Establishing a company in Indonesia | Procedures, period, and points to note
To establish a company in Indonesia,
There are complex laws and regulations and strict capital rules that are different from Japan.In order to
Advance preparation and correct understanding are essential.
Therefore, in this column, we will explain the basic process of establishing a company in Indonesia,
We will explain foreign investment regulations and points to note regarding work visas.
1. Difference between “domestic capital” and “foreign capital”
First of all, the first thing you need to understand when establishing a company in Indonesia is
「Domestic company"and"foreign companyis the definition of。
| Domestic company | A company whose composition is "100% Indonesian capital (corporate/individual)". |
| foreign company | A company with even ``just 1%'' of foreign capital. |
Surprisingly, even though 99% is domestic capital,
As soon as a foreign corporation invests 1%, it is treated as a “foreign company.”、
Subject to strict control by administrative agenciesIt will be。
2. Advantages and disadvantages of establishing a “foreign capital company”
So, when a Japanese company enters the business as a foreign company,
What are the advantages and barriers?
Advantages: Strong governance and securing management rights
The biggest advantage isCan be established with 100% foreign capital except for regulated industriesis at the point。
This eliminates the need to worry about shareholder composition,
Management policy can be completely determined by the Japanese headquartersis。
In addition,Reduce dependence on local partnersBy that,
Eliminate the risk of company takeover and disputes。
Disadvantages: Strict capital regulations and entry barriers
On the other hand, there are high hurdles for foreign companies.
Specifically, the following capital regulations must be met.
| Minimum investment requirements | 110 billion rupiah per project |
| Minimum paid-up capital | 25billion rupiah (The minimum amount that a shareholder actually deposits into the company's bank account) |
Furthermore, there are industries that foreign companies cannot enter in the first place, or
The investment ratio is strictly limited.Industries regulated by foreign capital (negative list)” exists。
For example, retail businesses, military diversions, and businesses related to natural resources are severely restricted.。
3. Advantages and disadvantages of establishing a “domestic company”
Domestic companies have the advantage of being able to start small, but
It is necessary to be wary of the risk of losing management rights.
Benefits: Flexibility and lower initial costs
The biggest advantage isEven if it is a “foreign capital regulated industry” that foreign companies cannot enter.
Possible to enter and commercializeThat's the point.
Additionally, there are no huge paid-up capital requirements like those required of foreign companies;
You can start a business with a small budgetThere is flexibility.
Disadvantages: Governance risks and visa acquisition barriers
On the other hand, domestically owned companies come with significant management risks.
Specifically, shareholders are limited to Indonesian corporations or individuals;
Risk of company takeover and disputesis always present.
In addition,Foreigners cannot be appointed as representative directors。
Conditions for obtaining a work visa
Furthermore, although it is possible to start small,
When dispatching Japanese expatriates, it is necessary to pay attention to the following points.
For issuance of work visas for foreigners,
As a guideline, a minimum paid-in capital of 1 billion rupiah (approximately 10 million yen) is required.
Therefore, taking into account the merits and demerits of both,
The best choice for your business strategy and acceptable riskIt is very important to do this.
4. Company establishment procedures and schedule
In general, if advance preparations go smoothly,
Approximately in total4About a monthThe procedure will be completed with。
| phase | Procedure details | Estimated period |
| 【Prepare】 |
1. Preparation of necessary documents 2. Determination of corporate address, fiscal year end, capital, and term of office 3. Preparation of articles of incorporation |
Approximately 1.5 months |
| [Procedures] |
1. Issuance of NIB (Business Basic Number) 2. Obtaining NPWP BADAN (Corporate Tax Number Card) 3. Opening a bank account 4. Registration of various accounts |
Approximately 2.5 months |
In this way, we will be able to confirm the corporate address and collect documents such as passports before establishment.
Requires careful preparation in advance。
5. Obtained KBLI (business license) / 4stage risk level
In establishing a company in Indonesia,
Activating your KBLI (business license) is the key to a smooth business start-up.
This is because Indonesia's business license (OSS system) is
Classified into the following four stages according to the risk level of each businesshas been
Because the requirements are completely different.
