Indonesia Business Facts

Indonesia Business Facts

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President Jokowi’s goal wants Indonesia to be in the top 40 position in the ease of doing business is very possible. Looking at the achievements in the last two years, there are indeed changes and improvements, but not significant. Licensing acceleration services and some regulations that are in need during the last two years. Indonesia, Indonesia Business Facts, improves in the ease of doing business.

By 2015, the ease of doing business in Indonesia is ranked 114th, then climbed to 109th place in 2016. This year, it is getting better to be 91rd or up by 15 points. A more positive note occurs in the indicator of the ease of starting a business that rises 16 points from 167 in 2016 to 151 in 2017. This can be seen from the 3 hour permit service in the industrial area, Indonesia Business Facts, the existence of the cutting time of the Trading License (SIUP) and the Mark Company List (TDP).

According to President Jokowi, Indonesia should take advantage of its position now as one of the most lucrative investing countries in the world. Based on the United Nations Conference on Trade and Development (UNCTD), Indonesia is now in the 4th position as an investment destination country, rising four places from its position last year in 8th position. The soaring investment, Indonesia Business Facts, is expected to have a good impact on Indonesia’s economy and development.

Please note that there are some sectors or industries that are prohibited or restricted to foreign ownership. It is written in the Negative List of Investments. In the list, there are some restrictions on foreign ownership from zero (0) to ninety-five (95) percent. This will lead you to a further question: Whether you should look for a local partner or not. However, Indonesia Business Facts, there are some businesses that are allowed to be fully owned (100%) by foreigners.

Since the Indonesian government wants to protect micro, small and medium entrepreneurs, there is a policy of declaring that to open a business in Indonesia, the company must be registered as a foreign limited liability or PMA. To establish a foreign company, Indonesia Business Facts, it is necessary to meet certain conditions regarding minimum investment and the amount of paid up capital.

Although Indonesia is listed as the fourth most populous country in the world with more than 60% of the total population in their productive age (aged 15-60 years), not all of them have enough skills to participate in the industry and commercial world. This is because the education sector does not spread evenly in large areas. This condition causes the company facing difficulties finding talent pool, Indonesia Business Facts, especially in the outer regions of Java Island.

On the other hand, employing foreigners also requires complicated requirements. This will be a challenge that must be solved for every PMA. Some successful PMAs in Indonesia solve this problem by providing sufficient training to meet the needs of the required capabilities. Therefore, you should be really selective in choosing human resources based on your need to avoid overcharging, Indonesia Business Facts, by hiring unskilled or unstable people.

Indonesia is not the only country with the largest archipelago in the world, but also has a very complicated market segmentation. Given that there are many races, languages, religions, customs, and values, you cannot assume Indonesia as a single market. Each targeted group has different needs, Indonesia Business Facts, according to the approach taken.

You have to underline that the bureaucracy in Indonesia is very long and complicated, this can make any stranger new to this rule feel overwhelmed. Although the government has begun to impose any online system and One-Stop-Service service to ease the bureaucracy, Indonesia Business Facts, there are still some complex processes to be overcome.

On the other hand, policies or laws are often inconsistent and changing (e.g. Regarding Investment Negative Law and Bankruptcy Law). So you need to realize that knowing, Indonesia Business Facts, the latest rules is very important.

Development in Indonesia has long been focused on the island of Java (6 Provinces: Capital City of Jakarta, Banten, West Java, Central Java, Jogjakarta and East Java). All infrastructure and facilities are highly focused on the Island. Therefore, Indonesia Business Facts, doing business in these 6 provinces in the center of the Java archipelago has been a trend for a long time.

Indonesia has many types of abundant and diverse natural resources. If you need the resources and raw materials to run your business, make sure you know where you can get the raw resources and raw materials properly. Consider well, and know that Indonesia consists of islands that are widely spread over a large area, Indonesia Business Facts, the distribution of goods can be very expensive if one in choosing a place.

If you have seen the potential in this archipelago country and are beginning to consider entering the business sector, you need to know what kind of investment you can make in Indonesia. First, you can open a representative office or make foreign direct investment (PMA). You need to know that some business fields are restricted to foreign ownership, Indonesia Business Facts, so you can only build Local Nominee.

A Local Nominee is basically a local company owned by local people (Indonesia). However, you as a foreigner, can have a lot of control over the company. This is a good solution for foreign investors, Indonesia Business Facts, especially when dealing with the business listed in the Negative Investment List.

To invest directly in Indonesia, you need to establish a limited liability company wholly or partly owned by a foreigner (s) commonly referred to as PT. PMA (or PMA only). There are so many documents that are frightened by the law to be prepared along with any other requirements, Indonesia Business Facts, that must be met by the company.

Before you decide whether you want to build a representative office or a PMA, you also need to know about the Investment Negative List. This is because some industries in Indonesia are strictly closed or partly covered for foreign investment. This list is subject to revision by the central government of the Republic of Indonesia so you must keep in touch with this in the future. For sectors or industries that are partly closed to foreigners, Indonesia Business Facts,  you can still run your business in Indonesia with partners with Indonesian citizens.

For the first step, you need to contact the Indonesian Investment Coordinating Board (BKPM). Although BKPM already has a One-Stop-Service Center (OSS-C) to improve service and cut bureaucratic procedures, Indonesia Business Facts, you may remain overwhelmed by small details if you are a person unfamiliar with local rules and languages.

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