Know about making a foreign owned company in 2022 – Indonesia is one of the most competitive and exciting business epicenters in the world due to its burgeoning middle class and ever-increasing population, making it a must for the seasoned investor looking to expand their business or create something new.
One challenge for any potential foreign business owner is understanding how to make a business successfully and how to maintain it after it is set up.
In this article, Mega Rizkiani from LetsMoveIndonesia tells us everything you need to know to set up a foreign-owned business in Indonesia!
Can a foreigner open a business in Indonesia?
Yes, totally! Foreigners can open a business in Indonesia! However, there are some rules and regulations you have to acknowledge before opening a business in Indonesia.
Can a foreigner also set up a local company?
No, foreigners can’t set up a local company as according to Indonesian law, the shareholder of companies in Indonesia has to be Indonesian.
Are there any business types foreigners cannot set up?
There are some types of businesses that are not allowed to be set up. According to Presidential Regulation Number 10 Year 2021, there are six business activities that are not allowed to operate in Indonesia.
Those six businesses are Class 1 narcotics industry, all gambling or casino activities, cultivating species of fishes listed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flores (CITES), harvesting or utilizing of coral and sea rock for building/calcium, aquariums and souvenirs (both for dead and living corals), chemical weapon industry, and industrial chemical substances and ozone-depleting substances industry.
What are the biggest challenges foreigners face when setting up a business in Indonesia?
Some of the challenges include the huge capital needed to start and also, and not all business field is open to foreigners.
How much does it cost to set up a company and are there any capital investments?
It can take up to IDR 25 million with a capital investment of IDR 10 billion. Which includes a deed of establishment, decree approval from the ministry, tax ID, and business registration number. That does not include any office space just yet however, there will be an additional IDR 5.5 million annual fee for a virtual office.
Are capital investments mandatory?
Capital investment is needed for all types of foreign business in Indonesia (except the ones forbidden to operate). For a business, it should have a minimum of IDR 10 billion of capital investment.
How long does it take to set up a company?
It can take up to 20 days to fully set up your business however, it can be much faster up to 2 weeks. Everything depends on what type of business you’re going for here.
Once the company is set up, are there any annual obligations?
There is not much annual obligation that you have to submit after you start your business in Indonesia. The only thing you have to report annually is your tax report and LKPM report which is an investment report. You don’t have to report other documents as long as there are no revisions or renewals of the documents.
Once a foreign-owned company is set up, what are the visa options for investors and workers?
Hiring foreigners for your company is totally doable, as long as they apply for the correct visa. Shareholders should have an Investor KITAS if they were to invest for a minimum of IDR 1 billion. Working KITAS is needed for your future employees who don’t have any shares or those with less than IDR 1 billion shares in Indonesia.
If the company is unsuccessful, is it easy to close the business and what do I have to do?
In that case, you can close your company in Indonesia called dissolution company. On the contrary, you have to consider this choice carefully as closing your company usually takes much more time and funds compared to starting a business. Depending on the tax issue, you can close your company in about four months to a year.
About the author
Mega Rizkiani is a graduate of law from the prestigious Diponegoro University in Indonesia. She has over 7 years of experience in legal services and specializes in company registration law.
Mega has exceptional knowledge of legal matters and has assisted hundreds of independent and international companies expand into South East Asia’s most promising market.
About LetsMoveIndonesia
LetsMoveIndonesia is widely regarded as the Most Trusted Agency in Indonesia and has been the agency responsible for positive change in expatriate services since 2016. They offer a variety of services including Immigration, Company Registration and Tax & Accountancy Services. As the first agency in Indonesia to openly advertise their prices openly and transparently, paired with their dedication to improving expatriate services, it is no wonder why they were awarded the title of Best Visa & Business Consultancy in Indonesia by the National Awards Foundation in 2021. Check more about them on their website, www.letsmoveindonesia.com.
