Basics on Types of Representative Offices You Can Open in Indonesia
The legal environment of Indonesian business can be quite challenging for some businesspersons, especially if this is your first time. It is necessary to open a representative office first if your company is not qualified to open a local company. A representative office is good for companies that are exploring their options for doing business in Indonesia. It will also be helpful when dealing with local businesspersons who intend to collaborate with foreign companies later on.
In this country, your foreign company can choose between the 4 legal types of representative offices.
The KPPA is the representative office that only works on the business interests of your foreign company. If your foreign company has any affiliate companies, those would be handled by the same representative office. This representative office can’t engage in revenue-generating activities. It also cannot issue any invoices. The good part though is that you can use the KPPA to reach out to the Indonesian business community.
The KP3A is the representative office for trading. This handles your parent company’s manufacturing, selling and buying activities in the country. You do not need other types of representative offices if your company will set up branch offices in Indonesian cities. Your KP3A will process that also.
However, KP3A cannot issue invoices. If the KP3A deals in any transactions locally, it needs to use the parent company’s name. The KP3A temporary license is only good for two months. You can apply for a permanent license to last one year too. You are allowed to apply for an extension later on, with authority from a Letter of Appointment.
The BUJKA is the third among the 4 legal types of representative offices. This one is exclusive to foreign construction service companies only. With this kind of representative office, you may do research about projects in the construction industry of Indonesia. This also means you may reach out to individuals, businesses, and even government agencies through this representative office. This representative office is allowed to bring in foreign specialists and hire local staff if needed. The company will also be permitted to use the representative office to open its own bank account within Indonesia.
The last representative office is called KPPA Migas which is used only by foreign oil and gas companies. You can only set this up if the Indonesian Ministry of Oil and Gas issues a recommendation letter. With this letter, you may then apply with the BKPM. The license issued will be valid for three years but you may have it extended afterwards.
Doing business in Indonesia can be much easier if your parent company opts to put up a representative office first. Though your representative office cannot legally earn revenue, it can help you establish your brand in the country. This will greatly help your parent company (and any affiliate companies) to spread the word about what it offers. It will also be quite useful for interacting with local business leaders.
So, if your company needs an Indonesia incorporation package, you may tap us at 3E Accounting Services for that. Contact us through our website soon. You may also use our other services which include accounting, auditing and taxation services, if necessary.