Finding a Virtual Office That Has Everything You Need At the Right Price was first published in Indonesia Global Law Firm.
]]>What is a Virtual Office
Virtual offices are locations where companies can work remotely without actually being there. Virtual office spaces are usually equipped with all the amenities that would be provided by traditional office space, such as desk rentals, couches, conference rooms, printers, fax machines, phones, and more. The only difference is that employees are not required to be at this location to work. Employees can simply login remotely to access their company’s virtual office space.
A virtual office space allows employees the freedom of working from home or other remote locations without sacrificing all the important features of a typical office environment. Working from home has long been popular among many employees because it provides them with the opportunity to find a better work-life balance. Virtual office spaces offer an alternative to working from home and increase employees’ flexibility.
Remote workers can simply check into their virtual office space to get the benefits of an office environment without having to work in one. Virtual offices can enhance workplace collaboration, improve productivity, and facilitate information sharing among employees. This is especially true for companies that require real-time communication with clients or business partners who are located in different parts of the world.
For example, a consulting firm may need to hold video conferences with clients on a regular basis; however, it would be difficult for its consultants to travel back and forth between client’s offices every time they needed a face-to-face consultation. With a virtual firm, all that is required is an internet connection and a high-definition camera; these two components are enough to allow the consultant and clients to interact as if they were actually in the same room.
Companies can also rent meeting rooms in their virtual office spaces. These kinds of virtual offices offer a great alternative to traditional conference rooms that cannot be easily accessed by colleagues located in distant business locations. Virtual firms, for example, do not always require every member of the team to attend client meetings; rather, it is sufficient for just one team member to make an appearance at the virtual office space for such transactions. This way, colleagues from other parts of the world can still work with each other despite being geographically dispersed.
Benefits of Using A Virtual Office
Standard benefits
Save time and money on office space
A virtual office is a great way to save money and time. All you need is a computer, internet connection, and phone line. When you have a virtual office you don’t have a lot of the overheads from running an office from home. You don’t have to pay for the space or for utilities because those things are now included with your monthly bill. You also don’t have to buy furniture, equipment, hire staff, or spend time commuting to work. This is a really great choice if you’re looking for a way to save both time and money!
It also gives the business owner the opportunity to locate their business in a better geographical location that fits their needs. Virtual offices also give companies the chance to use conference room rentals without having to pay for an expensive lease.
Work from anywhere with internet access
Office workers are trying to cut down on the time they commute to work each day, so they’re looking for new ways to do business – like virtual offices! This is where you use the internet to connect with your bosses and co-workers, even though you might not all be in the same building or city anymore.
Some companies say that having employees work from their homes helps them save money on office space and equipments. But some people say this will make team communication harder because it’s more difficult than talking face-to-face. So far, most businesses are using virtual offices as a way to save money, but it’s possible that businesses will rely more on them in the future.
Emotional benefits for workers
Employees who work from home are less stressed and more productive, according to a study. The main reason? They’re happier! As well as feeling better about themselves on the inside (and out), they also find it easier to deal with difficult customers or coworkers when you don’t have an office full of distracting noises in your ear all day long. Plus there is less risk for physical injury as a result of commuting.
Working from home will benefit the workers emotionally also because they don’t have to worry about the negative repercussions of not working or pleasing their boss. This can include feeling guilty or angry at themselves for missing work. When they don’t feel like part of the team, they might begin to experience loneliness and develop a sinking feeling in their stomach when they need to go into the office.
There are also many benefits especially for parents who want to spend time with their family but still work at the same time. Some other benefits include:
- increased morale
- higher productivity rates
- reduced employee absenteeism
- more creative, accurate and precise by working at their own pace
- feel better with a healthier lifestyle without commuting every day
- save employees money on food and travel
- enjoy the rejuvenating feeling of working from a holiday destination
Communication benefits
When an individual is at the office, they are not able to reach out to people in different locations. It is also hard for them to be involved in any conference calls or video chats. However, when businesses have virtual offices, things are different. People are still able to communicate with others. This can be done through either phone or computers. With this type of system in place, it becomes easier for workers to communicate with each other without being confined to a certain location.
Other communication benefits of using virtual office include:
- Attract and retain clients through a professional image presented by a virtual office address.
- Improve communication with your employees, partners and business associates.
- Ability to tap into global markets without the need to be physically present in certain areas of operation/trade or opening branch offices around the world.
Management benefits
Working in an office tends to get complicated because you need so many people to help out and it becomes really hard for companies to manage everything especially when they don’t know how long they will be at one location. A virtual office allows companies to still work without having an office and this frees up time so they can focus only on the important stuff without losing out on anything else.
Location benefits
Virtual offices provide the flexibility and convenience of operating out of any location. A virtual office is most often used for businesses that need to maintain an address but doesn’t have an office space they own or would like to rent. There are also virtual offices for people who travel extensively and want to maintain a presence where they live or work remotely. This can be particularly important when running a home-based business such as eBay, Etsy, or any other similar service that may require shipping from buyers outside their home country.
