General Representative Office (KPPA)
There are three (3) type of representative office: General Foreign Company (KPPA), Foreign Trade Company (KP3A) and Foreign Construction Services Enterprises (BUJKA)
Setting up a General Representative Office (KPPA)
There are three (3) types of representative office in Indonesia based on Article 21 Regulation of Head of Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM) Number 15 of 2015 Concerning Guideline and Procedure for Licensing and Non-Licensing Investment (“BKPM Regulation No.15/2015”) as follows:
- Representative Office of Foreign Company (KPPA);
- Representative Office of Foreign Trade Company (KP3A); and
- Representative Office of Foreign Construction Services Enterprises (BUJKA).
A general foreign representative office is also called a Kantor Perwakilan Perusahaan Asing or KPPA in Bahasa Indonesia. They’re usually created for you to have a market presence with no capital requirements, before starting a business in Indonesia with a PT PMA.
As a representative office, keep in mind that you can’t generate local revenue or issue invoices. According to the Indonesian Investment Coordinating Board, a KPPA is a local branch of a foreign parent company has two main responsibilities:
- Representing the parent company’s interests in Indonesia, and/or
- Preparing the founding of a Foreign Investment Company (PT PMA).
Contrary to the foreign-owned company (PT PMA), which is subject to the Negative Investment List, foreign investors can set up a representative office in most sectors or industries in Indonesia.
This means that any business entity can open a representative office in Indonesia and makes it perfect for foreign investors who want to evaluate the market or communicate with Indonesian stakeholders.
Basic Requirements of a General Representative Office (KPPA)
A KPPA can only be set up in the capital city of a province
It also should be set up in an office building (not in a virtual office). Alternatively, a custom solution is working from the dedicated desk in an office building. A dedicated desk gives you access to thriving coworking spaces, a network of professionals, and all the amenities at location, while also saving costs.
A KPPA license is issued with a validity period of three years
You can extend it twice, each for a period of one year, to a total of 5 (five) years. After that point, it can’t be extended unless the representative office can prove that its activities are different from its earlier activities. When the validity period expires, the investor has the choice between setting up a PT PMA or exiting Indonesia.
A KPPA must employ at least one chief representative officer
The Chief Representative Officer in Indonesia needs to be appointed by the director of the parent company abroad. They can be either an Indonesian national or an expat, and they need to be appointed by the director of the parent company abroad.
The same person can not fill both positions; the foreign director needs to appoint someone else as Rep Office Head in Indonesia (or the director of the parent company abroad needs to step down from his position first, appoint a new director for the foreign parent company, and then can become the Rep Office Head in Indonesia).
General guidelines are that he/she holds at least a Bachelor’s degree and 3 years of working experience in the related field.
The recommended ratio between a foreign and local employee in Representative Office is 1 foreigner to 3 local employees.
- Letter of Appointment to the Chief Representative Officer by the foreign parent company legalized by a public notary and Indonesian Embassy in the resident country
- Letter of Intent and Letter of Statement concerning the commitment to stay, and only work in the position as a Representative Office Executive without conducting other business in Indonesia legalized by a public notary and Indonesian Embassy in the resident country
- Letter of Reference from the Indonesian Embassy in the resident country
- Articles of Association of the foreign parent company that show the board of directors including amendment(s) in English
- Chief Representative Officer’s documents:
i) Passport (of foreign national), or,
ii) Personal ID (KTP) and Tax ID (NPWP) (of Indonesian national)
- 2 passport-sized photographs (4x6cm)
- Power of Attorney to sign the application if being represented by another party
Steps to Register a General Representative Office (KPPA)
|1||Obtain SIUPA (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing) Approval of Representative Office from Investment Coordinating Board (BKPM)|
|2||Obtain Company Tax ID (NPWP) from local tax officer|
|3||Obtain Single Business ID Number (NIB) from Online Single Submission (OSS)|
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