Understanding the Limitations of RO in Indonesia: Key Restrictions for Foreign Representative Offices

Corporate Secretary Service Indonesia – If you’re considering establishing a Representative Office (RO) in Indonesia, you must understand the limitations of RO in Indonesia. These restrictions define what your office can and cannot do. Global companies like Google and LINE operate under these rules for their Indonesian representative offices.

What is a Representative Office in Indonesia?

A Representative Office (KPPA) serves as a liaison for foreign companies. According to BKPM Regulation No. 1 of 2020, it:

• Represents parent company interests
• Prepares for potential Foreign Investment (PT PMA) setup
• Cannot conduct direct business activities

This structure helps companies explore the Indonesian market while complying with local regulations.

Key Limitations of RO in Indonesia

The limitations of RO in Indonesia are strict. Your office cannot:

1. Generate income in Indonesia

1. No sales transactions
2. No service contracts with local clients

2. Manage local subsidiaries

1. Cannot control other company branches
2. Cannot sign binding agreements

3. Operate outside approved activities

1. Limited to liaison and coordination roles
2. Must be located in provincial capital offices

These restrictions ensure ROs don’t compete with local businesses while allowing market research and relationship building.

Who Can Establish an RO?

Your company qualifies if:

• You appoint an office manager (foreign or Indonesian)
• The manager resides in Indonesia
• You secure proper office space

Tech giants like Google use this model to maintain a presence without full commercial operations.

Read Also: Learn Representative Office Services Indonesia: Legal Requirements for Foreign Companies

Registration Process

Follow these steps to establish your RO:

1. Prepare documents:

• Company Articles of Association
• Manager appointment letter
• Passport/ID copies
• Activity statement letter

2. Submit to BKPM:

• Complete application forms
• Include all attachments

3. Obtain approval:

• BKPM issues permit
• Copies sent to relevant ministries

4. Finalize local permits within 3 months:

• Tax identification numbers
• Company registration
• Domicile certificate

Ongoing Compliance

After approval, your RO must:

• Submit biannual reports via OSS system
• Maintain permitted activities only
• Avoid any revenue-generating operations

Violating these rules risks permit revocation.

Why These Limitations Matter

The limitations of RO in Indonesia serve two purposes:

1. Protect local businesses from unfair competition
2. Allow foreign companies to test the market

For full commercial operations, you’ll need to establish a PT PMA (foreign investment company).

Next Steps

1. Assess if RO structure meets your needs
2. Prepare required documents
3. Submit complete application
4. Maintain compliance with reporting

Understanding these limitations of RO in Indonesia helps you plan effectively. While restrictive, this structure provides valuable market access for foreign companies exploring Indonesia. For complex cases, consult to PortCorp, professionals familiar with Indonesian corporate regulations. Proper setup ensures smooth operations within legal boundaries.

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 limitations of RO in 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!