The three most common types of Representative Office that can be opened by an overseas company in Indonesia are –

1. Trading Representative Office,

2. Public Works Representative Office

3. 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).

II. PUBLIC WORKS REPRESENTATIVE OFFICE

Scope of activities
The Ministry of Public Works Decree No.50/RPT/1991 stipulates that an overseas engineering and/or engineering consulting company (“principal company”) intending to operate in Indonesia must establish a Public Works Representative Office (PWRO).

The Construction Services Board of the Ministry of Settlement and Regional Infrastructure (MSRI), previously the Ministry of Public Work, is the Government agency responsible in issuing the PWRO license. There are certain requirements to meet for establishing a PWRO. The MSRI requires the principal company to have a sound financial position and technical skills in addition to a minimum three years experience in undertaking projects.

Although MSRI does not define a specific benchmark to gauge the project performance of the principal company, our experience shows that MSRI may require the principal company to be equivalent to a company with an “A” qualification construction project license in Indonesia. An “A” qualification is defined as a company capable of carrying out projects with a total minimum value of Rp.500 million or equivalent per year.

A PWRO is permitted to perform the following activities:

An individual (Indonesian or expatriate) can be appointed as the Chief Representative in a PWRO.

Joint operation requirement
The Indonesian joint operation partner has to meet the following requirements:

Application procedures
To obtain a PWRO operating license, the principal company must submit an application letter to MSRI attention to the Head of Construction Services Supervisory Board.

Guarantee fee
This guarantee fee must be paid directly to the Indonesian Central Bank (Bank Indonesia). The amount of guarantee fees varies depending on the type of activities the PWRO is planning to carry out.

Expiration date
Three years after issuance date extendable. In renewing the license, the principal company must submit a letter requesting for an extension of license to the Construction Services Supervisory Board.

Reporting requirements
The PWRO is required to submit the following reports to the related government offices.

Time frame
The PWRO license could be issued within three to four weeks after the submission of complete documentation. Timeframe to arrange the required immigration documents and work and stay permits are excluded.

Fee and scope of work
The professional fee to provide assistance in processing the PWRO license will be US$ 8,000. The scope of work will include the following:

III. REGIONAL REPRESENTATIVE OFFICE

Scope of activities
The Presidential Decree No. 90/2000 allows an overseas company (“principal company”) to establish a Regional Representative Offices (RRO) in Indonesia.

The Capital Investment Coordination Board (BKPM) is the Government agency responsible for issuing the RRO license. BKPM requires the principal company to have an affiliate, subsidiaries or branches in any other Asian countries (at least two) as evidenced by the following documents:

The main objectives of establishing an RRO are to facilitate the operation and activities of a group of multi-national companies and to search for investment opportunities in Indonesia.

Accordingly, the RRO is permitted to:

However, the RRO is not permitted to:

The RRO could be managed by an Indonesian or expatriate Chief Representative i.e. Representative Office Executive. The principal company may also appoint additional expatriate manager(s) to assist the office manager.

Expatriates working in an RRO are exempt from foreign exit tax (currently Rp 1,000,000, approximately US$ 100).

Application procedures
A standard application form i.e. Model KPWPA is available for the principal company to complete. The application form and the relevant supporting documents shall be submitted to BKPM for approval.

Following the issuance of the RRO license, the candidate expatriate Chief Representative must prepare the Expatriate Manpower Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing – RPTK).

The Chief Representative has to indicate in the RPTK the position and terms of appointment of any expatriates planning to work for the RRO. The RPTK approval can be sought from the MOMT.

Following the RPTK approval, the RRO can start arranging the expatriate work and stay permits.

Expiration date

None.

Reporting requirements
The RRO is required to file the following reports:
 

Time frame
The RRO license could be issued within two to three months after the submission of completed documentation. Timeframe to arrange the required immigration documents and work and stay permits are excluded.

Fees
The professional fee to provide assistance in processing the RRO license will be US$ 11,500. The scope of work will include the following: