Starting a Business in Indonesia: A Comprehensive Guide for Foreign Investors

Starting a business in Indonesia, including setting up an Indomie noodle business, can be a lucrative endeavor. Whether you're interested in Indomie or another venture, this guide will walk you through the essential steps to establish your business in this dynamic market.

Market Research: Your First Move

Before laying out your plans, conducting thorough market research is crucial. Identify potential customers, assess the demand for products like Indomie noodles, and evaluate the competition. This will help you develop a unique selling proposition (USP) and understand your target market.

Understand Legal Requirements

When starting a business in Indonesia, you'll need to deal with various legal documents. The following are some key documents you'll need:

Principle License and Business License Domicile Letter Deed of Establishment Approval of Business Registration Number NIB Tax Identification Number NPWP Taxable Entrepreneur Confirmation PKP Company Welfare Report and Manpower Report

Option for Foreign Investors

Foreign investors have several options when setting up a business in Indonesia. Here are some common methods:

Set up a business in Indonesia from scratch Buying a ready-made shelf company Nominee company in Indonesia Representative office in Indonesia

In this guide, we will focus on the first option: setting up a business in Indonesia as a foreigner.

PT PMA: A Special Foreign-Invested Company

A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a specific type of company that allows foreign investment. Here are the key requirements:

Paid-up Capital: The minimum paid-up capital for a foreign-owned company is Rp. 25 billion (~175,000 USD). Shareholders and Capital Statement: Shareholders must sign a capital statement letter to ensure they have sufficient funds for the capital requirements.

Structure of PT PMA

PT PMA follows a specific corporate structure:

Shareholders: Every company must have at least two shareholders, which can be individuals or corporate entities. Commissioner and Directors: Each company must appoint at least one commissioner and one director. The commissioner acts as a supervisor, and can be a non-resident. At least one director should be a citizen or resident of Indonesia with a tax card NPWP. Work Permit: A foreign director may apply for a work permit, but while waiting, a local director or professional director service should be appointed.

Selecting a Business Location

Indonesia is a decentralized country, with much of the government’s work taking place at the district level. Therefore, it's important to choose your business location before starting the registration process. Different areas have different rules for registered addresses. For instance, in Jakarta, the address must be in a building with a building permit IMB that allows the operation of an office.

Tips for Optimizing Business Setup

Virtual Office: Setting up a virtual office can significantly lower your overhead costs. This method also avoids the bureaucracy and cost of a physical office and updates to your Articles of Association. One Single Submission System: Most business line registrations go through a centralized system called One Single Submission (OSS), which has made the registration process easier and faster. The registration of a PT PMA now takes 1 to 2 weeks with OSS, instead of the previous 10 weeks.

Step-by-Step Registration for PT PMA

Deed of Establishment: Choose the right classification for your business to avoid future issues. You'll also need to obtain the Ministry of Law and Human Rights ratification of the Deed of Establishment. Tax Registration: After establishing the company, obtain a Tax Identification Number (NPWP) from your local tax office. Compliance with several tax requirements will follow. ID Number to Operate/NIB: Register your legal entity in the One Single Submission (OSS) System to get your company’s ID Number to Operate (NIB), which is a unique number that identifies your profile and includes your import license and customs identification number. Operational License/Commercial License: Obtain your business’ operational license on the same day as NIB, provided there are no other requirements. For businesses like fintech, an additional OJK license may be required.

Conclusion

Starting a business in Indonesia is a strategic move that can bring significant returns. By following the steps outlined in this guide and understanding the legal framework, you can establish a thriving business in this dynamic market.