Foreign Company Representative Office (KPPA) in Indonesia
Want to establish a Foreign Company Representative
Office (KPPA) in Indonesia? Check out the Definition and Requirements here
What
is KPPA?
Definition
of KPPA
KPPA
is an individual Indonesian citizen or individual foreign citizen, or business
entity which is a representative of business actors from abroad with approval
to establish an office in the territory of the Unitary State of the Republic of
Indonesia (Article 9 paragraph (3) BKPM Regulation 4/2021).
KPPA
is a representative of foreign companies operating abroad but KPPA cannot carry
out business activities.
KPPA,
which is also called a representative office, plays an initial role in opening
the doors of opportunity by studying the market in more detail in the country
where KPPA was formed.
KPPA Limitations
Furthermore,
the restrictive provisions as stated in Article 16 paragraph (3) of BKPM
Regulation 4/2021 apply to KPPA as follows:
1. As
supervisor, liaison, coordinator, and managing the interests of the company or
its affiliated companies;
2.
Preparing for the establishment and business development of Foreign Investment
Companies (PMA) in Indonesia or in other countries and Indonesia;
3.
Located in an office building in the provincial capital;
4. Not
seeking any income from sources in Indonesia, including not being permitted to
carry out activities or carry out any engagements/transactions for the sale and
purchase of commercial goods or services with companies or individuals in the
country; And
5. Do
not participate in any form in the management of a company, subsidiary or
branch company in Indonesia.
The
Head of Representative of a Foreign Company must reside in Indonesia, have full
responsibility for the office and is not permitted to carry out activities
other than representative activities of a foreign company and must not hold
concurrent positions as head of a company and/or more than 1 foreign company.
Then,
if the appointed Chief Representative of the Foreign Company is a foreign
citizen and/or employs foreign workers, then the Foreign Company Representative
is required to also employ Indonesian workers.
The
laws and regulations that apply in Indonesia regarding KPPA are contained in
the Investment Coordinating Board Regulation Number 4 of 2021 concerning
Guidelines and Procedures for Risk-Based Business Licensing Services and
Investment Facilities.
Types
of KPPA
The
Representative Offices listed in Article 9 paragraph (10) of BKPM Regulation
4/2021, consist of:
1.
Representative offices of foreign trade companies;
2.
Representative offices of foreign companies;
3.
Representative offices of foreign construction service business entities;
and/or
4.
Representative offices of foreign electricity support services.
Business
Licensing Requirements Documents for Foreign Company Representative Offices
(KPPA)
Several
required documents that KPPA must fulfill in order to be established in
Indonesia are listed in Appendix II to BKPM Regulation 4/2021, which
include:
1.
Recording of the articles of association (Article of Association) in English or
its translation in Indonesian
2. The
Letter of Appointment is known to the local Embassy of the Republic of
Indonesia (KBRI)/Trade Attaché/Indonesia Investment Promotion Center (IIPC)
3. The
Letter of Intent is known to the local Indonesian Embassy/Trade Attaché/IIPC
4.
Letter of Statement from the Head of the Representative Office stating his
willingness to stay and only work as Head of the Representative Office, without
carrying out other business activities in Indonesia to the knowledge of the
local Indonesian Embassy/Trade Attaché/IIPC
5.
Letter of Reference from the local Indonesian Embassy/Trade Attaché/IIPC.
Want
to establish a Foreign Company Representative Office in accordance with
applicable laws in Indonesia?
What
are you waiting for? Contact IPHub via e-mail at marketing@iphub.co.id or +62
811-8181-466
IPHub
is experienced in managing the establishment and legality of KPPA and PT
Penanaman Modal Asing (PT PMA).