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What the Differences between KPPA and KP3A

One of the differences between KPPA and KP3A is the scope of the business activities.”

In order to facilitate pre-investment of foreign capital investment and foreign company business expansion in Indonesia, the Government allows the incorporation of foreign company representative, which represents the foreign company or group of foreign companies overseas. Further, Indonesia Investment Coordinating Board (“Badan Koordinasi Penanaman Modal” or “BKPM”) through Online Single Submission (“OSS”) facilitates the incorporation of 3 (there) types of foreign company representative which are: foreign company representative office (“Kantor Perwakilan Perusahaan Asing” or “KPPA”), foreign trade company representative office (“Kantor Perwakilan Perusahaan Perdagangan Asing” or “KP3A”), and foreign construction service business entity (“Badan Usaha Jasa Konstruksi Asing” or “BUJKA”). This article will confine its discussion into KPPA and KP3A.

KPPA and KP3A: Definition

According to Regulation of BKPM No. 6 of 2018 its amendment on Regulation of BKPM No. 5 of 2019 on Guidelines and Procedures of Capital Investment License and Facilities and (“RB 5/2019”) defines KPPA as a representative office that leads by Individual (Indonesian or foreigners) which appointed by foreign company or group of foreign companies overseas (“principal company”) as its representative in Indonesia.

Meanwhile, Regulation of Ministry of Trade No. 10/M-DAG/PER/3/2006 of 2006 and its latest amendment on Regulation of Ministry of Trade No. 49 of 2020 on Provisions and Guidelines of Issuance of KP3A Business License (“RM 49/2020”) also defines KP3A as an individual (Indonesian or foreigners) which appointed by the principal company as its representative in Indonesia.

Both KPPA and KP3A do not require minimum capital investment and investment realization upon its corporation, contrary to PT PMA. Further, OSS has also facilitated prompt registration of KPPA and KP3A license.

Requirements

The differentiation requirements of KPPA and KP3A can be found in the following table:

 KPPAKP3A
Business ActivitiesAs supervisor, liaison, coordinator of principal company’s interests.Prepare the establishment of PT PMA and business expansion in Indonesia.Conduct activities for introduction and promoting principal company’s goods (must appoint local company as agent).Market research and supervision.Arrange import, must cooperate with local company that have API and trade license.
Business Activities of Principal CompanyGeneral Business ActivitiesTrade
LocationIn building offices of provincial capitalProvincial capital and/or district/city.
RestrictionDo not seeking any income in Indonesia, including conduct activities or engaging in an agreement/transaction of sell and purchase of commercial goods or services with companies or individuals in Indonesia.Do not participate in management of company, subsidiary or branch company in Indonesia.Head of KPPA must domicile in Indonesia and cannot hold concurrent positions as the head Company and/or more than 1 (one) KPPA.Engaging in trading activities, transaction including but not limited to tender submission, sign contracts, and claim settlement.
Validity of LicenseNo expiry date as long the company conduct its activitiesNo expiry date as long the company conduct its activities
Type of LicenseBusiness Identification Number (NIB) and RegistrationBusiness Identification Number (NIB) and SIUPKP3A

Required Documents

Incorporation of both KPPA and KP3A requires several documents for application submission, as follows:

  1. Letter of Appointment;
  2. Letter of Intent;
  3. Letter of Reference from Indonesian Embassy/Trade Attache;
  4. Letter of Statement;
  5. Articles of Association of the Principal Company;
  6. Identity of  appointed Head of KPPA (KTP/Passport);
  7. Address information.

All documents which signed overseas must be legalized by a local notary and Indonesian Embassy/Trade Attache.

Author: Kristalia Andiani Puteri

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