: Regional Licensing

Once the license is in hand, then the company will go to the PTSP-PDPPM (One Stop Service) to go through the regional licensing process. This must be carried out within three months of being granted an approval letter. Required licenses include:

• Certificate of Company Domicile
• National Taxpayer Identifier (TIN or NPWP in Indonesia)
• Company Registration Certificate
• Taxable Confirmation Letter

Step 4: Ongoing Reporting

The KPAA will be required to report its activities to the BKPM every 6 months once it is in operation. These are filed on the OSS system online. In this way, your KPPA will always be in line with the prevailing Indonesian law.

Advantages of KPPA Supervision and Liaison Service

Having a KPPA in Indonesia has the following benefits for international companies:

• Market Access: With world-class regulatory & market insight services, provided by KPPA, foreign firms can get to know the local business environment as well as the local regulatory framework to create a `footprint’ for their business for the future.
• Investment and Employment Opportunities: A KPPA provides job opportunities for foreign workers and domestic workers, and contributes to local economies.
• Regulatory Compliance: With KPPA supervision and liaison services, enterprises operating in a foreign country are guaranteed compliance with local regulations and will not face fines or interruptions to operations.

So, don’t worry about developing your business by setting up a company in Indonesia, because Portcorp is here as a solution for your business, also when you need KPPA Supervision and Liaison Services. Portcorp is your comprehensive corporate secretary service in Indonesia. With our presence, you can get a dedicated company secretary to support you to what you need. Our company secretaries will track deadlines and file paperwork so your business keeps running smoothly. Contact us now on +6221-5020-8090 for your business succeed in the future!