Other benefits include:
- Increase your companies’ access to potential leads, suppliers and new customers.
- Expand the range of services offered by your business at a minimal cost.
- Provide a centralized address for all aspects of national and international contract negotiations (i.e., legal, contracting).
Security benefits
Virtual office security benefits include both physical and digital security that is designed specifically for business environments:
- Eliminate or lower costs associated with alarm monitoring, security guards and visitor logs keeping track of who enters the building.
- Ability to maintain control over sensitive files in an offsite location via encrypted storage offers peace of mind knowing important information is secure.
How to Find the Right Virtual Office
Finding the right virtual office for your business might seem like an intimidating task. However, with a little research and effort, you will be able to find the perfect virtual office for your needs.
First, you should determine what type of services you would like to receive from your virtual office provider. Some providers offer only rental of the real estate while others may provide these services in addition to administrative support or off-site meeting space. Determine the most important service you want to get out of your virtual office and search for providers that cater specifically to that need.
Secondly, you will want to determine how much you are able and willing to spend on a virtual office. If you find one that has all the services that you need, but they are out of your price range, consider looking for a provider that only covers your most important needs. This way, you can save some money without receiving sub-par service.
Lastly, search for providers in your area by searching online classifieds or yellow pages under “virtual offices”. Make sure to check out any listings that seem promising before committing yourself to use them as your business address. You may also want to look into smaller local companies that specialize in virtual office support instead of large corporations that might not understand the unique needs of small businesses.
The right virtual office is a must for any business looking to create an efficient and effective work environment. In fact, we can help you find the perfect one-stop solution that will make it all happen seamlessly! It doesn’t matter if you have a hectic schedule. We can help with the virtual office selection process! Your time is valuable and we want it reserved for more important tasks.
Photo by Gabriel Beaudry on Unsplash
Finding a Virtual Office That Has Everything You Need At the Right Price was first published in Indonesia Global Law Firm.
]]>Easier Indonesian Import License with OSS was first published in Indonesia Global Law Firm.
]]>Since the enactment of OSS investors and importers no longer need to obtain Angka Pengenal Impor (API or Import Identification Number) and Nomor Induk Kepabeanan (NIK or Custom Identification Number) as basic import permits. After the business entities complete the registration through OSS they will acquire an NIB (Nomor Induk Berusaha or Business Registration Number) which also applies as Tanda Pendaftaran Perusahaan (Company Registration Number), Nomor Identifikasi Importir (Importer Identification Number) and Nomor Induk Kepabeanan (NIK) provided the business entities have chosen to activate all of their Customs Activity (Akftifitas Kepabeanan) when filling data in OSS before the NIB is issued. .
Difference between NIB and API/NIK
- Another convenience is that NIB remains valid as long as the company operates so that the company no longer needs to renew the API every 5 years. However, the company still has to ensure all import conditions required by the authorities are properly met.
- Additionally, companies are no longer required to apply for a permit renewal due to changes in company data or information. An update in the company’s OSS profile is enough.
- In the new system (post-OSS), only directors can be registered for the signing of import documents.
- The time it takes to issue API-P or API-U is approximately up to 5 months. NIB is considered faster because OSS has been integrated to the Indonesian customs and excise system.
- A company was not allowed to have both API-P and API-U at the same time, but now a company in possession of NIB can do both activities allowed under API-P and API-U at the same time.
Save Time and Resource Applying through a Local Agent
If you want to make sure that your import permit application is processed quickly and without hassle, then we are here for you. Our experienced consultants know all about the latest regulations in place so there’s nothing holding up what should be a straightforward process of getting whatever it is – permits or licenses needed from customs-grade documentation at any given time!
Photo by Paul Teysen on Unsplash
Easier Indonesian Import License with OSS was first published in Indonesia Global Law Firm.
]]>LKPM FAQ – Everything You Need to Know to Avoid Sanctions was first published in Indonesia Global Law Firm.
]]>What is the benefit of submitting LKPM?
In addition to serving as investment realization reports, LKPM also serves as a means of communication between BKPM and business actors. Companies can convey the problems in doing business activities and if deemed necessary, BKPM will follow up and facilitate the company’s problems submitted through LKPM.
What are the sanctions for failing to submit LKPM?
Sanctions for not submitting LKPM is listed in BKPM Regulation No. 7 of 2018 on Guidelines and Procedures for Controlling Investment Implementation: Part Five (Imposition of Sanctions) Article 31 – 39. Download the regulation here.
How many LKPMs must be submitted by the Company?
LKPM must be submitted for every KBLI in every business location in every business field.
What to do after submitting LKPM?
After submitting LKPM online to BKPM, the company should check the LKPM submission’s status. There are 4 (four) LKPM statuses that should be of concern to the company:
- Draft – LKPM has not been submitted to BKPM. LKPM draft can be edited and sent to BKPM at a later time no longer than the submission deadline
- Sent – LKPM has been sent to BKPM, but has not been reviewed by the BKPM’s LKPM officer/PIC
- Revision Needed – LKPM submitted to BKPM has been reviewed and needs revision. To see what the revisions are, you can reopen every submission step. Pay attention to the “Catatan Perbaikan” or Repair Notes field or check the email of the person in charge of your company’s LKPM submission.
