RO Cannot Import Goods into Indonesia? Comparison of RO in Indonesia, PT PMA, and PT

Corporate Secretary Service Indonesia – Opening a foreign representative office in Indonesia provides a bridge for foreign companies looking to expand their business reach without having to establish a local business entity. Representative offices facilitate international companies’ activities in conducting market research, building networks, and establishing collaborations with various business partners in Indonesia.

Although they don’t have a license to conduct direct commercial activities, representative offices offer many strategic advantages for companies looking to observe and understand the potential of the Indonesian market. If you’re planning to establish a company in Indonesia and aren’t familiar with the process, this article will help explain the various types of offices or business entities you can establish in Indonesia.

This article will also discuss why RO cannot import goods into Indonesia and the differences between a representative office, a PT PMA, and a Limited Liability Company. So, let’s take a look.

Foreign Company Representative Office (KPPA)

A Foreign Company Representative Office (KPPA) is one option for foreign companies abroad wishing to conduct business representative activities in Indonesia. The KPPA cannot conduct commercial activities or generate income from sources in Indonesia like RO cannot import goods into Indonesia; it only acts as a representative office supporting the head office’s business activities.

The purpose of establishing a foreign company representative office in Indonesia is to conduct market research, build business relationships, supervise branch offices or affiliated companies in Indonesia, and help promote the parent company’s products or services abroad. The KPPA can also act as a liaison and coordinator for foreign companies to better understand the potential of the Indonesian market before deciding to make a larger investment or establish a local company.

Comparison of Representative Offices, PT PMA, and PT

Before establishing a business in Indonesia, you need to understand the differences between the existing types of business entities: Representative Offices, PT PMA (Foreign Investment), and PT (Limited Liability Companies). Each has unique characteristics, advantages, and different regulations regarding capital, shareholders, and operational objectives. Therefore, here is a comparison of these three business entities:

Read Also: Difference Between PT PMA and Foreign Company Representative Office KPPA Indonesia

Representative Offices

Representing a parent company, a representative office is an entity established by a foreign company to conduct non-commercial activities in Indonesia. Representative offices in Indonesia are not permitted to conduct direct sales activities or generate revenue domestically.

• Branch offices of trading companies do not require minimum capital for establishment, as they are not commercial in nature.
• There are no shareholders in the opening of a representative office because this entity is merely an extension of the foreign parent company.
• Establishing a KPPA or RO serves as a base for market research, promotion, or coordination for its parent company. It may not engage in transactions or activities that generate profit like RO cannot import goods into Indonesia.

PT PMA (Foreign Investment)

PT PMA is a limited liability company owned, either in whole or in part, by foreign investors. PMA companies in Indonesia are designed to enable foreign investors to conduct commercial business in Indonesia. A complete explanation of PMA company business development is as follows:

• Based on Investment Coordinating Board regulations, PT PMA requires a minimum paid-up capital of IDR 10 billion, with the requirement that this capital be used for business operations.
• PT PMA shareholders can consist of foreign entities or foreign individuals, with the ownership proportion depending on the business sector regulated in the negative investment list.
• PT PMA can conduct commercial activities such as the sale and purchase of goods, production, or services, and generate profits from these activities in Indonesia. They can also own assets, employees, and property in Indonesia.

PT (Limited Liability Company)

PT (Limited Liability Company) is a local business entity wholly owned by Indonesian citizens or local legal entities. PTs are established to conduct commercial business activities domestically. The key points of explanation are as follows:

• The minimum authorized capital of a local PT is usually regulated by local government regulations, but generally requires a minimum capital of IDR 50 million.
• PT shareholders can only be Indonesian citizens or local legal entities. Each PT must have a minimum of two shareholders.
• A PT serves as a legal business entity to conduct various commercial activities in Indonesia. A PT can also own assets and property in the country and conduct full commercial business activities.

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 to understand why RO cannot import goods into Indonesia. 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!