What are the requirements to establish a foreign company office in Indonesia?
DAFTAR ISI
INTISARI JAWABAN
The establishment of a foreign company office you are referring to can be a Foreign Company Representative Office (in Bahasa Indonesia is known as Kantor Perwakilan Perusahaan Asing/ "KPPA") or a Representative of Foreign Trading Company.
To establish a KPPA, a KPPA license is required which can be submitted through the Online Single Submission ("OSS") system, and for a Representative of Foreign Trading Company, a Business Permit for Representatives of Foreign Trading Companies a.k.a. SIUP3A is required. So, what is the legal basis?
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This article is the second update of the article with the same title written by Shanti Rachmadsyah, S.H. and was first published on Monday, 15 November 2010 and updated on Wednesday, 29 July 2020 by Bernadetha Aurelia Oktavira, S.H.
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Definition of Foreign Company Representative Office
In order to answer your question, we will explain about Foreign Company Representative Office (in Bahasa Indonesia is known as Kantor Perwakilan Perusahaan Asing/ "KPPA"), which is a representative office established by a foreign company or several foreign companies outside the territory of Indonesia with the intention of managing the interests of the company or affiliated companies in Indonesia and/or in other countries and/or preparing for the establishment and business development of Foreign Investment Companies in Indonesia and/or in other countries.[1]
From this definition, it can be concluded that the activities of a Foreign Company Representative Office are solely to manage the interests of its overseas companies without being allowed to conduct business activities.
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Furthermore, for the representative offices of foreign companies, the following restrictions shall apply:[2]
as supervisor, liaison, coordinator, and take care of the interests of the company or its affiliated companies;
prepare Business Development and establishment of PMA companies in Indonesia or in other countries and Indonesia;
located in an office building in the provincial capital;
does not seek any income from sources in Indonesia, including not allowed to carry out activities or engage in any engagement/transaction of the sales and purchase of commercial goods or services with companies or individuals in the country; and
must not participate, in any form of the management of any company, subsidiary or branch of a company in Indonesia.
Provisions for Risk-Based Business Licensing through the OSS System
Basically, Representative Offices shall comply with provisions of Risk-Based Business Licensing in accordance with the laws and regulations[3] that shall be submitted through the Online Single Submission (“OSS”) System.[4] In applying for Business Licensing, business actors are granted access rights by the OSS Agency.[5] Then, to obtain access rights to the OSS System, business actors submit an application to the OSS Agency electronically/online through the OSS System.[6]
According to Article 12 section (6) Regulation of the Investment Coordinating Board 3/2021, the application is submitted by filling in the application data for access rights to use the OSS System by filling in at least:
name of the business actor;
data as follows:
individual by filling in the population identification number data;
business entity by filling in the data on the business entity authorization number;
public service agency, public company, regional public company, broadcasting institution, other legal entity, association, or partnership by filling in the data on the legal basis for formation; and
representative offices and foreign business entities by filling in the data on the population identification number of the head of the representative office/person in charge who is an Indonesian Citizen or the passport number of the head of the representative office/person in charge who is a foreign citizen.
position in the business entity for those who fill data as referred to in letter b number 2, number 3, and number 4;
telephone number of the person in charge; and/or
electronic mail address of the business actor.
Then, based on Article 12 section (1) Regulation of the Investment Coordinating Board 3/2021, the use of access rights to business actors is given to:
submitting an application for business licensing based on the risk of the first business activity;
apply for changes, expansion, and/or revocation of risk-based business licenses;
submit reports on investment activities;
submit reports on activities or efforts to manage business activity risks, including but not limited to the implementation and fulfillment of provisions related to risk-based business licensing standards and requirements;
submitting complaints; and/or
apply for business facilities.
Definition of Representative of Foreign Trading Company
Besides the Foreign Company Representative Office, Representatives of Foreign Trading Companies are individuals who are Indonesian Citizens or Foreign Citizens appointed by foreign companies or associations of foreign companies domiciled outside the country as their representatives in Indonesia, as stipulated in Article 1 number 1 Regulation of the Minister of Trade 10/2006.
Moreover, according to Article 3 Regulation of the Minister of Trade 10/2006, Representatives of Foreign Trading Companies may:
carry out activities to introduce, promote and advance the marketing of goods produced by Foreign Companies or Associations of Foreign Companies domiciled outside the country that appoint them, as well as provide information or instructions for the use and import of goods to companies/users within the country;
conduct market research and supervision of domestic sales for the purpose of marketing goods from Foreign Companies or Association of Foreign Companies domiciled outside the country that appoint them;
conduct market research on goods needed by Foreign Companies or Associations of Foreign Companies domiciled outside the country that appoint them and connect as well as provide information and instructions on the export requirements of goods to companies within the country;
close the contract for and on behalf of the company that appointed them with a company within the country in order to export.
For your information, the Head Office and Branch Office of Representative of Foreign Trading Company must secure Business Permit for Representatives of Foreign Trading Companies, from this point onward is referred to as Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing (“SIUP3A”).[7] An application to secure an SIUP3A shall be submitted in writing by the Head of the Head Office or the Branch Office of the Representatives of Foreign Trading Company or an appointed proxy to the Director of Business Development and Company Registration as the SIUP3A-issuing official by filling out the Application Form as set out under Appendix I to Regulation of the Minister of Trade 10/2006.[8]
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These are the answers we can provide, we hope you will find them useful.