- The Company can answer the questions asked by BKPM in the column “Permasalahan yang Dihadapi Perusahaan” or Problems/Constraints Faced by the Company in the “Realisasi” or Realization step.
- Please note that based on Article 3 Paragraph (4) of BKPM Regulation No. 7 of 2018, if the company does not answer or make improvements to LKPM with the “Perlu Perbaikan” or Revision Needed status then the company is considered not submitting the LKPM in question.
- Approved – The LKPM submitted to BKPM has been reviewed and approved by the LKPM officer.
How do I know my company’s LKPM status?
You can view the LKPM status on the homepage in the following column:
You can also search LKPM based on the status. To do this, go to Beranda (Home), Pencarian LKPM (Search LKPM), choose Tahun (Year), Periode (Period), Status and click Cari (Search).
Will I get a receipt for submitting LKPM?
Definitely, your receipt can be downloaded on this screen:
Can I revise the already submitted LKPM?
- If the LKPM status is “Sent”, the company can contact BKPM officer / PIC through FO Dalak on the 2nd Floor of the BKPM Office or try reaching them through contact information on this page and ask to “return” the LKPM that has been sent. The company can then revise the LKPM. During revision the LKPM’s status switches to “Perlu Perbaikan” or Revision Needed.
- If the LKPM status is “Disetujui” or Approved then the LKPM is no longer available for revision. The company can revise the LKPM for the next period.
What if the total realization of investments recorded in LKPM is not the same as the company’s financial records?
In this case, the company can contact the BKPM officer / PIC through FO Dalak on the 2nd Floor of the BKPM Office and inform the matter in the “Permasalahan yang Dihadapi Perusahaan” or Problems Faced by the Company field on the online LKPM page.
What if the LKPM is submitted past the deadline?
LKPM cannot be submitted later than the specified deadline (Article 10 paragraph 5 letter b). So if the company submits the LKPM past due, the company can accumulate additional investment as much as possible within the last 1 (one) year.
This also applies to companies submitting their first LKPM report (maybe due to ignorance/lack of information regarding LKPM submission), then the investment realization value that can be accumulated is the investment value in the last 1 year. You can write the explanation in the “Permasalahan yang Dihadapi Perusahaan” or Problems Faced by the Company field.
Example:
Company A neglected the LKPM quarter III, IV of 2018 and quarter I, II, III of 2019 period submission. At the beginning of the fourth quarter of 2019 the company received a warning letter from BKPM.
After checking with company A’s finance department, additional investments were obtained during the second quarter of 2018 to the fourth quarter of 2019 as follows:
Therefore:
In the fourth quarter of 2019 the value of the accumulated investment is only the additional investment in the first quarter of 2019 to the fourth quarter of 2019 (last 1 year period) namely:
Additionally, in relation to the above you should also write the following in the “Permasalahan yang Dihadapi Perusahaan” or Problems Faced by the Company field as follows: “The additional investment is the accumulation of first to the fourth quarter of 2019 period.”
Source: PEDOMAN dan TATACARA PENGISIAN LKPM Online_Jun
Photo by bruce mars on Unsplash
LKPM FAQ – Everything You Need to Know to Avoid Sanctions was first published in Indonesia Global Law Firm.
]]>Find Out If Your Company Need to Submit LKPM and HOW! was first published in Indonesia Global Law Firm.
]]>What Is LKPM?
LKPM (Laporan Kegiatan Penanaman Modal or Investment Activity Report) is a report on investment, labor, production, partnership as well as other obligations realization and problems faced that must be submitted periodically (Article 1 section (20) BKPM Regulation No. 5/2021).
Is Your Company Required to Submit LKPM?
You are obliged to submit LKPM, except:
- Your company has an investment value of less than Rp. 1.000,000,000 (one billion Rupiah);
- Your company is in non-bank financial institution, insurance, banking as well as upstream oil and gas sector;
- Your company has a Principle Permit (IP – Izin Prinsip), Investment Registration (PI – Pendaftaran Penanaman Modal), and/or an inactive or expired Business License (IU – Izin Usaha)
When to Report LKPM?
There are two types of LKPM based on the business scale:
Small scale business LKPM – Submitted by businesses having less than Rp 5 billion capital. They are to submit the LKPM per semester.
The submission schedule is as follows:
- First Semester. The report consists of January – June activities and should be submitted no later than July 10th of the current year
- Second Semester. The report consists of July – December activities and should be submitted no later than January 10th of the following year
Medium to large scale business LKPM – Submitted by businesses having between Rp 5-10 billion capital (medium) and more than Rp 10 billion capital (large). They are to submit the LKPM per quarter.
