A Representative Office is defined as “a foreign company or a group of foreign companies that has opened a Rep. Office in Indonesia to represent and manage its/their interests, or to prepare the establishment and development of their business in Indonesia”.
Building a presence in Indonesia does not require a full commitment. For example: establishing a foreign investment limited liability company. The Representative Office option is often the preferred way for foreign investors to explore initial business opportunities in the Indonesian market.
The Representative Office’s activities are limited to supervising, liaising, coordinating, managing and acting as an intermediary for the foreign company’s business interests in Indonesia. This can be related to preparation operations towards establishing a PT PMA in the future.
Moreover, the Representative Office is eligible to apply for non-permanent stay permits (KITAS) and to hire foreign experts. For more info, please refer to the section “VISA AND IMMIGRATION” [LINK]
Under Indonesia’s legal framework there are four types of Representative Offices:
Foreign Company Representative Office (Kantor Perwakilan Perusahaan Asing / KPPA)
Foreign Trade Company Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing / KP3A)
Representative of Foreign Construction Company (Perwakilan Badan Usaha Jasa Konstruksi Asing / PBUJKA)
Representative Office of Foreign Oil and Gas Company (Kantor Perwakilan Perusahaan Asing Minyak dan Gas Bumi / KPPA Migas)
Representative Office - KPPA
A foreign company or a group of foreign companies can establish a Foreign Company Representative Office in Indonesia to represent its interests. The activity of a KPPA is limited to the exploration of the Indonesian market. Within the scope of exploring the Indonesian market, a KPPA can act as supervisor or intermediary of the foreign company’s interests.
A KPPA may neither participate in managing the foreign company nor its subsidiary or branches in Indonesia. Furthermore, a KPPA is not allowed to engage in an agreement or transaction such as sale or purchase of goods and services within Indonesia.
The KPPA license is valid for as long as the KPPA is operating.
The KPPA’s role is to:
Supervise, cooperate, organize, coordinate and represent the parent company or its overseas branches.
Preparing the formation and development of foreign-owned companies in Indonesia.
The KPPA is not allowed to:
Become a member of the management of a company, branch or subsidiary in Indonesia.
Earn income through sales or purchase transactions and other sources in Indonesia.
Foreign Trade Company Representative Office – KP3A
A foreign company or a group of foreign companies can establish a Foreign Trade Company Representative Office in Indonesia. The KP3A can be established as either:
manufactures agent, or
A KP3A is not allowed to engage in trading and sales transaction activities representing a complete transaction (e.g. submission of tender documents, signing of contracts, settlement of claims, etc.). However, the KP3A can execute the activities such as introduction and promotional activities, market research and supervision of sales as well as closing contracts with domestic companies for and on behalf of the foreign company.
A KP3A license is valid for as long as the KP3A is operating. A KP3A is allowed to open branch offices anywhere in Indonesia.
Representative of Foreign Construction Company – PBUJKA
PBUJKA is entitled to contact a person, entity, governmental institution or national private entity in order to acquire information in regards to the construction service market as well as to be included in the construction services tender, and to appoint and hire local and/or foreign manpower in accordance with the prevailing laws and regulations.
After receiving the Representative Office License from the Ministry of Public Works, a PBUJKA may perform construction works in Indonesia. Within executing construction works the PBUJKA must establish a Joint Operation (JO) with Indonesian construction company(ies) classified as “large-scale” construction services company(ies) and transfer its knowledge to the partner in the Joint Operation.
The license for PBUJKA is valid for 3 (three) years and can be extended. To get the license, the applicant will be charged with an administration fee cost of USD 5,000 (Five Thousand US Dollar) for consulting services planner/construction supervision, and a cost of USD 10,000 (Ten Thousand US Dollar) if the company is managing the construction.
Representative Office of Foreign Oil and Gas Company – KPPA Migas
A KPPA Migas has similar role as KPPA but for the Oil and Gas sector. The KPPA Migas has to obtain approval in the form of a Kantor Perwakilan Perusahaan Asing (KPPA) license.
A KPPA Migas license is valid for 3 (three) years with the possibility of extension. To extend, the KPPA Migas must propose an extension within 30 (thirty) days prior to the due date of expiration at the latest.