how to start a business in indonesia
Post on 19-Feb-2017
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So, the questions on how to start a business in Indonesia has come so frequently to our mind. In this presentation, we would like to discuss more on the things every foreign investor should consider before entering Indonesian business sectors.
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The Overview
With current political and economic climate that highly support the foreign investments, Indonesia has become a lucrative target for many foreign investors.
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Things To Consider Before Doing Business
In Indonesia
Before you decide to start your investment in Indonesia, you need to consider the following things: 1. The Type Of Business 2. The Type Of Company 3. Human Resources Issue 4. Diverse Markets 5. The Complicated Bureaucracy and Inconsistent Laws 6. Unequally Shared Infrastructures 7. Plenty Of Natural Resources And Raw Materials
1. The Type Of Business
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Please note that some sectors or industries are prohibited or limited to foreign investment. The list is written in the Negative Investment List. In the list, some sectors limits the foreign ownership prom zero (0) to ninety-five (95) percent. This will lead you to a further question: Whether you should find a local partner(s) or not. However, some businesses are allowed to be fully owned (100%) by foreigners.
2. The Type Of Company
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Since the government of Indonesia wants to protect its micro, small, and medium enterprises, there is a policy stated that to open a business in Indonesia, the company needs to be registered as a foreign limited liabilities or PMA. To establish a foreign company, it is obligated to meet a certain requirements regarding to minimum investment and paid up capital
3. Human Resources Issue
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This condition causes companies to face difficulties to find talent pools, especially in areas outside Java Island. On the other hand, hiring foreign talents also require complex requirements. This will become a challenge that every PMA needs to solve. Some successful PMA in Indonesia address this issue by providing considerable trainings to fill the gap of talent shortage.
Although Indonesia is listed as the fourth most populated country in the world with over 60% of the total population is in their productive ages (15-60 years old), not all of them are having the sufficient skills to participate in the industrial and commercial world. It is because education sector does not spread equally in its large territory.
4. Diverse Markets
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Indonesia is not only the biggest archipelago nation in the world, but also the most
complex and fragmented markets. Considering
that there are many races, languages, religions, customs,
and values, you cannot treat Indonesia as a single market
entity. Every target groups has its own needs that business
needs to address.
5. The Complicated Bureaucracy and
Inconsistent Laws
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You have to highlight that the bureaucracy in Indonesia is so long and complex, making any foreigners who are new to this environment feel overwhelmed. Although the government has already started some online systems and One-Stop-Service Center to cut the bureaucracy, there are still some complex processes to go through.
On the other hand, the policies or laws are often inconsistent and changed (for example regarding to the Negative Investment Law and the Bankruptcy Law). This should be put into your awareness that keeping up-to-date to the recent laws and policies are very important.
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6. Unequally Shared Infrastructures
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The development in Indonesia has long been focused in the area of Java Island (6 Provinces: The Capital City of Jakarta, Banten, West Java, Central Java, The Special Region of Jogjakarta, and East Java). All the infrastructures and facilities are highly concentrated in this Island. Therefore, doing business in these 6 provinces in Central Java has been becoming a trend for so long. However, there are also some other big cities in other Islands that is targeted by foreign investors. All you need to consider is to do a research to match your business with the places that have the biggest potentials to support your company.
7. Plenty Of Natural Resources and
Raw Materials
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Indonesia has plentiful and diverse kinds of natural resources. If you need natural resources and raw materials to run your business, make sure you know where you can get them easily. Consider that Indonesia consists of islands that spread in vast territory, distribution of goods can be extremely costly.
Img: pixabay
Regardless the business sectors, many foreign companies expect to run profitable business in the huge markets of fast growing economic condition. You may wonder what a business entity you should choose to legally operate your business in Indonesia. Further, we will help you understanding the Indonesian Company Law.
In order to invest directly in Indonesia, you need to establish a limited liability company owned wholly or partly by foreigner(s) that is called as PT. PMA (or simply PMA).
The representative office (RO) is basically set up for a specific purposes, such as promotion, marketing, buying-selling agents, or market research. As an RO, you will get an operational license for generally 2 years.
