Knowing Four Types Representative Office in Indonesia

”In its activities, Representative Office is limited only as a supervisor, liaison, coordinator and management of the interests of the company or its affiliated companies and prepares the establishment and development of PMA company business in Indonesia or in other countries and Indonesia.” 

Foreign Company Representative Office is an office established by a foreign company or a combination of foreign companies in another country as its representative in Indonesia, which aims to take care of the interests of its affiliated companies and to prepare the establishment and business development of Foreign Investment Companies hereinafter abbreviated as (“PMA”). Representative Office was established to conduct market research to assess whether the company’s products can and are suitable to be marketed in Indonesia. After being convinced that the product can be accepted and developed in Indonesia, the related foreign companies can continue to establish the PMA.

By issuing the Government Regulation No. 24/2018 on the Electronically Integrated Business Licensing Service No. 24/2018 (“PP No. 24/2018”), the Government regulates that the application for Foreign Company Trade Representative License and Representative Office License for Foreign Construction Company is submitted to the Online Single Submission. Meanwhile, the General Representative Office and the Representative Office with Subsector Oil and Gas is still applied to the BKPM.

In accordance with Investment Coordinating Board of the Republic of Indonesia Regulation No. 6 of 2018 (“Perka BKPM No. 6/2018” and PP No. 24/2018, there are 4 (four) categorize of representative offices in Indonesia, namely:

  1. Foreign Company Representative Office. Foreign Company Representative Office in services or consultancy sector, is an office headed by an individual Indonesian citizen or a foreign national appointed by a foreign company or a combination of foreign companies abroad as a representative in Indonesia.
  2. Representative Office of Oil and Gas Foreign Companies. Representative Office of Oil and Gas Foreign Companies, is an office headed by an individual Indonesian citizen or a foreign national appointed by a foreign company or a combination of foreign companies abroad as its representative in Indonesia in the oil and gas sub-sector.
  3. Representative Office of a Foreign Trade Company (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing / SIUP3A). Representative Office of a Foreign Trade Company, is an office headed by an individual Indonesian citizen or a foreign national appointed by a foreign trade company or a combination of foreign companies abroad as a representative in Indonesia.
  4. Representative Office of Foreign Construction Services Business Entity (Kantor Perwakilan; Izin Usaha Jasa Konstruksi Asing). Representative Office of Foreign Construction Services Business Entity is a business entity established according to law and domiciled in a foreign country, has a representative office in Indonesia, and is equivalent to a legal entity of a Limited Liability Company engaged in construction services business.

Important Note for Representative Office in Indonesia

In its activities, Representative Office is limited only as a supervisor, liaison, coordinator and management of the interests of the company or its affiliated companies and prepares the establishment and development of PMA company business in Indonesia or in other countries and Indonesia.

Representative Office is prohibited from seeking any direct income from sources in Indonesia, carrying out activities or engaging in sales/ purchase transactions and commercial goods or services with companies or individuals in Indonesia, and not participating in the management of a company, subsidiary or branch of a company in Indonesia. So, Representative Office can only take care of the interests of the company without being allowed to carry out any direct commercial advantage.

Representative Office must be located in the provincial capital and having an address at the available office building. In addition, the head of the Representative Office must also reside in Indonesia fully responsible for the smooth running of the office and not be able to carry out activities outside of the Representative Office activities and not hold concurrent positions as the head of the company and/ or more than 1 (one) Representative Office.

In the case of the Representative Office head appointed is a foreign national and/ or employs foreign workers, Representative Office must employ Indonesian workers in accordance with the provisions of the legislation.

 

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