Setup General Representative Office (KPPA) in Indonesia
A general representative office (KPPA) may be the perfect solution for a foreign investors who want to explore the Indonesian market or require a supporting presence in Indonesia. A general representative office is easy to set up and does not require any initial capital investments. Foreign investors should however be aware that the activities of the KPPA are limited as they cannot engage in full commercial activities on their own behalf.
In case investors want to incorporate a company which can be fully commercially operational in Indonesia, they should open a limited liability company: either a PT with nominee shareholders or a PMA with foreign shareholders.
Minimum Establishment Requirements
The general representative office has no investment requirements. Investors are therefore not required to pay-up any shares or to invest a certain amount into the Indonesian economy.
The establishment requirements for a representative office are:
- Parent Company. The trade representative office must be connected to an entity abroad (parent company). Without such parent company, the representative office cannot exist in Indonesia. Foreign or Indonesian individuals or Indonesian entities are therefore not allowed to open a trade representative office in Indonesia.
- Trade Activities. Since the trade representative office is specifically set up to represent its parent company in trading activities in Indonesia, the parent company must prove that it is active in the field of trading.
Allowed and Restricted Activities
The general representative office (KPPA) is allowed to perform the following activities:
- Supervise projects or activities from the parent company in Indonesia. These activities include for example vendor quality checks and product quality checks;
- Act as liaison between the parent company and clients in Indonesia, where the representative acts on behalf of the parent company in discussions with clients;
- Act as coordinator for the parent company with clients, vendors, government bodies and other stakeholders;
- Perform market research and other preparations with the aim to establish a foreign owned limited liability company (PMA) in Indonesia in the near future;
The representative office cannot perform the following activities:
- Generate any income from sources within Indonesia. The representative office is therefore not allowed to make any sale and purchase transactions in Indonesia; and
- Directly manage or become the management of a company, subsidiary or branch office in Indonesia. As explained above, the activities of the representative office are primarily focused on representing the foreign parent company .
There is only one mandatory position in the general representative office, the Chief Representative. The Chief Representative heads the representative office and is appointed by the foreign parent company. In case a Chief Representative is replaced, the replacement candidate must also be appointed by the foreign parent company.
The Chief Representative can either an be Indonesian national or a foreign national. A foreign national is required to apply for a work and stay permit in Indonesia. Since a Chief Representative is usually appointed for a longer term ( >1 year), a long term work and stay permit is required.
Processing Timeline KPPA
Below is an overview with the average processing times for the setup of a general representative office (KPPA) in Jakarta. Establishment of a KPPA outside Jakarta may lead to additional processing times.