In general, a representative office in Indonesia can be counted as an easy entry vehicle for foreign companies interested in testing the Indonesian market. Such offices can carry on market research and relationship-building without being required to make the normal commitment of a fully operational set-up.
Definition and Purpose
A representative office is a non-profit-oriented organisation but acting on behalf of a foreign parent company in Indonesia. These are usually based on the following activities:
- Market Research: collection of information related to market trends and consumer behaviour;
- Networking: networking with the most possible local partners, suppliers, and potential clients; and
- Coordination: Liaison Office acts as a coordinator between the parent company and local stakeholders.
Setting up representative offices does not constitute pursuit of profits by contractually engaging in sales activities or any other activities in Indonesia.
Types of Representative Office
There are numerous types of representative offices in Indonesia, each serving specific sectors they represent:
- Foreign Company Representative Office (KPPA): This office is intended to represent the interests of foreign companies and deal with market exploration.
- Foreign Trade Company Representative Office (KP3A): As could be concluded from its name, this is an intermediary type for the conduct of trade-related activities but without direct sales.
- Representative Office for Foreign Construction Companies: It enables the construction companies to manage projects and still collaborate with local companies.
- Representative Office for Foreign Electricity Companies: Enables firms involved in the electrical industry with the requirement of technology transfer and locally meeting the regulatory requirements.
Representative Office Benefits
Opening representative office in Indonesia has a number of the following advantages:
- 100% Foreign Ownership: The representative offices can be fully owned by foreign companies with no requirement of local shareholders.
- No Minimum Capital Requirement: There aren’t any high-amount capital requirements for the setup of a representative office as opposed to other business forms.
- Simplified Licensing Process: The process has been simplified in recent regulations in order to make it comparatively easier to establish than other business forms.
What You Can Do After Establishing a Representative Office?
- Conduct market research and gather information related to the potential clients
- Arrange for communication between the parent company and the local entities.
- Plan for the future establishment of a more permanent structure of business in Indonesia.
However, they cannot engage in any transaction for gaining revenues from Indonesian sources.
How to Set Up a Representative Office in Indonesia?
In establishing representative office in Indonesia, foreign companies have to meet the following requirements:
1. Legal Entity Status: The parent company must be a legally constituted corporation with at least three years of actual operation;
2. Documents You Need to Prepared;
- Letter of Appointment stating the representative office head.
- Articles of Association, parent company.
- Letter of Intent and Reference, relevant authorities.
- Tax Registration Number – NPWP and Business Identification Number – NIB.
- Physical Office: There should be a physical location that should be in conformity with the local regulations.
A representative office in Indonesia could be considered the most effective way of market entry for foreign companies with minimum risks and investment. These offices focus on activities that are not commercial in nature, hence their work and contribution to market research and networking are pretty constructive, providing insight opportunities in Indonesia into future business branch office presence decisions in Indonesia. With regulations continuing to get more evolved, there is a scope for foreign investors to make the most of simpler processes and strong support systems within Indonesia‘s regulatory framework.
Want To Get Your Representative Office in Indonesia Done Seamlessly? Contact Lets Move Indonesia Now!
Lets Move Indonesia is a premier agency dedicated to facilitating seamless business operations for expatriates looking to establish a representative office in Indonesia. With a strong focus on providing comprehensive services, they assist clients in navigating the complexities of the Indonesian market.
E: info@letsmoveindonesia.com
WA: +62 812 9260 0590
P: +62 21 300 297 27 (Jakarta),
+62 361 934 8343 (Seminyak),
+62 361 939 9406 (Canggu),
+62 361 280 789 (Sanur)
W: www.letsmoveindonesia.com