The LKPM submission schedule is as follows:
- First Quarter, consist of Januari – March actvities and should be submitted no later than April 10th of the current year
- Second Quarter, consist of April – June actvities and should be submitted no later than July 10th of the current year
- Third Quarter, consist of July – September actvities and should be submitted no later than October 10th of the current year
- Fourth Quarter, consist of October – December actvities and should be submitted no later than January 10th of the following year
Sanctions for Failing to Submit LKPM
BKPM (Badan Koordinasi Penanaman Modal or Investment Coordinating Board) will send three warnings one after another in writing if:
- You fail to submit LKPM for two consecutive periods, or
- It is your first LKPM without any additional investment realization for four consecutive periods in a row with zero realization value.
BKPM may also issue a temporary suspension if you don’t fulfill your obligations on minor infractions. Finally, revocation of the business permits or business activity may occur if you don’t fulfill your obligations on medium infractions.
The time period of each action taken by BKPM upon failure to submit LKPM is as follows:
- First written warning: 30 working days, if there’s no response then
- Second written warning: 15 working days, if there’s no response then
- Third written warning: 10 working days.
- Further sanctions may range from temporary suspension to termination of business permit and/or business activity (refer to Article 55-62 BKPM Regulation no 5 of 2021 for comprehensive list of sanctions).
Sanctions are voided when obligations are submitted and responses are sent to the OSS system.
Are you aware of the missed deadline? If so, don’t waste any time and contact Indonesia Global Law Firm to assist in LKPM matters.
Documents Needed to Submit LKPM
The following supporting data are needed to fill out the LKPM form.
For companies in the construction phase (prior to commercial operational)
Financial/expense data:
- Land purchase and maturity
- Building construction
- Machine and spare parts purchase
- Others, include: all operational expenses (payroll, rental expense, etc)
For companies in the production phase (parallel to commercial operational)
- Fill out a form stating that the company is ready to enter commercial production phase prior to completing commercial production LKPM
- Financial / expense data:
- Fixed capital, include: land, building, machines, etc.
- Working capital
- Production realization
- Company obligations:
- Companion labor training partnership
- Corporate Social Responsibility
- Environmental management obligations – UKL, UPL/AMDAL/Enviromental permit
- Employment BPJS (Social Security)
- etc (if required)
In general
- Any addition to employment:
- Local workers: Male/female, third party outsource workers
- Foreign workers: RPTKA, IMTA, data on accompanying local worker who will take place of the foreign worker’s position
- Documents related to problems faced including their respective updates
- Previous LKPM (if any)
How to Submit LKPM
You can submit LKPM through LKPM Online. However, first you need to obtain NIB by registering your company to the OSS system. Afterward, get access to LKPM by following these steps:
Open LKPM Online and click “Pendaftaran Hak Akses untuk Perusahaan PMA/PMDN” as shown below.
You will be presented the page below.
Fill out Company Data
Note: if you lose access to LKPM Online you can email helpdesk.spipise@bkpm.go.id and ask to resend the credentials. They will be delivered within 2 – 3 business days. The credentials will be sent to the registered email address.
Provide the following documents as a reference to obtain Access Right to LKPM Online:
- Recent deeds and their legalizations
- Power of attorney for the the person in charge for LKPM granted by the company’s Board of Directors (if the person in charge for LKPM is not the company’s Board of Directors)
- KTP and/ or Passport of the principal and agent of the power of attorney
With the access right in hand, open and login to LKPM Online. Make sure to write the user ID and password (numbers, capitals) as written in the email you received. You will then be presented with the following interface. Click “Tambah LKPM Baru” to submit a new LKPM.
In the following screen select LKPM delivery phase:
- If your company only has a Principle Permit (IP) from BKPM, select the CONSTRUCTION stage. The LKPM will be submitted over NIB owned. At this stage, the company is still in the process of building and preparing all the physical needs of the company, for instance:
- land purchase
- buildings / factory, roads, drainage, etc. construction
- purchase of machinery, equipments, spare parts, etc.
- recruitment costs of contractors for construction work, rent
land/buildings/machinery and equipment, and other costs not included in categories 1, 2, and 3 during the construction/construction period
- If your company has a Business License (IU) from BKPM, select the PRODUCTION stage. The LKPM will be submitted based on the business license owned.
- If your company has neither a Principle Permit nor Business License, select the CONSTRUCTION stage. The LKPM will be submitted over NIB owned.
Construction Stage LKPM
Upon clicking “Tambah LKPM Baru” you will be presented with the screen below:
Click “Lanjut” and you will arrive on the Investment Realization (Realisasi Investasi) interface:
Realisasi Investasi or Investment Realization section:
Write the investment realization of the reported period here.
Modal Tetap = Fixed Capital (company’s fixed assets) including:
- Land Purchase and Maturation
- Erection of Buildings, Construction of Roads, Drainage, etc.
- Machinery/Equipment and Spare Parts Purchases
- Others: for investments beyond the three expenditures above, for example:
- notary payment for the creation of company deeds,
- contractor labor payments,
- payment of office rent during construction, machine/vehicle rental, land leases, etc.
