As an archipelagic country with abundant natural wealth, Indonesia has always been a target for investors in Doing business in Indonesia and invest here.
Indeed, for a long time, Indonesia has attracted the attention of foreign investors to invest. Not to mention, Indonesia has a large consumer market opportunity.
However, you need to know that Doing business in Indonesia is not as easy as you might think, there is a lot of preparation for business permits, a list of companies, and other requirements that must be met, especially in establishing a company foundation.
Indonesian regulations do limit foreign ownership to establish a Doing business in Indonesia. This is a challenge in itself for foreign citizens who want to do business in Indonesia. So if you are interested in becoming investors and entrepreneurs Doing business in Indonesia, of course, you must be ready to face some of these challenges, namely:
High minimum initial capital
To do business in Indonesia, don't be surprised to hear that BKPM requires all foreign companies in the form of PT PMA to have a minimum investment plan of 10 billion rupiahs(+/- USD 800,000); amounting to 2.5 billion(+/- USD200,000), 25 percent of the total investment must be paid-up as the initial minimum capital.
Prohibition against foreign ownership
One of the legal challenges that foreign investors have to face is that the government wants local businesses to thrive; the amount of investment that foreign Doing business in Indonesia can make is regulated in the Negative Investment List(DNI) or Indonesian Investment Law.
Infrastructure is still lacking
Doing business in Indonesia is undeniably influenced by the rapid development of infrastructure development in Indonesia, it turns out that the quality and quantity of infrastructure in Indonesia is not yet optimal. The existing infrastructure is not evenly distributed in each region.
This results in development being limited to a few areas that have adequate infrastructure, for example, Java Island and several other areas.
In order not to run into obstacles later, you need to find a lot of information about business and business licensing regulations and their implementation mechanisms. Because Indonesia has been known for its laws and regulations that often change. These fast-paced changes are hampering the potential for businesses in Indonesia to thrive.
Hiring foreign employees
Doing business in Indonesia according to the Indonesian Minister of Manpower, local residents are prioritized in terms of the recruitment of workers. If investors can easily work and get work permits, getting work permits for foreign employees will certainly be more challenging.
However, this does not mean that foreign citizens(WNA) do not have the opportunity to set up a business in Indonesia. In fact, there are also many expatriates who are successful in Doing business in Indonesia.
If you want to be part of Indonesia's fast-growing economy, you need help getting started doing business in Indonesia. With BINKA Consulting, we will help you face the challenges of Doing business in Indonesia.
Procedures for Establishing Doing business in Indonesia
Similar to domestic investors or individuals who wish to establish a company, licensing must be carried out properly. Foreigners if want to Doing business in Indonesia must follow several applicable procedures in accordance with the rules set by the government.
Here are some procedures for establishing companies with foreign capital or those owned by foreigners(PT PMA) in full.
Before Doing business in Indonesia, he established PT. PMA, there are several things that must be done by individuals or groups of foreign investors. First is knowing the Negative Investment List(DNI) that applies in Indonesia.
Regulations regarding restrictions on ownership by foreign investors are recorded in the Negative Investment List(DNI). The number of foreign investors Doing business in Indonesia is recorded in the DNI. Apart from that, DNI also regulates the percentage of ownership in foreign investment.
DNI has several categories, namely:
Doing business in Indonesia that are closed to foreigners, open with certain conditions, and open without any conditions. If the type of business is on the list of closed business fields at DNI, the license will not be granted.
A PT PMA that is recognized in Indonesia must have a minimum initial capital of around IDR 10 billion. Of this amount, about a quarter of 25% must be paid as initial capital. Finally, first, determine the domicile of the company. A PT PMA can be established if there is already a physical building, not a virtual office.
After you have done the above preparations correctly, do several procedures to make a permit letter, namely:
1. Apply for a temporary permit
This provisional permit application is made to determine whether the business sector to be taken is permitted by foreign investment or not. If allowed, the next stage can be continued.
2. Registration of investment at BKPM
When registering with the Investment Coordinating Board(BKPM), prepare the following documents :
Certificate from the Embassy of the investor's country of origin located in Indonesia.
Challenges of Doing Business in Indonesia
Update information about Doing business in Indonesia
Hiring foreign employees
Procedures for Establishing Doing business in Indonesia
Preparation before establishing Doing business in Indonesia
Doing business in Indonesia or PT. PMA