Representative Office Indonesia


Understanding Representative Office in Indonesia

A Representative Office (KPPA) holds a unique position. It operates under specific regulations, functioning as an extension of a foreign company without generating revenue within Indonesia.

What is a Representative Office?

A Representative Office (RO) in Indonesia, also known as Kantor Perwakilan Perusahaan Asing (KPPA), is a non-commercial entity established by a foreign company to facilitate market research, liaison activities, and promotional efforts within the country. It cannot directly engage in any commercial activities within Indonesia, such as generating revenue, signing contracts, or issuing invoices.

The legal breakdown of KKPA explained in the following list:

  1. Not a Separate Legal Entity: Unlike branches or subsidiaries, ROs lack independent legal personality. They act as extensions of the foreign parent company, meaning liabilities can fall back on the parent.
  2. Non-Commercial Activities: Strictly prohibited from engaging in any activity that generates income within Indonesia. This includes selling goods or services, signing contracts, and issuing invoices.
  3. Limited Functionality: ROs primarily focus on market research, promotion, liaison with potential partners/clients, and administrative support for the parent company.
  4. Restricted Staff: The number of employees is limited, and their roles are restricted to non-commercial activities.
  5. Limited Duration: ROs typically have a one-year validity period, renewable for additional periods.

Legal Basis of Establishing a PT PMA:

  • UU No. 40/2007 – Perseroan Terbatas / UUPT
  • UU No. 1/1995 – Pasar Modal
  • UU No. 25/2007 – Penanaman Modal
  • Perpres 10/2021 – Pengaturan tentang DNI

Key Benefits of Establishing a PMA in Indonesia

The establishment of a PMA in Indonesia offers various benefits for businesses seeking expansion in the region:

  • Setting up an RO is relatively cost-effective and faster compared to other business entities.
  • Representative Office provides a platform to explore the Indonesian market before committing to a full-fledged business presence.

Important Points to Remember

However, setting up an RO involves several restrictions,  including:

  • Restricted Scope: Activities are strictly limited to non-commercial functions.
  • No Revenue Generation: Cannot generate income or enter into transactions within Indonesia.
  • Limited Asset Ownership: Owning property or assets in Indonesia is generally not permitted.

Engaging us as your consultant may grant you ease of understanding the scope of Representation Office in Indonesia. Speak to us now to start exploring the Indonesian Market!

Application Process of PMA Establishment

Establishing a Limited Liability Company (PT) for Foreign Investment (PMA) in Indonesia involves several stages and procedures. Below are the steps to be taken in the establishment process of a PMA PT in Indonesia:

  1. Seek advice from a legal professional or consultant familiar with Indonesian business law to understand your needs and determine if a KPPA is the right choice.
  2. Prepare the necessary documents as listed below. Ensure they are properly translated and notarized if required.
  3. Complete the application form provided by the Indonesian Investment Coordinating Board (BKPM).
  4. Submit the application and documents to the BKPM, either directly or through an authorized representative.
  5. The BKPM will review your application and documents. If approved, they will issue the KPPA license.

Document Requirements for PMA Establishment

When applying for the establishment of a PMA, applicants must provide various documents, including:

  1. Letter of Appointment: Issued by the foreign parent company, appointing a head representative for the KPPA. Requires legalization by a public notary and the Indonesian embassy in the parent company’s country.
  2. Letter of Intent: Outlining the purpose and activities of the KPPA. Requires legalization by a public notary and the Indonesian embassy.
  3. Letter of Statement: Confirming the commitment to operate as a non-commercial entity. Requires legalization by a public notary and the Indonesian embassy.
  4. Power of Attorney: Authorizing a representative to act on behalf of the foreign company (optional). Requires legalization by a public notary and the Indonesian embassy.
  5. Company Registration Documents: Certificate of incorporation, articles of association, and financial statements of the parent company. Requires legalization by a public notary and the Indonesian embassy.
  6. Domicile Letter: Issued by the local sub-district office confirming the registered office address of the KPPA.
  7. Tax Identification Number (NPWP): Obtained from the tax office after registering the KPPA.
  8. Business Plan: Outlining the proposed activities and future plans of the KPPA.
  9. Passport and CV of the Head Representative: Notarized copies.

Specific requirements and documents may vary depending on the nature of your activities and the location of your KPPA. Come Visit Indonesia works with professional consultants to assist you in ensuring a smooth and efficient investment process.

Frequently Asked Questions about Company Formation in Indonesia

 What is the key difference between a KPPA and a PT PMA (foreign-owned company)?

KPPA can only conduct non-commercial activities like market research and promotion and cannot gain revenue while PT PMA can engage in full-fledged business operations, including selling goods and services.

 Do I need a visa to open a KPPA?

Yes, you will need a business visa or a Limited Stay Permit (KITAS) with specific endorsements for running a KPPA.

How long does it take to establish a KPPA?

Generally, 2-3 weeks on average, depending on the complexity of your application and any additional permits required.

Which business entity is suitable for your business in Indonesia?

It depends on requirements and status. For Indonesian citizens, we recommend establishing a PT. A representative office is suitable for market research, while PT PMA is ideal for substantial investments.

What are the challenges of investing in Indonesia as a foreigner?

Navigating bureaucratic procedures, cultural differences, and regulatory changes can be challenging. Start investing in Indonesia with Come Visit Indonesia’s professional guidance to obtain easy access to streamlining the Indonesian Investment Market.

Let Come Visit Indonesia be your reliable partner in Indonesia.

Whether you’re planning a short visit or a long-term stay, starting a business venture, or seeking legal clarity, we’re here to help you every step of the way.

Contact us today to explore how we can empower your Indonesian journey.


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