Representative Office

A foreign representative office is a formation or entity that a foreign company uses to engage in market supervision, networking, investigating business chances, or offering other managerial needs in Indonesia to the holding company overseas.
The representative office is a perfect way for foreign investors to explore business opportunities in Indonesia. Although there is no restriction on hiring foreigners, a representative office is obligated to recruit Indonesian workers. A representative office is also limited to non-profitmaking activities.
In Indonesia, a representative office also called KPPA (Kantor Perwakilan Perusahaan Asing). KPPAs are regulated by the Indonesian Investment Coordinating Board (BKPM) and governed by specific guidelines and provisions.

These are the benefits or advantages of setting up a representative / KPPA in Indonesia:

• Low Incorporation Cost: As mentioned earlier, FRO is a great way to enter the Indonesian market at a low cost. FRO helps foreign companies to comprehend the market.
• Visa Support: One of the great things about having FRO in Indonesia is that foreign investors or foreign employees can have residence and work permits. They can perform business activities as business visa sponsors for business partners.
• Organizational Structure: FRO can act as an alternative for employers with a more adaptable organizational chart. Here, FRO only requires one chief executive.
• 100% Foreign Ownership: FRO is a hundred percent owned and controlled by a foreign company. Shareholders and directors are not needed.

Today, there are four types of Representative Offices in Indonesia. What are they?

• Kantor Perwakilan Perusahaan Asing (KPPA) or Foreign Representative Office (FRO)
• Kantor Perwakilan Perusahaan Perdagangan Asing (KP3A) or Representative Office for a Foreign Trading Company (TRO)
• Badan Usaha Jasa Konstruksi Asing (BUJKA) or Representative Office for a foreign construction company
• Jasa Penunjang Tenaga Listrik Asing (JPTLA) or Representative Office for a foreign electricity company

These are the activities you can do with a KPPA or representative office in Indonesia:

• Market Research and Analysis
• Promotional and Marketing Activities
• Networking and Relationship Building
• Liaison with Local Authorities

In accordance with the guidelines for representative office operations in Indonesia provided by the Decree of the Head of BKPM No. 6 of 2018, in order to open a foreign representative office, the parent company must first obtain a Letter of Approval from the Investment Coordinating Board (BKPM) as the primary license. Additionally, a representative office must obtain a Business Identification Number (NIB) from the Online Single Submission (OSS) and a Taxpayer Registration Number (NPWP) from the Tax Office.
The required essential to obtain the following permissions or licenses are as follows:

• Letter of appointment from the parent company
• Letter of Intent from the parent company
• Power of Attorney to sign the application if the participant is represented by another party
• Letter of Reference from the Indonesian Embassy or Indonesian Investment Promotion Centre (IIPC) where the parent company is located
• Articles of Association of the parent company and any amendment(s)
• Copy of valid passport (for foreigner) or copy of identification card number (for Indonesia) who will be proposed as a Representative Office Executive
• Letter of statement concerning the willingness to stay, and only work in the position as a Representative Office Executive without doing other business in Indonesia

1. Prepare Foreign Company’s Legal Documents
   The documents you need to prepare are the Article of Association (ACRA), Business License, Scan Passport of the Director. In addition, a legalized of Letter of Intent, Letter of Statement, Letter of Appointment and Letter of Reference issued by the embassy in the country of origin has to be attached.
2. Prepare your Chief of Representative Office
   The Chief of Representative Office can be a local Indonesian citizen or a foreigner who holds work permit. A scan of passport and photo of the Chief are to be prepared before registration.
3. Registration to the Investment Coordinating Board
   Once all the requirements are complete, all documents has to be submitted to the Investment Coordinating Board to get the Representative Office.
4. Tax Registration
   All company documents that have been issued up to this step has to be submitted to the Tax Office for the issuance of the Company Tax ID card.
5. Obtaining a Business Registration Number
   Once your Representative Office gets the tax registration, we can apply for a Business Registration Number for you to finally able to conduct your research, open a bank account, and hire employees.
6. ADDITIONAL : Opening Company Bank Account
   For convenience purpose, you can also open a company bank account with your Representative Office to pay salaries, rents and other expenses that might occurred.