How Much Does it Cost to Register a Company in Indonesia?

Corporate Secretary Service – Investors looking to expand their businesses in Asia may not consider Indonesia as their first choice, however, it has become a favourite destination among experienced entrepreneurs looking for an entry point into the continent. In fact, Indonesia has made real progress in reducing barriers to entry for foreign investors and international entrepreneurs can now purchase land and property. So, today there are many good reasons to do business in Indonesia 2024.

Furthermore, with a GDP of US$1,475.69 billion and home to one of the fastest growing middle classes in the world, the economy is booming and opportunities are available for businesses and investors considering overseas expansion. As we all know, being one of the first to spot and exploit those opportunities is key, so incorporating a company in Indonesia as soon as possible is recommended.

Below we have compiled a brief guide on how to incorporate a company in the country and share some recommendations on how to maximize your return on investment when doing business in Indonesia.

Requirements for Incorporation in Indonesia

The minimum registered capital requirement to incorporate a company in Indonesia depends on the size, scope of your business, and whether it will be owned by Indonesian citizens or foreign shareholders. Indonesia-based companies can incorporate with a minimum registered capital of start from US$3,500 for a local limited liability company, although as a foreign entrepreneur, you will need a significant initial investment to enter the market.

International investors must have an investment plan worth US$1.2 million or more and at least a quarter of that figure must be deposited in the country as initial share capital. While this can be a drawback for investors, it is possible to bypass the requirement by working with Indonesia-based entrepreneurs as a joint venture, or by applying for an Indonesian visa or citizenship to setting up company as if you were a resident of Indonesia. But you can appoint a nominee director from this country as another way start your company when expanding in Indonesia.

To open a company, you will need a minimum of two shareholders, a resident director and a commissioner, who can be of any nationality. It is always a good recommendation to take a partner with a local entrepreneur or business to make sure compliance with the local requirements.

Assessing Demand

Right after you decide to incorporate in Indonesia, the next step is to determine the tier of demand for your products or services. You can do this by talking to local citizens, analyzing the performance of your competitors and the market in general, and conducting your own primary research and testing to determine whether your business would be a success in the country. If this is a concern for you, you may want to consider visiting a market research mission and speaking to potential clients to secure contracts before you begin your incorporation.

Read Also: Is it Hard to Start a Business in Indonesia?

Select the Entity Type

You can save your time and make sure that you can access the necessary benefits also the tax relief when expanding across South Asia, when you decide the right entity type for your business.

Indonesian LLC (Perseroan Terbatas): The most common entity in the country and most used by locals. It requires one Indonesian director and two shareholders, as well as a commissioner who can be from overseas.

Penanaman Modal Asing (PMA): Companies that are partly or wholly foreign-owned are referred to as PMAs, governed by the Foreign Capital Investment Act. Before they can incorporate and carry out activities in the country, such companies must be approved by the Capital Investment Coordination Board and must invest US$1.2 million in the country. 25% of this investment must be paid up as share capital upon incorporation.

Representative Office: Foreign companies looking to gain a presence in Indonesia should consider a representative office, but should note that companies can only conduct research and promotion activities, and cannot engage in revenue-generating activities. It is very important to take note that Indonesia does not offer a branch office form.

Public Company: As outlined in Indonesia’s Company Law, public companies must have at least 300 shareholders and IDR 3 billion in capital. Some companies will make you facing the strict regulations and must be listed on the PT BEI (Bursa Efek Indonesia) stock exchange. Even though a company owned by a foreigner may not become a public company in a short time, you need to know that PMA can be transformed into a public company with local investment.

Registration Process

Once you have assessed the level of demand and chosen the most appropriate entity type for your business, you must obtain incorporation documents and register your company name with the Ministry of Law and Human Rights. Those documents must be notarized, a registration fee must be paid, and you will receive a receipt to file with the Trade Registry. The next step is you must apply for the business license in Indonesia through the relevant authority for your niche and then register it for employment with the Ministry of Human Resources.

Finally, you’ll be able to register for social security and get tax numbers for your company, and then open a corporate bank account so you can accept payments from clients. Waiting for your incorporation documents to be approved can take around ten days, drafting your Articles of Association around two to three days, and getting a business and permanent license between 10 and 15 days. Generally, you should be able to go from a business idea to a fully-fledged registered company in about 1 to 2 months, as long as you submit the right documents and work with a local business advisor like PortCorp who can help you speed up the process.

Don’t worry about developing your business by setting up a company in Indonesia, because Portcorp is here as a solution for your business. 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 for your business success in the future!