Investment Procedure : Representative Office

REPRESENTATIVE OFFICE

Foreign investor could setup a Representative Office to study the market for a maximum period of 5 years. Foreign Representative Office is an office incorporated by an overseas company to represent itself in Indonesia with a view to manage the interest of the company or the affiliated companies in Indonesia and/ or in other countries and/ or to prepare the establishment and development of foreign investment companies in Indonesia.

Foreign Representative Office usually has limited functionality and generally are prohibited from directly engaging in operational activities, signing contracts, issuing official invoices, receiving payments from its clients, and directly engaging in any other profit generating activities.

The requirements and procedure to form a representative office in Indonesia is governed by the Regulation of The Chairman of BKPM No. 15 of 2015 Regarding Guidelines and Procedures for Licensing and Non-Licensing Investment. According to this regulation there are 3 types of Representative Offices which can be incorporated in Indonesia, namely:

1. Foreign Company Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA).

The functionality of KPPA is limited to:

  • Manage the parent company’s corporate interests.
  • Prepare the establishment and development of its business in Indonesia.

The documents required to incorporate KPPA are as follows:

  • Copy of Articles of Association of the foreign company represented and any amendment(s) in English or its translations in Bahasa Indonesia from sworn translator.
  • Letter of appointment from the foreign company represented to whom which will be proposed as a Representative Executive.
  • Copy of passport of director of company to be represented.
  • Copy of valid passport (for foreigner) or copy of identification card number (for Indonesian citizen) who will be proposed as a Representative Executive.
  • Letter of statement concerning the willingness of Representative Executive to stay, and only work in the position as the Representative Executive without doing other business in Indonesia.
  • Power of Attorney (PoA) if the application is not obtained directly by Representative Executive.

Important Notes for KPPA:

  • KPPA can only be incorporated in capital of Indonesian provinces (e.g. Jakarta, Bandung, Yogyakarta, Kalimantan, etc.).
  • The location of KPPA must be in office building.
  • KPPA permit is valid for 3 years and can be extended 2 times for 1 year each.
  • After 5 years KPPA may be granted extension for different activities than before.
  • KPPA must be incorporated in an office building or tower.
  • In case Representative Executive is foreigner, he/ she must obtain Temporary Stay Permit Card (Kartu Izin Tinggal Terbatas or KITAS) and Work Permit to stay and work in Indonesia.

2. Foreign Company Trade Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing or KP3A).

The functionality of KP3A is limited to:

  • Introduce, promote and market the goods produced by a parent company, as well as providing information, or directions for use and importation of goods to companies or users in Indonesia.
  • Conduct market research and surveillance in Indonesia for domestic sales of goods produced by parent company.
  • Conduct market research on the items required by parent companies abroad (who appointed the company in Indonesia) as well as providing information about the terms of the export of goods to companies in Indonesia.
  • Closing contracts for and on behalf of the company that is appointed by the parent company in Indonesia for export of goods.

In order to perform the trading related activities in KP3A, a Foreign Company Trade Representative License (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing or SIUP3A) must be obtained from BKPM OSS-C. The documents required to obtain SIUP3A are as follows:

  • Letter of appointment from the foreign company represented to whom which will be proposed as a Head of Representative Office.
  • Letter of intent concerning the activity of reprecentative office in Indonesia and the regulation to not engage in any trading activities as well as selling transaction.
  • Letter of statement concerning the willingness of Representative Executive to stay, and only work in the position as the Representative Executive without doing other business in Indonesia.
  • Letter of reference from a Commercial Attaché/ Representative of the Embassy of the Republic of Indonesia in the country of origin.
  • Head of Representative Office must attach following documents:
    1. Curriculum Vitae or CV (Daftar Riwayat Hidup).
    2. Foreign citizen: copy of valid passport and Foreign Worker Employment Plan (Izin Mempekerjakan Tenaga Kerja Asing or IMTA).
    3. Indonesia citizen: copy of valid resident identity card (Kartu Tanda Penduduk or KTP) and Tax ID (NPWP).
  • Letter of domicile of KP3A from building management or local official.
  • Copy of temporary SIUP3A.
  • PoA if the application is not obtained directly by Head of Representative Executive.

Important Notes for KP3A:

  • KP3A is prohibited to carry out any trading activities and sales transactions such as submitting tenders, signing contracts, settling claims, etc.
  • KP3A can be incorporated in capital of provinces, districts and cities in Indonesia.\
  • KP3A must be incorporated in an office building or tower.
  • In case Representative Executive is foreigner, he/ she must obtain Temporary Stay Permit Card (KITAS) and Work Permit to stay and work in Indonesia.

3. Foreign Company Construction Representative Office (Kantor Perwakilan Badan Usaha Jasa Konstruksi or BJUK).

License can be obtained by a Foreign Construction company with large scale qualification as stipulated in the Ministerial Regulation. BJUK License can be used to undertake construction service business activities throughout the territory of Indonesia. BJUK License is valid for 3 years and can be extended.

Documents required for obtainment of BJUK are as follows:

  • Aplication Letter (original in Bahasa Indonesia).
  • Copy of Article of Association of Company from mother country which has been legalized by a public notary or competent authorities in the country of origin.
  • General data of foreign construction services business entity.
  • Original letter of recommendation from Indonesian Embassy in country of origin which states that construction company is legally registered in the country and has a good reputation.
  • Copy of valid construction service permit of parent company which has been certified by the issuing authourity.
  • Copy of equalization certificate legalized by an Institute of national level.
  • Original letter of appointment for the Chief Representative of BJUK by the parent company.
  • Record of latest financial statements of parent company which has been audited by a public accountant.
  • Copy of passport or identity card of Chief Representative.
  • CV of Chief Representative.
  • Domicile Certificate of the Representative Office in Indonesia issued by the local municipality office.
  • Letter of statement of truth and authenticity of documents (original).
  • Letter of Statement that the directors or commissioners of parent company are not serving as commissioners or board of directors in other construction companies (original).
  • Original PoA stamped and signed by company directors if the application is not directly carried out by Chief Representative Executive along with documents of receiver of PoA.
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