Many foreign investor at the early stages of investing their capital in Indonesia choose to open their representative in Indonesia. After the business starts they will aplly for foreign direct investment. The establishment of representative office is relatively easier as no need capital requirement nor complex procedure. Establishment of representative can be done dependin on the licenses type and business line needed. The type and business line for representative office in indonesia has been explained on my previuos post here.
Establishment of representative office for the company which has line business other than trade, banking as well as construction is through Indonesian Investment Coordination Board (BKPM). The establishment of representative office under BKPM is governed under its chairmand decree no. 57/2004.
Required documents for the establishment of representative office are as follow:
- Letter of Appointment from the parent company;
- Power of Attorney (if the application represented by proxy);
- Article of Association of the parent company and any amendment (s);
- Copy of valid passport (for foreigner) or copy of identification number (for Indonesia) who will be proposed as a chief of representative office; and
- Letter of Statement concerning the willingness to stay, and only work in the position as the chief of representative office without doing other business in Indonesia.
The approval will takes maximum ithin ten days after all the complete required documents is submitted. Once the approval from BKPM is obtained, some supporting legal document should also arranged. Other supporting legal documents are company registry (TDP) Legal domicile (SKDP) and tax identity number (NPWP). The whole process is estimately accopmplish within 2-3 months.
It is essential to know that representative office activities are limited to as supervisor, connector, coordinator and to arrange company’s interest or affiliated companies in Indonesia and or state outside Indonesia. No commercial transaction is allowed for representative office. specifically, representative office is pohibited to carry out activities as follow :
- Representative office is not allowed to seek revenue from the source in Indonesia including not allowed to carry out activities or to conduct a sale agreement/transaction and to purchase goods and services with company or individual in broad.
- Representative office will not participate in any form of company’s management, subsidiary or company’s branch in Indonesia
- Representative office management should domicile in Indonesia
- Representative office management should fully responsible of all office activities
- Representative office management is able to employ expatriate worker which has certain skill
- Representative office management is not allowed to carry out any activities other than office’s activities
- Representative office management obliges to carry out all prevailing government’s regulations
- Representative office management should submit annual report, not later than 31 January in the next year to the Chairman of Investment Coordination Board using KPPA’s form report
