“The Chief of Representative plays a crucial role, acting as a liaison between the office and the principal company abroad, overseeing compliance with Indonesian laws, and managing day-to-day operations.”
Before conducting business in Indonesia through a foreign direct investment company (known as PT PMA), a Foreign Company may consider establishing a representative office to conduct market research. According to Article 9 Head of BKPM Regulation Number 4 of 2021, a Representative Office is an Indonesian or foreign individual, or a business entity that act as a representative of a business actor in Indonesia. For carrying out their activities, a Chief of Representative Office held a pivotal role in its operational management.
Chief of Representative Roles
As a representative office, the main roles of their chief are to coordinate with its principal office outside of Indonesia. The chief of representative serves as supervisor, liaison, and coordinator to manage the interests of its principal company or its affiliates in Indonesia.
Another Chief of Representative duties are ensuring the compliances of the that all the representative office activities comply with the laws and regulations in Indonesia. This include ensuring the compliances of the risk-based business license is correctly submitted through the OSS System and in accordance with the stipulated requirements and the activities conducted by the representative office comply with the established limitations, including the management of the company, subsidiaries, or branches in Indonesia. As the Representative Office is prohibited to engaging in commercial activities, sales, or the purchase of goods or commercial services with companies or individuals in Indonesia, the Chief of Representative shall also ensure that the representative office conduct their activities without seeking income from sources in Indonesia.
The Chief of Representative also have duties regarding the management and administration of the representative office. The Chief of Representative shall take full responsibility for the day-to-day operation of the representative office and managing office administration.
Chief of Representative Responsibilities
According to Head of BKPM Number 4 of 2021, the Chief of Representative of a Foreign Representative Office must reside in Indonesia and is not allowed to engage in activities outside the representative office’s scope. The Chief of Representative is also not permitted to hold a position as the Head of a company and/or more than one foreign company representative office. The Chief of Representative shall ensure the Representative Office compliance to the relevant laws and regulation. In the event that the Chief of the Representative office is a foreign national or employs foreign workers, they must ensure compliance with regulations related to the use of Indonesian labour.
Changing Chief of Representative
While there are no specific regulations outlining procedures for changing the Chief of Representative, our experiences indicate several necessary steps for replacing a Chief of Representative in a Foreign Company Representative Office in Indonesia.
As the “representative presence” of a foreign company in Indonesia, a Foreign Company Representative Office functions as an extension of its principal company abroad and is not considered a separate entity. Consequently, the Chief of Representative is appointed and designated by the principal office located outside Indonesia.
To initiate the replacement of a Chief of Representative by appointing a new Chief, the principal office must utilize an Appointment Letter for the new Chief of Representative. In addition, the principal office should issue a Statement Letter and Letter of Intent concerning the replacement of the Chief of Representative Office. These documents must undergo legalization by the Indonesian Embassy/Trade Attaché and Notary in the principal company’s home country. Once the three related documents are legalized, the Chief of Representative can be replaced through the OSS system by uploading the legalized documents.
By understanding the roles and responsibilities of Chief of Representative and the procedures to appoint a new Chief of Representative above, the Chief of Representative office can effectively carry out their role, contribute to the success of the foreign company’s operations in Indonesia, and ensure compliance with applicable regulations.
Author: Daffa Zidan
Do you need assistance and/or further discussion about the Chief of Representative Office, either a new appointment through establishing a representative office, changing the Chief of Representative Office, or arranging a work permit for the Chief of Representative Office?
Let’s contact us through:
WhatsApp Hotline: 0812-1111-8608
Email: info@ylpconsulting.com
Our experienced Consultant will be delighted to assist you.