Indonesia is a rapidly growing market with several significant investment opportunities and potential from international companies. It has attracted the attention of many international investors around the world due to its infrastructure needs, the vastness of its domestic market, its large population, and most importantly, its abundant natural resources.
To set up a company in Indonesia, you must first obtain an Indonesian business registration number.
Why should I get a Business Registration Number?
A company registration number is a unique number assigned by the authority for registering corporate taxes, filing and filing tax returns, and more.
There are several reasons why obtaining a business registration number is very important in setting up a company in Indonesia. The reasons are as follows:
– Any limited liability company, whether a Local PT or a Foreign Owned Enterprise (PT PMA), can be frozen and dissolved by the government if an inspection is carried out and the company does not have a business identification number. The public can report to the government about unlicensed companies because such companies will be considered illegal and irresponsible.
– If a company obtains a business registration number, it only means that the company has been recognized by the government and the business will be protected by applicable laws and regulations.
– Companies that have a holding number in Indonesia will be included in the list of state-recognized companies in Indonesia. With this recognition, the public will believe in all the performance and activities claimed by the company.
Benefits of getting a Business Registration Number in Indonesia
There are several benefits that will be obtained by companies with a business registration number. These benefits are:
– You will be able to apply for a visa for any foreign employee you hire on behalf of your company
– You will be able to obtain business visa sponsorship for your clients from your company
– You can also follow and follow all business tenders in Indonesia by entering your company name
However, it should be noted that obtaining a registration number is only part of the company registration procedure in Indonesia.
Procedures for Obtaining a Business Registration Number in Indonesia
Business registration number in Indonesia is a certificate of power of attorney used by entrepreneurs for licensing purposes in carrying out their respective business activities. Therefore, as an entrepreneur who wants to obtain a business identification number in Indonesia, he must follow the procedures below:
– Obtain approval on behalf of your company from the Minister of Law and Human Rights of the Republic of Indonesia. It will take 4 business days to receive approval.
– Obtaining approval from the Investment Coordinating Board (BPKM), this may take 12 business days or more to obtain.
– Provide the preparation of Articles of Association (Deed) that have been legalized by a notary. This preparation may take about 4 working days.
– You must have a domicile certificate from the local government office. This certificate can take at least 3 business days.
– You must also obtain a taxpayer identification number or NPWP for your company in Indonesia. To obtain this taxpayer identification number, it may take about 3 working days.
– After that, you need to open an account at a bank in the name of your company. It will usually take a day to open a bank account.
– You need to obtain the deed of establishment of your company from the Ministry of Law and Human Rights of the Republic of Indonesia for approximately 20 working days.
– You must obtain a certificate of company registration from the local government. To obtain this certificate, it may take approximately 20 business days.
What’s Next After Getting a Business Registration Number?
Once your company is established, you can start running your business in Indonesia and carry out activities such as:
– Open an Indonesian company bank account
It is possible to open an Indonesian company bank account without having to be physically present in Indonesia.
– Rent or purchase property and other assets on behalf of your company
After obtaining a business registration number for your company in Indonesia, you will be asked to choose a location to set up your physical office in Indonesia. However, note that you will be required to refer to the Negative Investment List for your business location as some business activities are prohibited in certain areas.
– Start other preparations for your operation, such as but not limited to staff recruitment, office renovation preparation, etc.
You should have already planned how your operations will be carried out in your company. By planning and starting your operations after your company is established, you will save a lot of money and time.
– Proceed to obtain work and residence permits for foreign employees in your company
You will be asked to find out how many foreign employees you will hire in your company. This is important because you will be required to comply with regulations pertaining to obtaining a work permit for your foreign workers.
NOTE: The opening of a corporate bank account is required after incorporation
Beyond the surface-level steps, obtaining a company registration number in Indonesia can involve unforeseen complexities and time delays. Here’s why:
- Navigating Bureaucracy: Dealing with different government agencies can be cumbersome. Each office might have its own procedures and paperwork requirements, leading to potential back-and-forth and delays.
- Legal Nuances: Indonesian business regulations can be intricate. Accurately interpreting and fulfilling these requirements, especially for someone unfamiliar with the legalese, can be challenging. Minor errors in documentation can lead to rejections and additional processing time.
- Limited Availability: Government officials might have limited consultation hours or appointment slots. This, coupled with potential delays within the system, can extend the waiting period for approvals and registrations.
Potential Costs Associated with Company Registration and Permits in Indonesia
Obtaining a company registration number and any necessary permits in Indonesia involves several potential costs. Here’s a breakdown with some sources for reference:
- Government Fees: The Indonesian government charges fees for various registrations and approvals. These can vary depending on the company type, location, and specific permits required. However, a ballpark figure based on sources like estimates the cost for incorporating a PT company (local) at around IDR 17,000,000 (approximately USD $1,150) and a PT PMA company (foreign owned) at around IDR 30,000,000 (approximately USD $2,000).
- Notary Public: Notarial services are required for legal documents like the Deed of Establishment. The notary fee is typically a small percentage of the document’s value, but again, can vary.
- Bank Account Opening: Opening a corporate bank account might incur fees depending on the chosen bank and account type.
- Professional Help: Considering the complexities involved, some entrepreneurs choose to hire professionals like lawyers or consultants to assist with the registration process. Their fees can vary depending on the scope of services provided.
If you are a foreign entrepreneur who is serious about starting your business in Indonesia, having a local service provider who is heavily involved and supports your operation will be a definite advantage. Contact us for a free consultation today.
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