Modal Kerja = Working Capital (the amount of fund reserved for operational purposes). Working Capital is filled once for when the company is about to enter the commercial production stage.
Penggunaan Tenaga Kerja or Employment Section
Write the ADDITIONAL employee recruitment in the reporting period, NOT TOTAL EMPLOYMENT!
Realisasi Mesin dan Peralatan or Machinery and Equipments Realization Section
Write your company’s purchase of machinery and equipments then break them down into:
- Domestic Purchase (Pembelian Dalam Negeri)
- International Purchase (Impor)
- Using custom facility (Impor Menggunakan Fasilitas)
- Not using custom facility (Impor Tidak Menggunakan Fasilitas)
The number of Additional Investment Realization (Realisasi Investasi Tambahan) in Machinery/Equipment & Spare Part (Mesin/Peralatan & Suku Cadang) column must equal to Machinery and Equipment Total Realization (Total Realisasi Mesin dan Peralatan).
Permasalahan yang Dihadapi Perusahaan or Problems Faced by the Company Section
Write any obstacles, problems, constraints related to your business (if any) as well as other construction or materializing business activities related information.
Petugas Penanggung Jawab LKPM dari Perusahaan or Company’s Person in Charge of LKMP Submission Section
Write the contact information of the person in charge of submitting this LKPM. The individual must be reachable and provide information related to every information written in the LKPM. BKPM may at any time contact the person in charge and ask for data confirmation.
The person in charge does not have to be in the Company’s Board of Directors.
Note:
- After completing both the Company Data and Investment Realization forms above, you can submit the LKPM to BKPM by clicking the “Kirim LKPM” button, or
- If you have any doubts regarding the Company’s LKPM you can click “Batal, simpan sebagai draft” button to save the LKPM report as draft, and contact (021) 5252008 ext 2712, 2821, 2831, 2841 for a consultation.
Production Stage LKPM
Once the company has completed the Construction stage and meets the licensing requirements, it’s then ready to enter the commercial manufacturing stage.
- The amount of Working Capital required in one period is taken from the last LKPM of the Construction stage
- The Company must submit Pernyataan Siap Berproduksi or Ready to Produce Statement (left side of LKPM Online dashboard) before start filling out the Production Stage LKPM.
- Click “Pernyataan Siap Berproduksi” (Ready to Produce)
- Choose the KBLI radio button for the business in question (which is ready for commercial production and has met the requirements)
- Click “Isi Form” (Fill in Form), a “Pernyataan Siap Berproduksi” (Ready to Produce) form will appear as shown below:
- Complete the above form
- Click “Saya sudah membaca dan menyetujui” (I have read and approved)
- You can repeat steps 1-5 if you have multiple KBLIs
Upon completing Pernyataan Siap Berproduksi, click “Beranda” (Home) on the left menu as pictured below.
- Choose Tahap Produksi/Sudah Komersial (Production Stage/Commercial) on the right hand section
- Click “Tambah LKPM Baru” (Add New LKPM)
Complete Company Data as shown on the screen below:
- Click “Lanjut” (Continue)
You will arrive on Realisasi Investasi & Produksi or Investment & Production Realization screen.
Realisasi Investasi of Investment Realization Section
- Write additional (Tambahan) investment here
- Spending examples on additions to Fixed Capital:
- Machinery repair costs;
- New machine purchase, spare parts, etc.;
- Building or other renovations;
- Computer set units, software licenses, and other supporting equipments;
- Building, vehicle, machine rents;
- etc
- Spending examples on additions to Working Capital (for daily operations):
- Salary increases;
- Increasing salary expense due to expanding employment;
- Taxes, levies, fuels, raw and supporting materials;
- Purchase of goods traded;
- etc
Realisasi Impor Barang dan Bahan sesuai dengan API-P/API-U or Goods and Materials Import Realization According to API-P/API-U Section
Write the number of import transactions for goods and materials in accordance to API-P/API-U (if any).
Penggunaan Tenaga Kerja Perusahaan or Company Employment Section
- Write ADDITIONAL employees directly recruited by the company (NOT TOTAL EMPLYEES/LABORS) in the reporting period;
- For example: In a reporting period, a company has 150 employees. In that reporting period the number decreases to 100. The company then recruit another 65 in the same reporting period. Then the reported amount of ADDITIONAL EMPLOYEES is 15.
Permasalahan yang Dihadapi Perusahaan or Constraints Encountered Section
Write down constraints, problems, obstacles in doing business as well as other informative materials such as Business Permit No, date, issuing authority.
Produksi Barang/Jasa dan Pemasaran pada Periode Ini or Current Period’s Goods/Services Production and Marketing Section
- How many is the exported produce (Ekspor %, in percent, 0 if none)
- How many is the production realization (Realisasi Produksi) in the reporting period
- Export value in US$ (if any, 0 if none)
Kewajiban Perusahaan or Company’s Obligations Section
Fill in as per company’s data.