A local nominee is basically a local company owned by local people (Indonesians). However, you as a foreigner, can have much control over the company. It is a good solution for foreign investors, especially when dealing with businesses listed in the Negative Investment List.
Which Company Type Is The Most Suitable
for Your Business
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FOREIGN DIRECT
INVESTMENT (PMA)
REPRESENTATIVE OFFICE
LOCAL PT NOMINEE
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Our Vision
To be leading consulting firm of business services to clients expanding and operating in Indonesia.
Our Mission
To provide full-range of market-entry and corporate services to enable our clients to focus on their core business and activities in Indonesia and beyond.
PT. Cekindo Bisnis Grup is a leading consulting firm of Market-Entry and Corporate secretarial services to clients expanding and operating in Indonesia and further to Southeast Asia.
Our Values Client-focused Excellence performance Knowledgable locally Integrity moral Normative operations standards Delivered on-time One stop services provider
Company Profile
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Our main services:
Business Set Up
Business Process
Outsourcing
Local Representation
Company Registration
License & Product Registration
Market Research & Analysis
Local Partner Selection
Trade Mission Land & Property
Ownership
Recruitment & HR Establishment
Payroll Management
Accounting & Tax Reporting
Visa & Work Permit
Mystery Shopping
Local Distributor & Partner
Buying Agent Office Space
Cekindo Services
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Senior Advisor Prof. Dr. Rahardi Ramelan
Relevant Experience
Mr. Ramelan is currently Senior Advisor at PT Cekindo Bisnis Grup. Hi is a Research Professor at the Agency for the
Assessment and Application of Technology. The honorary degree of Doctor Honoris Causa from Monash
University, Australia and Northeastern University Boston.
Minister of State for Research and Technology of the Republic of Indonesia and Chairman of the Agency for Assessment and Application of Technology (BPPT) in the Seventh Development Cabinet of the Republic of Indonesia.
Minister of Industry and Trade in the Development Reforms Cabinet of the Republic of Indonesia and Chairman of National Logistic Agency.
Deputy Chairman for Industrial Analysis and Vice Chairman of the National Development Planning Agency of the Republic of Indonesia
Several management positions and responsibilities related to Indonesian Aviation industry, the Weapon industry.
Prof. Dr. Rahardi Ramelan
Profile Overview
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Principal Consultant Michal Wasserbauer
Michal is currently Principal Consultant at PT Cekindo Bisnis Grup. He has more than 5 year‘s experience in the
Corporate Market research, Strategy and Evaluation Expansions, Business Consultancy, and Preparation of
Business Feasibility Studies. He has worked for various industries, namely Grocery and Marchandise Retail,
Energy, Medical Device, Heavy and Automation Industries.
+6281282300584 | michal.wasserbauer@cekindo.com
Michal Wasserbauer
Market opportunities valuation Investment analysis Performance management Feasibility studies
Strategy planning Stakeholder management Marketing consultancy
Profile Overview
Relevant Experience
Relevant Skills
Multinational grocery and general merchandise retailer: Capital Investment Appraisals
World‘s largest student and recent graduates-run organisation: Financial Controller
International consultation company: Market Expansion Consultant
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Principal Consultant Nurmia Agustina
Nurmia is currently Principal Consultant at PT Cekindo Bisnis Grup. She has wide experience in the areas of Business
Development, Legal Corporate Restrictions, Business Consulting, Project Management, Market Development &
Entry Strategy, Sales & Distribution, Management Strategy, Recruitment, Visa & Work Permit, and Change
Management. She has worked for various industries, namely Energy & Resources, Telecommunication, Retail,
Pharmaceutical & Medical, Financing, Non-Profit, IT and Heavy Industries.
+628119691987 | nurmia.agustina@cekindo.com
International Management company: Management & Legal
consultant
Chamber of Commercial: Head of Business Processing Section
Nurmia Dwi Agustina
Corporate law Outsourcing processes Company formation Acquisitions Project Management Competitive Analysis
Business Planning Risk Management Talent Management Strategy Recruitment Visa & Work Permit Change Management
Relevant Experience
Relevant Skills
Profile Overview
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