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Learn How to Set Up a Telecommunications Business in Indonesia Today and Launch Your Own Brand Into This New Lucrative Sector

How to Set Up a Telecommunications Business in Indonesia

Thinking of starting your very own telecommunications business, but not exactly sure how? Given how widespread data usage is and how the demands, as well as the capacity for its use, are ever-increasing, it would be wise to take advantage of such a trend by starting up your very own telecommunications business. Learn how to set up a telecommunications business in Indonesia today and launch your brand into this new lucrative sector.


Why Now?

Telecommunications companies have recently proven themselves to be a viable contributor to the country’s economy, stimulating other sectors, creating new job opportunities, raising competitiveness and pulling in both local, and foreign investments for the country. As of today, Indonesia stands as the third-largest telecommunications market in the world and from the looks of it, it will continue thriving for a very long time.


Where to Begin?

Starting a telecommunications business is not unlike starting any other companies in Indonesia; you must first have your company or corporation registered as a business entity, formally. Business entities consist of many forms, and you are to make your selection based on the description that best describes your business. These include; public company (Perum), the liability company (Persero), the Firma (FA), the Commanditaire Vennotschap (CV), and the limited company. Telecommunications businesses also typically can be divided into three; mobile cellular services, fixed-line services, internet and broadband services, and network infrastructure services. These two are up to you to decide based on the nature of your business.

Keep in mind that you are required to apply for a relevant licence before you can start your business. You will need to apply for the telecommunication Service Provider Licence / Content Provider Licence issued by the Ministry of Telecommunication and Informations of Indonesia. If you are a foreigner; however, there is the condition that you must have at least US$1,000,000 in investment in Indonesia and be eligible for Permanent Business Licence.

Securing a licence is a worthwhile endeavour as it covers many things such as; basic telephony services, added-value telephony services, premium calls, phone cards, call centres, multimedia services, internet service provider, network access point, public internet phone services, data communication system services and content provider services.


Procedures for Obtaining the Licence

This process will take up to six months, two months dedicated to each of the processes stated below.

  1. You must first secure a Principle Licence, a licence that will permit you to make a direct investment into your business by procuring the necessary facilities and hardware at a given frame of time based on the category of telecommunication organising you selected.
  2. You will then have to go through an examination called the Operational Eligibility Examination/Uji Laik Operasi (ULO). This examination is technical and will be conducted by an accredited agency or team assembled by the Directorate General. The goal is to assess the business model, both technically and operationally.
  3. Upon completing the Operational Eligibility Examination/Uji Laik Operasi (ULO), you will be issued a licence of conduct (Modern Licensing), which is the final licence. This licence is in the form of a contract that will detail rights, obligations, sanctions and report of conducts which all you will have to agree to. This licence is issued by the Minister of Communication and Information. The operational aspects of the contract focus on your beginnings in undertaking your business, how your business is expected to develop, payments for right of frequency usage fees as well as the appropriate sanctions executable to clients that have violated upon the established terms and conditions. Your licence will be evaluated or reviewed every five years.

It is also important to mention that there is a Telecommunication Company Obligation fee and Contribution KPU/USO to the government for 1.75% of your company’s gross revenue.


Foreign Ownership

If you are not an Indonesian citizen and you would still like to invest in a business in Indonesia, there are several ways to which that can be done:

  1. You have already acquired shares of an existing telecommunications company based in Indonesia.
  2. You co-established an operation in Indonesia with a local business owner in the spirit of a joint venture.

The former also comes with its limitations being the Negative Investment list imposed by the government to protect the Indonesian economy from being overly saturated with foreign investment.

How to Set Up a Telecommunications Business in Indonesia