Petugas Penanggung Jawab LKPM dari Perusahaan or Company’s Person in Charge of LKMP Submission Section
Write the contact information of the person in charge of submitting this LKPM. The individual must be reachable and provide information related to every information written in the LKPM. BKPM may at any time contact the person in charge and ask for data confirmation.
The person in charge does not have to be in the Company’s Board of Directors.
Note:
- After completing both the Company Data and Investment Realization forms above, you can submit the LKPM to BKPM by clicking the “Kirim LKPM” button, or
- If you have any doubts regarding the Company’s LKPM you can click “Batal, simpan sebagai draft” button to save the LKPM report as draft, and contact (021) 5252008 ext 2712, 2821, 2831, 2841 for a consultation.
Image: Photo by Campaign Creators on Unsplash
Find Out If Your Company Need to Submit LKPM and HOW! was first published in Indonesia Global Law Firm.
]]>Open A Business in Indonesia for Foreigners – FAQ was first published in Indonesia Global Law Firm.
]]>Indonesia is one of the fastest-growing economies in Southeast Asia. Foreigners looking to open a business in Indonesia should be aware that there are numerous risks involved, such as labor and legal issues. The good news is, however, that these can be mitigated with sufficient research before beginning your venture.
This FAQ aims to provide you with information about opening a business in Indonesia so you can make an informed decision on whether it’s right for you. The next step will be to read this FAQ from start to finish!
Frequently Asked Questions by Foreigners on Starting A Business in Indonesia
- How does the register a company in Indonesia process work?
- Make sure your business sector is available for investment. Here’s how.
- Choose your company type.
- Obtain the Deed of Incorporation through a public notary.
- Get approval from the Ministry of Justice and Human Rights (SK HAM)
- Get provincial level permits and licenses
- Obtain Tax Identification Number (Nomor Pokok Wajib Pajak or NPWP) for your company
- Obtain a Single Business Identity Number (Nomor Induk Berusaha or NIB) for your company
- Apply for other licenses.
- Additional licenses may be required for certain business sectors
- What business entities are available in Indonesia?
- There are 3 legal entities for your business available in Indonesia. They are:
- PT PMA (Foreign Direct Investment)
- PT PMDN (owned entirely by locals)
- Represenattive Office (much less requirements but unable to perform profit generating activities)
- Check out the pros and cons of each entity here.
- There are 3 legal entities for your business available in Indonesia. They are:
- What are some of the things foreigners looking to start a business in Indonesia should be aware of before they open their company?
- Consider getting a professional to register your company. Becoming your own agent can be a daunting task. The change in regulations is always happening, and unless you’re up-to-date with all the latest changes to these rules for starting your company it will lead to disaster! It’s best if someone who knows what they are doing helps us out instead of risking getting rejected or delayed because you don’t know enough about this process.
- Obtain living and working permits for your foreign employees. Too often start-ups or entrepreneurs make a common mistake: not understanding how difficult it can be for them to run legally within Indonesian borders without permission from the Ministry of Manpower’s Office. There are many rules surrounding these permissions–and sometimes confusion as well–but if you’re willing take an extra step toward doing things by the book then your business will thank you later. In fact, recent changes in legislation mean that working here has never been easier!
- Always check the building permit (IMB) before leasing. Make sure the building you lease is deemed eligible for business purposes.
- Fail to report tax and investments accordingly. Your tax card is the key to being able to declare your taxes and avoid penalties. You must report as soon as you get it so that authorities can be notified about any activity or lack thereof when they are monitoring closely, which could result in some pretty hefty fines if ignored over a long period of time!
- How long is the business registration process?
- The process can vary anywhere from 1 month up to 3 months depending on how quickly owners send across their company documentation. But once everything has been submitted successfully, companies will be operational within 30 working days! You can also obtain your business licenses through Online Single Submission licensing application which integrates all business permit applications under one website.
- Can foreigners purchase a property in Indonesia?
- Buying a condominium or apartment and office space is possible for foreigners as long as the building isn’t subsidized government housing and the building’s land status is strata title under the Right to Use (Hak Pakai) with certain conditions that is regulated in Article 69-73 of Government Regulation Number 18/2021.
- What are the types of property ownership available for PT PMA in Indonesia?
- There are 3 types of land statuses available for rent by PT PMA (FDI):
- The Right to Cultivate (Hak Guna Usaha or HGU), granted for 35 years and extendable for another 25 years as stipulated in Article 22 Point (1) Government Regulation Number 18/2021. Another renewal will be no more than 35 years.
- The Right to Build (Hak Guna Bangunan or HGB), grants the right to build and own a building on land which does not belong to the builder for 30 years and is extendable for a maximum of 20 years.
- Renewals on State Land (Tanah Negara) and Land with Right to Manage (Tanah Hak Pengelolaan) is available for a maximum of 30 years.
- Renewal of Right to Build (Hak Guna Bangunan) on a Freehold Title Land (Tanah Hak Milik) is a maximum of 30 years using the deed granting the Right to Build on a Freehold Title Land (Article 37 Point (1) and (2) GR Number 18/2021).
