The Perseroan Terbatas is a limited-liability corporation (LLC) organized by foreign nationals and capitalized with foreign funds. The limited liability company must go through the entire registration and incorporation process, and is the most costly business structure to setup.
A limited liability corporation s a common investment vehicle for Indonesia-based business wherein foreign parties (individuals or corporate entities) can incorporate in the country.
A limited liability company can give greater control over the business venture in Indonesia, and avoid a multitude of problematic issues which can potentially result from dealing with a domestic joint venture partner.
Such problems often include profit not being maximized, leakage of the foreign firm’s intellectual property and the potential for joint venture partners to set up in competition against the foreign firm after siphoning off knowledge and expertise.
The steps for setting up a LLC are explained in detail below.
1. Pay fees for obtaining clearance of the company name at a bank
The company name must be cleared with a notary through a computerized processing system. The notary must pay the fee of IDR 200,000 at a bank before obtaining clearance for the proposed company name. They will then obtain a payment receipt with a code.
Time: 1 day
Cost: IDR 200,000
2. Arrange for notary to obtain standard form of company deed
The notary will then use this code online to reserve the company name as proof of payment. The reserved name will be blocked for a period of 60 days, although this procedure is not necessary if the founding shareholders are confident the same name has not already been used.
The company name must not:
- Have been lawfully used by any other company or which is similar to another company’s name
- Be identical or similar to the name of a state, government, or international agency without approval
- Fail to conform to the purposes and objectives and activities of the company
- Consist of a set of numbers, letters or figures that do not form any words
The Ministry of Law and Human Rights may reject name application reservations if names are the same or resemble those of another company.
The application form for the company name must be accompanied by the following information:
- The payment number of the approval of the use of the company’s name from the bank
- The booked name of the company
Time: 4 days
Cost: Included in Step 3
3. Notarise company documents
An application to use a name similar to or the same as a well-known trademark will be rejected unless approval is obtained from the holder of the trademark. The maximum notary fee for objects of deed with an economical value of between IDR 100,000,000 and 1,000,000,000 is 1.5% of the total object of the deed’s value.
Time: Online process, less than a day
Cost: Depends on the value of the object of the deed
4. Apply to the Ministry of Law and Human Rights for approval of the deed of establishment
The application for approval of establishment of a company should be able to be electronically filed, by attaching the certificate of the bank account and a copy of the relevant bank transmittal advice.
The application must be filled in at most 60 days since the date of the deed establishment, which will be approved by the Ministry of Law. After 14 days, the Ministry of Law will issue the legalization on the establishment of the company. The establishment of company will be announced in the Supplement State Gazette within 14 days by the Ministry of Law.
Time: Less than 1 day
Cost: Included in Step 1
5. Obtain the Building Management Domicile Certificate
Companies located in an office building need to get the Building Management Domicile Certificate from the Building Management Office before proceeding to the next step.
Time: 1 day
Cost: No charge
6. Apply for the Certificate of Company Domicile
All Indonesian limited liability companies are required to possess a certificate of company domicile. This is issued by the head of the village where the company is located or by the building management if the office space is leased. This is required for several documents.
Time: 2 days
Cost: No charge
7. Pay non-tax state revenue fees for legal services
The requirement to pay the non-tax state revenue fee for legal services is stated on the website of the Legal Entity Administration System.
The cost breakdown is as follows:
- IDR 1,000,000 for validation of the company as a legal entity
- IDR 30,000 for publication in the State Gazette
- IDR 550,000 for publication in the Supplement State Gazette
Time: 1 day
Cost: IDR 1,580,000
8. Apply for permanent business trading license
The company must then apply for the permanent business trading license (SIUP) at the Ministry of Trade. This constitutes the business license for a non-facility company engaging in trading business and contains details about company activities, and the person in charge of the company.
Usually, the following documents must be attached:
- A copy of the company’s articles of association
- An attestation of location and the address of company offices
- ID card of the company’s President or Director
- Letter of approval from the Ministry of Law and Human Rights
After the application is reviewed, the Municipality will pass it along to the technical agency at the regional office for cooperatives for further review. It usually takes around 2 days to obtain the signature of the head of that regional office, after which the SUIP is provided.
Time: 15 days
Cost: No charge
9. Obtain company registration certificate
The Company registration certificate (Tanda Dafta Perusahaan – TDP) must be obtained from the local government office, trade sub-division. The SIUP must be obtained before the TDP can be obtained, with the same documents as the previous step required for submission.
Time: 14 days
Cost: No charge
10. Register with Ministry of Manpower
Companies must submit a manpower report in the company to the Ministry of Manpower and Transmigration, or the appointed officer, within a period of no more than 30 days from establishment of the company. The report must contain the following information:
- Company identification
- Manpower relation
- Manpower protection
- Employment opportunities
Ratification of the registration of mandatory labour affairs report in the company is expected to be completed within one working day.
Time: 1 day
Cost: No charge
11. Apply for social security, health care insurance, taxpayer registration number and VAT collection
Companies must then apply for the Workers Social Security Program (BPJS Ketenagakerjaan), healthcare insurance, and for a taxpayer registration number and VAT collector number. These are processed with the Social Security Administrative Bodies and Tax Office.
For social security and healthcare insurance the employer must provide the following personal information for each candidate:
- Name
- Date of birth
- Name of health service provider as selected by the employee
- Other personal information including:
- Employee and family member(s) who will be covered by the health insurance program
- Employee salary information
- Information on participation status
To register for tax, the following must be sent:
- Deed of establishment
- Identity card of one active director
- Statement letter regarding confirmation on place of business from one of the active directors
Time: 7 days, simultaneous with previous procedures
Cost: No charge