Starting business in Indonesia

Prosedures Starting business in Indonesia

Procedure 1.
Obtain the standard form of the company deed from the Department of Justice and Human Rights; arrange for a notary electronically; obtain clearance for the Indonesian company's name at the Ministry of Justice and Human Rights.
Time to complete:
7 days
Cost to complete:
IDR 385,000 for name clearance and reservation (official charge), included in the following procedure
Comment:
This procedure is to avoid a rejection by the Ministry of Justice and Human Rights of the Indonesian company's deed of establishment and articles of association in the event that the same name has been used by another Indonesian company. Since the process must be done through a computerized processing system, such reservation and clearance must be done by a notary. The reserved name will be blocked for a period of 60 days. If the founding shareholders are confident that the same name has not been being used by another Indonesian company, this procedure may be ignored.

Procedure 2.
Founders sign deed of establishment before a notary (Public Notary)
Time to complete:
7 days
Cost to complete:
notarial fees of IDR 10,000,000
Comment:
A nominal stamp duty (Rp 6000) is charged on the deed of establishment, plus fees of 0.1% of the company's authorized capital. The notarial fee varies depending on the notary used and the level of initial capital for the Indonesian company, from Rp7,500,000 to US$3,000, or 0.1% of initial authorized capital if capital is above certain level. This fee will cover all fees need for the procedure of the company establishment up to obtaining the approval from the Ministry of Justice and Human Right and the publication on the State Gazette. For some Notary this fee may have covered the obtaining of NPWP, TDP and SIUP.
Standard articles are available from the Department of Justice and Human Rights of the Republic of Indonesia.

Procedure 3.
Obtain a certificate of company domicile from the local municipality.
Time to complete:
10 days
Cost to complete:
no official charge
Comment:
All Indonesia limited liability companies are required to have Certificate of Company Domicile. This Certificate is issued by the head of the village where the company concerned is located (Lurah), or by the building management if the company leases its office space in an office building, confirming the domicile of the company. There is no official fee for this letter. However, there is usually an unofficial fee for administration and the amount will vary depending on each municipality, starting from Rp. 200.000,00- 500,000,00.

Procedure 4.
Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP)
Time to complete:
14 days
Cost to complete:
no charge
Comment:
The company must obtain an NPWP from the tax office. After the company domicile certificate and the NPWP are obtained, a bank account can be opened. The company must also obtain a taxable entrepreneur identification number (NPPKP) if it expects to have an annual revenue of more than Rp.600,000,000 for sales of goods and services. A NPPKP is necessary for VAT collection and/or withholding. The numbers for the NPWP and NPPKP are the same under current regulations. The company's domicile certificate, articles of association and ID card of the directors have to be submitted to obtain the tax numbers. Unofficial fees may apply in practice and range from Rp 200,000 - 500,000.

Procedure 5.
Deposit the initial issued capital in a bank account in the name of the proposed company - open bank account
Time to complete:
4 days, depending on complexity of drafting and availability of notary
Cost to complete:
Administration charges by the bank may apply; no official fee
Comment:
File NPWP number. The time for bank account opening may be longer than 1 week since the Central Bank (BI) requires all banks to comply with the "Know Your Customer (KYC)" requirement. Banks usually require the applicant to submit a copy of the company's articles of association and copies of ID cards of the proposed authorized signatories.
The Company Law stipulates that at the time of incorporation, the founding shareholders must pay up at least half of the issued capital in the company, and pay up the remainder of the issued capital by the time the Ministry of Justice and Human Rights approves the company's articles of association. In practice, however, the Ministry of Justice and Human Rights normally requires the founding shareholders to produce evidence upon submitting the application for approval of the articles of association, stating that the full amount of the issued capital of the company has been paid up by the founding shareholders.

Procedure 6.
Pay to the State Treasury for the non-tax state revenue (PNBP) fees for legal services pursuant to the Decree of the Minister of Justice No. M.OI-UM.01.06/1993
Time to complete:
1 day
Cost to complete:
IDR 200,000, included in procedure 2
Comment:
The payment for PNBP fees normally would be easier through the Notary since there is a new computerized system for registering/establishing a company, which has been applied by the Department of Justice ("DoJ"). This system can only be accessed by the Notary.

