Why Indonesia is a Great Destination for Offshore Company Formation

Setting up an offshore company offers great benefits which include minimal tax obligations, low setup and maintenance costs and reduced administration. These benefits are favorable for businesses in order to maximize profits.

 

Ranked as the 15th largest economy globally, Indonesia offers great prospects for setting up an offshore company. Furthermore, the International Monetary Fund (IMF) estimates the country to grow by 5.3% in 2018. Rising commodity prices are expected to boost the country’s economy. They have a population of more than 240 million with promising young demographic dividends. It is definitely a lucrative economy where businesses can greatly benefit from.

 

What makes Indonesia a great place for company formation? Read through this blog to find out!

 

Indonesia’s Business Climate for Company Formation

 

Indonesia is one of the most populous countries in the world, with an estimated yearly increase of 3 million. Plus, the cities’ fast development has encouraged people to move in the metropolis. This resulted to a fast-growing consumer class. Hence, the country offers a wide range of niche markets for businesses.

 

The country’s flourishing urbanisation and growing population contribute to its steady business climate. Thus, more and more investors are setting up their companies in Indonesia because of its market diversity and improving business laws.

 

So, here’s a general overview of company formation in Indonesia.

 

Registering a Company in Indonesia

 

Being one of the emerging markets in Southeast Asia, Indonesia continues to attract investors every year and fostering a blooming number of start-up companies. If you want to enter Indonesia, make sure you have the required documents needed for company registration process.

Also, a company is already considered foreign-owned even if only 1% of its shareholders is a foreigner. Business registration processes are different for foreign companies. There are only two forms of legal entities.

 

Foreign Direct Investment Company (PT. PMA)

 

When registering a business under this type of entity, the company has the same rights and responsibilities as any other local company. Another advantage of this type of legal entity is that there are better conditions for importing goods. Here’s an overview of the process:

  1. Approval of company name at the Ministry of Law and Human Rights
  2. Approval of Principal License at the Indonesian Investment Coordinating Board (BKPM)
  3. Preparation of Article of Association by Notary
  4. Obtain Deed of Establishment at the Ministry of Law and Human Rights
  5. Obtain Certificate of Domicile at the local government office
  6. Obtain Taxpayer registration number
  7. Obtain Company Registration Certificate at the local government

 

Representative Office

 

For this legal entity, there should be an existing parent company overseas to manage the representative office. Usually, a representative office focuses on conducting market research activities as well as marketing and promotion purposes.

 

But, the firm is not allowed to conduct business transactions. Here are the steps in setting up a general foreign representative office:

  1. Request BKPM Letter of Approval
  2. Letter of Domicile of the representative office
  3. Power of Attorney to sign the application if being represented by another party
  4. Tax identification number (NPWP)
  5. TDP/Company registration certificate

 

Tips for an Easier Company Registration Process in Indonesia

 

The Indonesian government is aiming to improve the country’s global competitiveness. Along with this effort, they are improving their business registration policies to promote more foreign investors.

 

In the meantime, if you wish to benefit from Indonesia’s tremendous business opportunities, drafting a comprehensive business plan is essential. By the same token, it would be a brilliant investment to consult a company formation expert that will help you determine which business entity will be suitable for you in Indonesia. These experts will give you a detailed guide and help facilitate faster registration process.

 

 

References:

 

World Bank Positive about Economic Growth Indonesia in 2018, Indonesia-investments.com

Overview About Company Registration In Indonesia, Lowtax.net

Company Registration in Indonesia, Cekindo.com

Indonesia’s Business climate for Company Formation