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A 2021 Guide for Company Registration in Indonesia

A 2021 Guide for Company Registration in Indonesia

The global economy is gradually recovering from the challenges posed by the COVID-19 pandemic, and Indonesia’s economy is no exception.

According to the latest economic outlook from Oxford Economics, the country’s GDP growth is expected to rebound to 6% in 2021. This has further bolstered the confidence of investors to make investments and leverage untapped opportunities available in the country.

Foreign Investors’ inclination towards Indonesia was quite evident in Q1 of 2021, as Foreign Direct Investment (FDI) rose by 14% to US$$ 7.7 Billion. According to the Ministry of Investment, this was the fastest year-on-year, first-quarter growth in the past five years.

To further boost the foreign investment scenario in Indonesia, the government is eager to enact prudent macroeconomic policies and reforms. For instance, the Positive Investment List has been introduced to allow foreign investors to venture into business sectors which were previously closed for foreign investments. However, in order to commence business operations in Indonesia, an investor needs to understand the step-by-step process for company registration in Indonesia.

Process for Company Registration in Indonesia

Setting up a company in Indonesia used to be a cumbersome process, lasting for at least two months. However, the Indonesian Government has been simplifying this process and the timeline for incorporation in Indonesia has been reduced, now ranging from a month to 1.5 months.

Also, businesses can start operating right away after having secured a Business Identification Number (NIB), now applicable via Online Single Submission (OSS) system.

Nonetheless, It is still vital for foreign investors to understand the various processes involved in setting up a company in Indonesia. Refer to the table below for a proper glance at the steps required for each business entity available:

STEPS REQUIRED LOCAL PT PT PMA REPRESENTATIVE OFFICE
Submit Submit your company name to the Ministry of Law & Human Rights Submit your company name.
Prepare Prepare the Article of Association and get notarise Prepare the Deed of Incorporation which include notarised Article of Association
Approval Deed of Establishment must be approved by the Ministry of Law & Human Rights The Ministry of Law and Human Rights will give approval for a legal entity. Obtaining a representative office (KPPA) license.
Get Certificate of Domicile Obtain a Certificate of Domicile Acquisition from local government to show the business location Domicile Letter Required to show the location of your business. Obtaining domicile letter from the local subdistrict
Apply Taxpayer Registration Number Apply for a Taxpayer Registration Number (NPWP) to secure other licenses, fulfill tax obligations, and open a bank account Obtain Taxpayer Registration Number (NPWP). It is required for securing other company’s licenses, banking activities, and fulfilling tax obligations. Apply for a taxpayer registration number (NPWP).
Apply for a Business Identification Number Apply for a Business Identification Number via the Online Single Submission (OSS) system NIB, Business License(s) and Location Permit will be granted one day following the registration via OSS
Company Registration Certificate and additional licenses Obtain a Company Registration Certificate (TDP) Acquisition. Once you have it, you can apply for additional licenses (depending on business sectors) Depending on the business sector, additional licenses such as commercial license and tourism license may be required to start company operation. Getting a company registration certificate (TDP).

Set Up a Company in Indonesia Today

What Are The Next Steps?

Following the successful incorporation in Indonesia, the next step is to open a corporate bank account. It is strongly recommended to have an account of a bank that can legally handle foreign currencies. Additionally, customs registration is mandatory for companies engaged in import and export activities.

Finally, all companies operating in Indonesia are liable to pay Corporate Income Tax at a flat rate of 22% and will be further reduced to 20% by 2022. However, Small businesses with yearly revenues of less than IDR 50 billion are entitled to a 50% reduction in the ordinary corporate income tax rate.

How Incorp can help with company registration in Indonesia

With colossal market potential and considerable support from the government, foreign investment in Indonesia is more favorable than ever. However, breaking into a new market overseas might be intimidating. Incorp offers a comprehensive range of business solutions to ease the process of registration and incorporation. Our consultants have thorough knowledge of the Indonesian Market and can help you create a viable roadmap for your business.

FAQs

What is the company registration number in Indonesia?

A company registration number is a unique number provided to each legally registered corporation in Indonesia. Also, having a company registration number identifies and protects your firm under Indonesian law.

Can foreigners register a company in Indonesia?

Yes, foreigners can own a business in Indonesia by forming a foreign investment limited liability company (PT PMA). It is a legal corporation through which foreign investors are allowed to conduct business in Indonesia.

How long does it take to register a company in Indonesia?

It takes about 10 working days for the incorporation documents to be approved, after which you can create your articles of association and apply for company permits.

What is a good business to start in Indonesia?

Travel Consultant – By linking up with several of the local hotels and restaurants, the travel agency can provide a certain discount to lots of tourists every day and go through with starting a business in Indonesia.

Set Up a Company in Indonesia Today

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About the Author

InCorp Content Team

InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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