Activation requirements based on risk level
| risk level | Overview and requirements |
| Low (Rendah) | All you have to do is register on the OSS system (Investment Coordination Agency's online system). Obtaining a separate business licensedon't want。 |
| Menengah Rendah | Enter simple business details on the OSS system, agree to environmental management, Complete by clicking the checkbox for compliance with all standards and labor standards. |
| Menengah Tinggi | Business Permit (Sertifikat Standar)It is necessary to obtain the information from the relevant ministries and agencies. |
| 高 (High) | Business license (Izin Usaha)It is necessary to obtain the information from the relevant ministries and agencies. |
In this way, when developing a business classified as "medium-high" or "high" risk,
It is not possible to start a business with just basic registration.Separate business license requiredIt becomes.
As a result, there are many cases where it takes more time and costs than expected.
Industries where obtaining a KBLI (business license) is likely to be difficult (examples)
The following industries require strict screening and clearing of standards by each relevant government agency.
Procedures tend to be difficult and lengthy.
| manufacturing | It is necessary to “clear the strict environmental standards” associated with the business, such as sewage, waste gas, and noise. |
| Wholesale trade including hazardous materials | Because we handle toxic chemicals, etc., we undergo strict safety management inspections. |
| Military diversion/ Natural resources related |
It is considered to be something that is directly related to the national interest, and requires careful confirmation by the government. |
| Human resources related business |
Appropriate management systems, such as LPK (vocational training schools), are being rigorously questioned from the perspective of labor protection and education. |
To prevent troubles related to obtaining KBLI (business license)
Therefore, what risk level does your company's planned business (KBLI) fall under?
What additional procedures will be required?
Thoroughly researched at the preparatory stage before establishmentIt is very important that you do so.
6. Points and precautions for obtaining a working visa (ITAS)
In addition, when dispatching Japanese expatriates,
Conditions for obtaining a work visa (ITAS) must also be incorporated into the business plan.。
Employment requirements for local personnel
The purpose of foreign employment is“Skill transfer to local human resources”It is said that。
Therefore, the number of officers (directors and auditors) is ``2 Indonesians for every 1 foreigner''.
Regarding the management and leadership level, there is a hiring standard of ``10 people for every 1 foreigner.''。
Acquisition schedule
After you have the necessary materialsApproximately 2 monthsIt takes。
Precautions when entering Japan
During the new ITAS acquisition procedure (timing of E-VISA issuance)
While staying in Indonesia,
Risk of visa being invalidated and procedures having to be redoneBecause there is
Extreme caution is required when entering the country for business trips, etc.。
7. Main legal/compliance procedures after establishment
Establishing a company is not the end.
Rather,Foreign companies are subject to stricter administrative supervision than domestic companies.For some reason,
Accurate response is essential even after establishment。
| LKPM (Investment Activity Report) | They are required to report their business details and investment amount to BKPM (Investment Coordination Board) once a quarter. |
| WLK (employment report) | 1Reports employment and company status to the Ministry of Labor once a year. |
| annual general meeting | Implemented within 6 months from the fiscal year end. All shareholders must sign the resolution. |
8. Frequently asked questions (FAQ)
Q. Is it okay to prepare the articles of incorporation only in English?
A. Not possible.
This is because the language law requires it to be written in Indonesian.。
However, in practice, it is possible to create it with both "Indonesian and Japanese" written.。
Q. Can one corporation serve as both a sales company and a factory?
A. Incorporation itself is possible.
but,1A corporation cannot hold both manufacturing and import licenses.Because,
When importing and selling finished products, a scheme involving an agent is required.。
9. For reliable company establishment in Indonesia
As mentioned above, establishing a company in Indonesia requires
Confirmation of industries regulated by foreign capital, strict capital requirements, and various reporting obligations after establishment, etc.
There are many hurdles to overcome.
If there are any deficiencies in the procedures, it will be difficult to validate your business license.
Risk of significant schedule delaysIt also accompanies.
Therefore, our company has experts who are familiar with Indonesian legal matters.
From preparations for establishing your company to obtaining visas and tax and labor compliance after establishment.
We provide one-stop support.
We also offer a service where you can easily consult with an expert for a fixed monthly fee.
This greatly reduces the burden on expatriates.
Please feel free to contact us first.
[For inquiries and consultations, please contacthere(Free initial consultation!) ]
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