Procedure 7.
Apply to the Ministry of Justice and Human Rights for approval of the deed of establishment
Time to complete:
14-30 days
Cost to complete:
IDR 1,100,000, included in procedure 2
Comment:
The notary preparing the deed of establishment of the company must electronically file the certificate of bank account and copy of the relevant bank transmittal advice, NPWP, and certificate of company domicile with the Ministry of Justice and Human Rights. The Minister of Justice and Human Rights will approve or reject the application within 60 working days, as stated in the Company Law. If no decision is made within 60 days, the articles of association are deemed to be rejected (Article 9(2) of the Law No. 1 of 1995 on Limited Liability Company) The fee is required to be paid via the notary to the provider of the computer administration processing facilities for accessing the computerized administration system at the Ministry of Justice and Human Rights to apply for the ratification of the deed of establishment of the Indonesian company. Delays depend on the workload of the Ministry of Justice and of the courier service provider used by the Ministry of Justice in delivering the MOJ approval to the notary. The Ministry of Justice only appoints certain courier service providers.

Procedure 8.
Register with the Company Register (the Department of Industry and Trade) and obtain a registration certificate (TDP)
Time to complete:
15 days
Cost to complete:
IDR 250,000 for PT PMA, IDR 150,000 for PT PMDN and PT Non PMA/PMDN, included in procedure 2
Comment:
There is no official fee but there may be an unofficial fee for administration and the amount will vary depending on the negotiation. The cost of Rp.250.000 is usually for the medium scale company.

Procedure 9.
Arrange for the notary to apply for the publication of the articles of association of the company in the supplement to the State Gazette from the State Publication House (Percetakan Negara), get payment receipt
Time to complete:
2 days
Cost to complete:
IDR 850,000 (based on an articles of association of 16 pages for 50 copies; additional charges would apply for more pages and/or copies), included in procedure 2
Comment:
The notary preparing the deed of establishment of the company must apply for the publication of the deed of establishment of the company at the State Gazette. The application is to be submitted to the State Printing Company. It normally takes 2 - 3 months to publish the notice. The minimum number of pages that must be purchased in the State Gazette is 16. Depending on workload and backlog of the State Publication House, publication may take up to 6 months. The delay in publishing the deed of establishment may expose the Director to a risk as, under the Company Law, the Board of Directors shall be jointly liable over any legal action made by the company before the registration at the Company Registry and the announcement at the State Gazette is made.

Procedure 10.
Apply for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP)
Time to complete:
14 days
Cost to complete:
IDR 40000
Comment:
The SIUP constitutes the business license for a non-facility company engaging in trading business. The SIUP contains the details of the trading business of the company and the person in charge of the company. The person in charge of the company would normally be the President Director. The Ministry of Industry and Trade, which issues the SIUP for a non-facility company, may require a letter of good conduct from the Indonesian police as a supporting document with respect to the person in charge of the company. For a foreign or domestic investment company (PT PMA or PT PMDN), no SIUP is required. However, once the PT PMDN or PT PMA is ready to commence its commercial production or operation, it must apply for a permanent business license to the BKPM. Normally, for the application of SIUP, the following copy of documents should be attached:
- Copy of AoA;
- A company domicile letter;
- NPWP;
- Copy of the Identity Card of the President Director of the company.
There is no official charge. However, usually there is an unofficial fee for administration and the amount will vary depending on the negotiation, usually starting from Rp.400.000,00 - 500.000,00 for a small scale company, Rp.600.000,00 - Rp.700.000,00 for a medium scale company, and Rp.750.000,00 - Rp. 1.000.000,00 for a big scale company.

Procedure 11*.
Register with the Ministry of Manpower as governed in Law No. 7/1981
Time to complete:
14 days (simultaneous with procedure 10)
Cost to complete:
no official charge
Comment:
The procedure applies to companies with more than 10 workers or monthly payroll of Rp1 million. Can be done simultaneous with other post-registration procedures. File Manpower Compulsory Report and company regulation to the Ministry of Manpower. There is no official fee but there may an unofficial fee for administration and the amount will vary depending on the negotiation, usually starting from Rp. 100.000,00.

Procedure 12*.
Apply for the Workers Social Security Program (Jamsostek Program) as governed in Law No. 3 Year 1992
Time to complete:
7 days (simultaneous with procedure 7)
Cost to complete:
no charge
Comment:
According to Law No. 3 Year 1992 regarding Workers' Social Security ("Law No. 3/1992"), it is a mandatory requirement for every company or individual, employing 10 (ten) workers or more, or monthly payroll of at least 1.000.000,00 a month, to apply for the workers social security program (Jamsostek) operated by the Executing Agency. This program covers:
1. Occupational Accident Security; Death Security; Old Age Security.
2. Security in the form of services, namely, Health Maintenance.
Company or individual who has arranged for the employees an independent program of social security benefits with comparable or better benefits than in the Package of Basic Health Maintenance Security in accordance with Government Regulation No. 14/1993, as amended lastly by Government Regulation No. 28 of 2002, is not obligated to enroll its employees in Jamsostek.