The three most common types of Representative
Office that can be opened by an overseas company in Indonesia are –
-
Trading Representative Office,
-
Public Works Representative Office
-
Regional Representative Office
A summary of the requirements for establishment of
these Representative Offices by overseas companies (updated September,
2002) is given below (Source : PT PricewaterhouseCoopers FAS,
Jakarta).
I. TRADING REPRESENTATIVE OFFICE
Scope of activities
The Minister of Trade decree No.402/MPP/Kep/11/1997
stipulates in article 2 and 3 that an overseas company (“principal
company”) is permitted to establish a trade representative office (TRO)
in Indonesia. The TRO can act as either a selling and manufacturer’s
agent or buying agent.
1. A TRO acting as a selling and manufacturer’s
agent:
- is permitted to represent its principal company in Indonesia
by introducing and promoting its products, which are manufactured
overseas. In addition, a TRO may also provide product information
to companies / consumers in Indonesia including guidelines in
importing such products.
- is permitted to conduct market research and to supervise the
sales and marketing of the products in Indonesia.
- is not permitted to carry out direct trading activities in
Indonesia in the form of securing contracts, selling or entering
into transactions, either at the initial or final settlement stage
e.g. submission of bids, signing contracts, claim settlements etc.
2. A TRO acting as a buying agent:
- is permitted to conduct market research in relation to
supplying of products from Indonesia as required by the principal
company. In addition, a TRO may also liaise and provide
information and guidelines to any prospective Indonesian
counterpart on the requirements for the exportation of products.
- is permitted to conclude contracts with an Indonesian entity
or business counterparts on behalf of the principal company.
Application procedures
An overseas company intending to establish a TRO must submit a
letter of intent to the Directorate General of Domestic Trade
attention to the Director of Company Registration and Business
Development. A standard letter of intent is available at the Ministry
of Industry and Trade (MOIT).
The Director of Company Registration and Business
Development will issue a Temporary TRO license upon approving the
letter of intent. The Temporary TRO license will expire three months
after the issuance date.
The temporary TRO license will allow the Chief
Representative to arrange an office by entering into a lease agreement
and any other agreements deemed necessary to support the TRO’s
activities such as car rental, employee contracts, housing, opening
bank accounts, etc.
The Chief Representative has to arrange for the
Permanent License before the Temporary TRO license expires.
MOIT requires TROs to pay a refundable guarantee
fee in order to obtain the TRO permanent license. Payment must be
transferred through PT Bank Negara Indonesia. The amount of guarantee
fee is as follows:
• Rp 5,000,000.00 if the Chief Representative is
expatriate; or
• Rp 1,000,0000.00 if the Chief Representative is Indonesian national.
Expiration date
One year after issuance date extendable.
The Minister of Trade decree No.402/MPP/Kep/11/1997
article 8 provides that each expatriate working for the TRO must
recruit and employ at least three Indonesian national experts and / or
administrative staff. This requirement is commonly referred to as “3:1
ratio”.
In relation to processing for a TRO permanent
license renewal, the Chief Representative must ensure that the TRO has
complied with the 3:1 ratio before submitting the application.
Reporting requirements
The TRO is required to submit the following reports to the related
government offices.
|
|
Type of Report |
|
Department/ office |
|
1 |
Monthly and annual
employee tax returns |
|
The Indonesian Tax
Office |
|
2 |
Six-monthly
activity report on export and import realization
|
|
The MOIT |
|
3 |
Annual manpower report |
|
The Ministry of
Manpower and Transmigration (MOMT) |
Time frame
|
|
Type of License
|
|
Time frame |
|
1 |
Temporary TRO License |
|
Two weeks after the submission of a complete
application. |
|
2 |
Permanent TRO License |
|
Two weeks after the submission of a complete
application. |
Timeframe to arrange the required immigration
documents are excluded.
Fee and scope of work
The professional fee to provide assistance in processing TRO
license will be approximately US$ 8,000. The scope of work will
include the following:
- Preparing the application letter;
- Reviewing the supporting documents, that are provided by the
overseas principal company;
- Submitting the application letter (attaching with the
supporting documents) to MOIT;
- Monitoring the temporary TRO license approval process;
- Arranging for the necessary immigration documentation such as
work and stay permits for the candidate expatriate Chief
Representative;
- Arranging for the necessary documentation to obtain the
permanent TRO license;
- Preparing the application for permanent TRO license;
- Submitting the application for permanent TRO license and
monitoring the approval process;
- Arranging for the Company Registration (TDP);
- Filing the required manpower report.
