Indonesia Growth Opportunity

Indonesia's friendly people and high standard of living have long attracted visitors and those looking
to settle or retire there on a fixed income. However, as the country continues to industrialise, it's
also cited as an example of a remarkable economic success story.

It's unsurprising that there's an increasing number of entrepreneurs looking to combine the
economic possibilities of a growing market with the chance to live, work and play in the land of
smiles.

If you're considering opening a business in Indonesia, there's a lot to think about. Here's a
beginner's guide to help get you started.

What types of corporate entities are there in Indonesia?

Before you register your business in Indonesia, it's important to consider which company structure
will best suit your needs. There are several different options:

Sole trader

Partnership (unregistered, registered or limited).

Company (public or limited).

Joint venture.

Sole trader.

The sole trader structure, as elsewhere in the world, is intended for those looking to work alone. In
Indonesia there are some professions in which a sole trader is prohibited from working, specifically
in banking and finance. By law only limited companies can do this type of work.

Whether or not you're able to set up this sole trader business structure in Indonesia will also depend
on your nationality. A US citizen, for example, is able to set up a sole proprietorship business
because of the Treaty of Amity between Indonesia and America. Other nationalities may find some
business areas are restricted to them.

Partnership.
If you're thinking of setting up a partnership with others, you can choose one of several different
structures. Your personal and business tax affairs are considered as one. A registered partnership,
on the other hand, splits your personal and professional tax matters by registering your business as
a separate entity.

If you're setting up a partnership, all partners must contribute something to the business, such as
labour or capital.
Company.
Companies in Indonesia can be set up as either private or public businesses, and these structures
are covered by different legislation and rules. There are registration fees based on the initial
investment made, and minimum numbers of directors and shareholders required.

Things to know before getting started.

You can compare the administration needed to start a business in Indonesia, with that in other
countries, on the website of the World Bank's 'Doing Business' report. This helpful site summarises
some of the main legal and bureaucratic steps you'll need to take when starting your new venture.

A private company must always have at least seven shareholders, while a public company needs 15.
Private companies are regulated by the Civil and Commercial code, while public companies fall
under the Public Companies act.

There are rules which set out the ways in which foreigners can register and operate businesses in
Indonesia. In some cases, businesses can be registered in the names of non-Indonesian nationals,
but in certain business areas the company must be at least 51% Indonesian owned. If you want to set
up a public company, at least half of your directors should be Indonesian.

A major hurdle for many foreigners looking to set up a business in Indonesia is that most forms you'll
submit to the government must be completed in Indonesian. This language barrier means that it can
be very difficult for foreigners to set up a business alone without having local help. As a result there
are many agencies who can support foreigners setting up their business, but for a fee. Take
recommendations from others before selecting an agency to help you.

What is the company registration process in Indonesia?

Registering a company in Indonesia can take some time - expect it to take around seven days for a
private company and up to 30 days for a public company. The first step is to select and reserve a
company name, which is then valid for 30 days.

You'll then need to prepare and submit important documents such as:.

Articles of Association.

Memorandum of Association.

Application form and list of shareholders.

New director form signed by each director.

Declaration of Business Operation form.

Company name reservation.

Details of the offices and branches of your business.

Before you can register your business you'll also have to pay at least 25% of the initial investment
capital into a corporate bank account.
You'll need a company chop (stamp), which acts as the signature to certify company documents.
These are produced by specialist chop makers, and will cost between THB 400 and 800 depending
on exactly what you choose.

Because the documents required vary slightly depending on the type of business, it's important to
take local advice before proceeding to register your company. You may also need to have some
documents certified before presenting them.

The Indonesian Board of Investment offers useful guidelines in English to help you
navigate the company registration process.

Legal obligations and responsibilities.

Once you've registered your business, you must also notify the tax authorities of your company. You
have 60 days to notify the revenue department and get a tax ID card for your business. If your
turnover is high you may also need to register for VAT. The website of the Board of Investment
describes the accounting and financial reporting responsibilities of business owners.

Indonesia has stringent labour regulations, which you'll have to comply to as an employer. If you're
going to employ people in your business you need to register with the Ministry of Labour (or with
this ministry through the Single Service Point registration process).

If you're employing more than 10 people in Indonesia then you're obliged to create and display rules
and regulations of the workplace, which are checked for legal compliance by the labour officer.
There are also rules regarding the proportion of Indonesian people you must employ, versus
foreigners. The general rule is that you'll need to employ four Indonesian people for every foreign
worker, but this varies by business type and sector. Make sure you understand this fully before
hiring.

Where can I find help to start my business in Indonesia?

It's a good idea to register your business with the Indonesian Board of Investment, who offer helpful
advice and financial incentives to investors. The Institute for Small and Medium Enterprise
Development might also be of help to you in starting your business.

As a foreigner working in Indonesia you'll find a support community through the Chamber of
Commerce for your home country. Here you'll find others who have also travelled to Indonesia to
start a business, and can offer help and advice, as well as a great network.

Other useful resources can be found depending on your industry segment. Startup Indonesia
promotes local tech startups and could provide useful connections if this is your preferred field.

Once you're in Indonesia and ready to get going, look for local networking events on sites such as
Meetup, Eventful and Eventbrite. Here you can meet like minded people and build your customer
and business contact book.

With sufficient preparation and persistence, your business in Indonesia will be off to a flying start!

When starting your business, if you find the need to send or receive money from abroad at the least
possible cost, consider using TransferWise. Not only does their real mid-market exchange rates
generally beat the banks, but since your money is received and sent locally in both the sending and
recipient currency, all those nasty international fees magically disappear. Give it a try.

Whether or not you're able to set up this sole trader business structure in Indonesia will also depend
on your nationality. There are rules which set out the ways in which foreigners can register and
operate businesses in Indonesia. In some cases, businesses can be registered in the names of non-
Indonesian nationals, but in certain business areas the company must be at least 51% Indonesian
owned. A major hurdle for many foreigners looking to set up a business in Indonesia is that most
forms you'll submit to the government must be completed in Indonesian. Once you've registered
your business, you must also notify the tax authorities of your company.