- The Right to Use (Hak Pakai) is the right to use and/or collect resources from the land directly controlled by a state, or owned by other persons that grant rights stipulated in an agreement with said person.
- The Right to Use on a State Land (Tanah Negara) and Land with a Right to Manage (Tanah Hak Pengelolaan) can be obtained for 30 years, extendable for a maximum of 20 years, and can be renewed for a maximum of 30 years.
- The Right to Use (Hak Pakai) on a Freehold Title (Hak Milik) can be obtained for 30 years max and can be renewed with the deed of granting the Right to Use (Hak Pakai) on the Freehold Title (Hak Milik) – Article 52 Point (1) and (3) GR Number 18/2021.
- Right to Cultivate (HGU), Right to Build (HGB) and Right to Use (Hak Pakai) are properties that can be owned by Indonesian citizens or foreigners who have a residence in Indonesia. These entities include companies established under Indonesian law with an office based in the country as well as those foreign companies which have set up a representative office here.
- The HGU and HGB ownership transfer is allowed during the contract period. However, certain conditions may apply depending on the land usage rights that come with these properties. The individual land use rights can also be transferred around between different people as needed so long as they comply with all relevant laws in place for such a transfer of property rights.
- There are 3 types of land statuses available for rent by PT PMA (FDI):
Indonesia Global Law Firm Can Help
Indonesia Global Law Firm is the perfect company for any business that needs legal assistance in Indonesia. With years of experience and corporate knowledge, we are able to help you come up with a strategy based on what your specific goals may be, while also keeping an eye out for ways we can save money or time throughout this process.
We know how expensive and frustrating it can be when businesses have to deal with complicated laws where their operations happen–we don’t want your business to go through all of those struggles!
Indonesia Global Law Firm will help you navigate the complexities of Indonesian law and regulations. With years of experience, corporate knowledge that’s second to none, and an attentive customer-focused approach—you’ll be in good hands with our legal team!
Image Credit: Photo by Icons8 Team on Unsplash
Open A Business in Indonesia for Foreigners – FAQ was first published in Indonesia Global Law Firm.
]]>9 Steps to Start A Business in Indonesia was first published in Indonesia Global Law Firm.
]]>Make Sure the Investment Availability for Your Business Sector
Foreign direct investment is a risky venture that many companies would never consider. The decision to invest can be even more difficult if the country you are investing in does not allow it at all or only under certain conditions.
That’s why after deciding which sector or industry you want to work in you need to make sure whether the business sector is open with conditions or altogether closed for foreign direct investment. You can do this by checking the Presidential Decree No. 49 of 2021.
While the above regulations list out various sectors that may or not be open with conditions and investments depending on the business field you want to focus on, you will then need to further look up your business classification using the Indonesian Standard Business Classification (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI) that helps break down what types of businesses exist within those fields.
Choose the Type of Company
There are three business entities you can choose for starting a business in Indonesia as a foreign investor. These include:
- Foreign Direct Investment Limited Liability Company (FDI LLC) or Perseroan Terbatas Penanaman Modal Asing (PT PMA)
- Locally owned Limited Liability Company known as Perseroan Terbatas Penanaman Modal Dalam Negeri (PT PMDN)
- Representative Office
We will take a look at the characteristics, advantages of each business entity as well as some disadvantages that you need to be aware of.
PT PMA Characteristics
- PT PMA’s (Foreign Direct Investment) capital is sustained by foreign citizens. Foreign business entities or even governments can provide this investment, which comes in various forms such as direct investments and other schemes.
- PT PMA needs to have at least two members (a director and a commissioner), each being either an individual or a legal entity. This minimum requirement is designed not only as an assurance that the company will never be left without its key decision-makers but also to prevent situations where one shareholder could unfairly take advantage of another shareholder’s equity stake.
- PT PMA is required to prioritize the employment of local workers who will not only produce a quality product but allow for sustainable progress in their organization.
- If a PT PMA wants to bring in more people from overseas, the company is also required to train and transfer special technology to local workers.
- Foreign investors can set up their companies anywhere in Indonesia. However, the Indonesian Government has determined that the industrial business sector must be established in industrial estates.
PT PMA Advantages
- The minimum organizational structure consists of one Director and one Commissioner.
- PT PMA has as many rights and obligations as any local company to conduct business in Indonesia. They are subject to the same regulations and laws.
- 100% or less company ownership by the foreign investor.
- License and permits are easier to obtain.
- Lower on-site tax or import duties.
- Qualifies for special customs facilities.
- Eligible to sponsor foreign employees.
- Temporary (2 years) stay permit for foreign investors.
- Foreign investors are eligible for a permanent stay permit provided they have lived in Indonesia for 2 years consecutively.
- Re-entry multiple trips for permanent stay permit holders with 24 months maximum duration since the permanent stay is granted.
PT PMA Disadvantages
- Required to provide business activities report to BKPM quarterly (every 3 months).
- Obliged to present monthly tax reports.
- Significantly higher investment plan than PT PMDN (local company) at IDR 10 billion. This amount excludes land and buildings.
