Want to know how to start a business in Indonesia? And what legislation applies to this?

Enterprise Forms

For foreign companies, the following legal forms are open:

Limited Liability Company According to Indonesian law (Perseroan Terbatas/PT): Foreign investment possible in the form of a joint venture with an Indonesian partner or an enterprise with 100% foreign capital.
PMA (Penanaman modal asing): Common legal form for foreign entrepreneurs.

Representative Office: A legal entity that can not generate profit or revenue.
Collaborative projects are possible in the form of a joint operation, Build, opera and Transfer (BOT) and Rehabilitation, opera and Transfer (ROT). Given the financial size of most projects and limited public resources, the Government has chosen to allow the private sector to participate in the realisation of infrastructural projects.

Investment Policy

For foreigners it is not possible to start a business in Indonesia without a pma or a candidate. Using a candidate means that the decisions, formal, must be made by the candidate.

The ‘Badan Koordinasi Penanaman Modal’ (BKPM-Investment Coordinating Board) is the one-stop shop for foreign investors. Acquiring land is a focus in Indonesia

How you want to start doing business determines, among other things, where you are going to settle and which legal form you choose. You can choose from various company forms if you are going to settle in the Netherlands. Consult the Chamber of Commerce for more information.

If you want to start a business in Indonesia, you will soon run into some barriers. It is true that in Indonesia you can not start a one-man business as a foreigner.

Fixed a PMA IN Indonesia.

Once the PMA is set it is possible to start your (own) business and you can make your own decisions. , if it takes two to three Monts a PMA we always establish advice to start up a PMA before you buy land or make business commitments.. You have to make sure that the company has all the licenses it needs, otherwise you will be surprised afterwords.

In Some industries it is necessary (by Indonesian law), which part of the shares belong to a local company or person of Indonesia. In most cases the foreign investor can have the majority shares and thus also a majority vote.

That is why EIBN always ensures an examination of the documents and licenses the company needs to start in a legal way. A local PT can be fixed faster, but this legal form can only be used by Indonesian companies or individuals. EIBN can help you to establish your company in Indonesia and other documents also with professional and business advice.

A better solution is to establish a PMA (Penanaman Modal Asing) in Indonesia. It doesn’t matter if the director is a local person from Indonesia or a foreigner living in Indonesia.

Wonderful Indonesia : campaign by government of Indonesia to promote its tourism and business

Is Indonesia a good market to expand my business?

The Indonesian economy continues to grow as in many previous years at a convincing pace with more than 6 % GDP growth also in 2016. Indonesia is becoming a truly global trade partner as part of the ASEAN Economic Community AEC, the Trans-Pacific Partnership agreement TPP, and the recently concluded EU-Indonesia Free Trade Agreement EVFTA. Indonesia locates next to China in the eastern side of Indochina peninsula in the South East Asia. All these increase remarkably Indonesia’ s attractiveness as a market, business location and investment target.

At the moment Indonesia is outlining and making implementation plans for its development plans until 2020 as their new five years’ plan. The government is focusing particularly on the development of education, infrastructure, energy and economic.

Indonesia is dynamic emerging market with over 260 million inhabitants, over 50% of them are in the age group of 20-40 years. Country has the fastest growing middle class in Asia and the purchasing power is increasing. Labor cost in Indonesia is about 50% of Chinese and 40% of labor cost in Thailand and Philippines. FDI in manufacturing, electronics and high-tech industries constitute the fast growing part of the economy. Learning, training and enhancing of labor skills are high on local people, government and major cities agenda.

Finland is an old friend of Indonesia and has exceptionally good bilateral political relations which are based on more than 30 years of development aid cooperation. Finland transition plan has a strong aim to further strengthen and continue with new type of strong business partnerships by 2018 when development aid ends.

Finnish and European companies’ products and solutions interest a lot, have high quality image and are needed. Transfer of knowhow is well known, appreciated and needed.

The potential is enormous, market is fast developing and local private sector purchasing power and ability to buy good and quality products is developing. Demand for technology, machinery, applications for various production sectors, and energy and environment-related improvements, education and training, retail sector.
Most European countries are increasing their trade promotion efforts, growing their trade support teams.

The growth in Indonesia exports has been driven by the fast growing manufacturing, telecommunications/especially electronics, clothing and apparel sectors with major exports to ASEAN (19%), EU (19%), US (18%), Japan (12%) and China (11%). In the last 5 years, Indonesia’s exports have doubled as competitive minimum wage and low costs of utilities have boosted FDIs in the manufacturing sector.

More information to understand Indonesian Rupiah rate to Euro

Ease of doing business, most important factors

It is easy to find opportunities and needs in Indonesia almost in all sectors and get into first interesting discussions with potential partners. Finnish and European companies’ products and solutions interest a lot, have high quality image and are needed. But many of those are not known, marketing and sales efforts are needed. Indonesia has just turned from a long term development aid country to growing and emerging middle income market, which is opening up to global business and mutual business partnerships.

It is not easy to turn opportunities into business and sales, but it is possible. Personal sales and f2f meetings are essential in the beginning. Frequent follow up meetings and showing interest and commitment is road to success. Companies need to have resources (manpower) to first year’s business development efforts. Frequent visits, longer stays are important and preferably local presence.

There are already a lot of foreign companies doing business and present in Indonesia. Not yet all are there, which makes it easier to get into the market. The local companies are not yet too strong which also gives room for foreign newcomers.

A good now in an operates best by networking– important to know right people and which strings to pull. Corruption is widely present– it may slow things but can be overcome.

Additional to central government.

Business environment is developing and in a change all the time. It takes time, resources and patience to create turnover. Time is required to understand the culture and create relationships. Locals appreciate Indonesia s culture apprehension.
Corruption exits and Indonesia is no 91 of 174 in corruption ranking index. Ease of doing business index (WB, 2016): 90th

All these increase remarkably Indonesia’ s attractiveness as a market, business location and investment target.
Indonesia is dynamic emerging market with over 92 million inhabitants, over 50% of them are in the age group of 20-40 years. Labor cost in Indonesia is about 50% of Chinese and 40% of labor cost in Thailand and Philippines. Indonesia has just turned from a long term development aid country to growing and emerging middle income market, which is opening up to global business and mutual business partnerships.

There are already a lot of foreign companies doing businessin Indonesia.

Contact EIBN if you need more information on how to expand your business to Indonesia!