What is a representative office?
A representative office in Indonesia is a structure that is utilised by foreign businesses for the purpose of engaging in the market surveillance, networking, exploring business opportunities or providing other managerial support in Indonesia to the parent company abroad.
Indonesia is a profitable market for foreign investors due to the country’s huge population, low minimum wages and abundance of natural resources. A representative office allows foreign investors who are new to the country and wish to explore business opportunities in Indonesia. It allows you to see if the country is the right place to start your business and to stay on. Representative office shall be led by one or more Indonesian or foreign citizen that considered being representative office executives. The appointment of representative office executives shall be based on the letter of appointment from the foreign company or groups of foreign companies.
Activities of foreign representative offices are limited to its role as supervisor, connector, coordinator, and to management of the interest of the company or affiliated companies in Indonesia /or an overseas.
It cannot be looking for earnings from Indonesian resources, that includes not conducting activity or making a contract/sale and purchase of goods or services with domestic companies or personal.
Advantages of a representative office.
100% foreign ownership
No capital requirements
Requirements for setting up a representative office.
Referring to the rules and regulations concerning the operations of a representative office in Indonesia as stipulated in the framework of the Decree of the Head of BKPM No. 6 of 2018, to establish a foreign representative office, the parent company shall obtain a Letter of Approval issued by the Investment Coordinating Board (BKPM) as main license. Moreover, a representative office shall obtain a Tax Payer Registration Number (NPWP) from the Tax Office and a Business Identification Number or Nomor Induk Berusaha (NIB) from the Online Single Submission (OSS).
Subsequently, the initial requirements to obtain the below permits or licenses
- Letter of appointment from the parent company
- Letter of Intent from the parent company
- Power of Attorney to sign the application if the participant is represented by another party
- Letter of Reference from the Indonesian Embassy or Indonesian Investment Promotion Centre (IIPC) where the parent company is located
- Articles of Association of the parent company and any amendment(s)
- Copy of valid passport (for foreigner) or copy of identification card number (for Indonesia) who will be proposed as a Representative Office Executive
- Letter of statement concerning the willingness to stay, and only work in the position as a Representative Office Executive without doing other business in Indonesia