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Doing Business in Indonesia
 
 
 

Forms of Local Business Organisation

Perseroan Terbatas (PT)

Limited Liability Companies (PT) can include, and are classified as private and public companies. They are governed by the 1996 Corporation Law. PTs are managed by a Board of Directors. Non-Indonesian citizens may not be directors or foreign investment commissioners in a PT.

Badan Usaha Milik Negara (BUMN)

These are companies owned by the government.

Perusahaan Dagang (PD)

These entities are known as private trading companies, most of which are sole proprietorships.

Limited Liability Partnerships (CV)

This legal designation only applies to the silent partners in a given partnership.

Firma

These are unlimited liability partnerships, more commonly known as disclosed partnerships.

Forms of Foreign Business Organisation

The common business structures established by foreign investors in Indonesia are:

• representative office;
• regional representative office;
• foreign joint venture company;
• branch of a foreign company.

Representative Office

Foreign companies in Indonesia tend to find that a representative office (RO) is faster to set up, cheaper and simpler.

In most cases, foreign companies setting up a RO in Indonesia will come under the control of the Department of Industry and Trade. These offices are restricted to a narrow range of activities such as working as intermediaries, handling promotional activities and gathering information for the head office abroad. They may not perform operational business or trading activities such as accepting orders, bidding for tenders, signing contracts, importing, exporting, and distributing. The representatives of the company may be one or more foreigners or Indonesian citizens.

The exceptions to these controls are construction and construction consulting firms, under control of the Department of Public Works. The department allows rep offices to engage in construction and construction consulting activities as long as they have a joint operation agreement with an Indonesian partner.


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