- Significantly higher minimum paid-in capital at IDR 2.5 billion.
- Ownership is regulated by Indonesia Investment Guidance (Daftar Negatif Investasi – DNI).
PT PMDN Characteristics
- Similar to PT PMA, a PT PMDN needs to have a minimum of two parties (as a director and a commissioner). Either can be an individual or a legal entity.
- Minimum paid-in capital starts from IDR 50 million to 10 billion.
PT PMDN Advantages
- Required minimum capital varies according to the company’s business classification.
- The company is allowed to have three main business activities.
- Limited Liability Company is bound and protected by company activities.
- Flexibility to replace leadership by General Meeting of Shareholders(GMS) or Rapat Umum Pemegang Saham (RUPS).
- Clear responsibility structure to owners or shareholders.
- A shareholder’s liability is limited to how much his share is in the company.
- Extra funding or capital can be earned simply by putting in more shares.
- Eligilble to sponsor Kartu Izin Tinggal Terbatas (KITAS) or Temporary Stay Permit.
- There are no strict limitations.
- Allowed to participate in open government tenders.
PT PMDN Disadvantages
- The company is 100% owned by local shareholders. Foreigners must apply to said owners for a reliable special purpose agreement, and no one else can purchase shares in the firm’s stock without their approval.
- Reports to shareholders include the company’s trade secrets, costing its secrecy.
- The process of dissolution, amendments to the articles of association, mergers, and other purposes require time, funds, and approval at the general meeting of shareholders (GMS) or Rapat Umum Pemegang Saham (RUPS).
- Subject to separate tax, also applies to dividends.
- Establishment requires a lot of time and funds (compared to other entities).
Representative Office
It is common for a representative office (which takes the form of a branch office of the parent company) to be created before the establishment of PT/PMA. The company’s products or services will need to prove they are marketable and suitable for Indonesia, so an examination would follow after approval from Indonesian authorities. Once this has been verified then foreign companies can establish either type of corporation above.
The Indonesian government’s tax policies make opening up a representative office easy to do because they have no large taxes on initial incorporation or transferring ownership shares over time. However, there are some limited regulations governing these businesses which could affect companies who want more than just one location here like limitations concerning dividends paid abroad; restrictions against conducting any banking, sales, and purchase activities from within this type of establishment; limiting foreign equity participation – (which may require special approval).
Representative Office Advantages
- No minimum paid-in capital required
- No shareholders requirements necessary
- No directors and commissioners required
Representative Office Disadvantages
- Ownership is regulated by Indonesia Investment Guidance (Daftar Negatif Investasi – DNI).
- Operational activity is limited to supervision, monitoring, management, coordination, and research. Any activities to generate profit as well as purchasing services and goods in the name of the representative office are prohibited (should be addressed directly to the parent company).
- A specific requirement for representative office location (in a provincial capital and in an office building).
- Sponsorship to foreign investors is limited.
Obtain the Deed of Incorporation Through a Public Notary
Once investors attain their Principle License (IP), they will be able to register with any public notary office and draft the establishment of an FDI company (PT PMA).
Get Ministry of Justice and Human Rights’ (SK HAM) Approval
The Ministry of Justice and Human Rights will need to approve the incorporation draft mentioned above before it can be published in the state gazette.
Get Provincial Level Permits and Licenses
After getting the company deed approved, investors will need to apply for provincial government licenses that refer mainly to regional regulation and certification required by business operating entities. Regulated by what sector the business is in, the licenses needed are Company Domicile Certificate (SKDP), Environmental License, Building Permit (Izin Mendirikan Bangunan or IMB), Nuisance Ordinance Permit, Location Permit, and Company Registration Certificate.
Obtain Company Tax Identification Number (Nomor Pokok Wajib Pajak or NPWP)
The next step is to register the company at the Directorate General of Taxes (DGT) with the necessary documents to obtain a tax ID (Nomor Pokok Wajib Pajak – NPWP).
Obtain a Single Business Identity Number (Nomor Induk Berusaha or NIB)
The next mandatory step is to apply for a Single Business Identity Number (Nomor Induk Berusaha or NIB). This identification number serves as multiple licenses in the past such as:
- Company Registration Certificate or Tanda Daftar Perusahaan (TDP)
- Import Identification Number or Angka Pengenal Impor (API)
- Customs Identification Number or Nomor Identitas Kepabeanan (NIK)
Additionally, NIB also serves as registration ID for Health and Social Security Systems or BPJS Kesehatan and BPJS Ketenagakerjaan for companies.
Apply for Other Licenses
Pre-operational additional licenses may be required depending on the business sector. Such additional licenses are commercial and tourism licenses.
If you need assistance with any of the above steps, we’re happy to help. From translating your business plan into Bahasa Indonesia and getting all necessary permits for a company opening in Indonesia, to preparing financial documents, our team is ready to assist at every step of the process. Find out how our team can help make your life easier by clicking here now!
9 Steps to Start A Business in Indonesia was first published in Indonesia Global Law Firm.
]]>