how to start a business in indonesia

How to Start a Business in Indonesia Jakarta, October 2016

2

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.

For further info, visit: www.cekindo.com. email to: [email protected], phone: 021-80660999

The Overview

With current political and economic climate that highly support the foreign investments, Indonesia has become a lucrative target for many foreign investors.

http://www.cekindo.com/

mailto:[email protected]

3 For further info, visit: www.cekindo.com. email to: [email protected], phone: 021-80660999

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


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.



http://www.cekindo.com/the-latest-regulation-on-indonesia-2016-negative-investment-list.html







http://www.cekindo.com/services/local-distributor-and-partner-in-indonesia.html





2. The Type Of Company


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


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


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


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.

Img: pixabay



6. Unequally Shared Infrastructures


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


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.



http://www.cekindo.com/services/business-set-up-in-indonesia-2.html

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


FOREIGN DIRECT

INVESTMENT (PMA)

REPRESENTATIVE OFFICE

LOCAL PT NOMINEE




12

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

13

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

14

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

15

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 | [email protected]

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

16

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 | [email protected]

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

17

Selected Clients

PT. Cekindo Bisnis Grup

Grand Slipi Tower 9th floor Jl. Letjend. S. Parman Kav 22-24 Jakarta - 11480 Indonesia [email protected] +6221 80660900