Learning all the facets of Indonesia’s culture and employment laws is key to beginning successful business operations there, but it can take significant time and resources. When looking to expand your business, you must hire employees, set up your payroll, and establish a subsidiary in compliance with local laws.
However, companies don’t have to go through the lengthy Indonesia subsidiary setup process when partnering with and Employer of Record like G-P. We ensure you meet all of Indonesia’s subsidiary laws, so you can focus on running your company without the stress of compliance.
How to set up an Indonesia subsidiary
When you set up an Indonesia subsidiary, you’ll need to decide where you would like to expand to and what type of business you’re planning on operating in the country. The answers to these questions can impact the Indonesia subsidiary setup process.
Different regions in Indonesia have separate rules, costs, and availability. You should always research the physical area where you plan to base your office before setting up an Indonesia subsidiary. You also need to decide which subsidiary structure is best for your business goals — a representative office, or joint venture company, or a Sociedad de Responsabilidad Limitada (SRL), which in Indonesia is the same as what’s commonly referred to as a limited liability company (LLC) in many countries.
The most common subsidiary structure is the SRL. The steps to set up an Indonesia subsidiary include:
- Paying the fees to clear your company name at a bank.
- Obtaining a statement of Company Domicile.
- Paying non-tax state revenue fees for legal services.
- Applying for a permanent business trading license.
- Obtaining a company registration certificate.
- Registering with the Ministry of Manpower.
- Applying for social security, healthcare insurance, taxpayer registration number, and more.
The projected investment value will depend on the company size:
- Small-scale business: IDR 50 million
- Medium-scale business: IDR 500 million
- Large-scale business: Over IDR 10 billion
Indonesia subsidiary laws
Indonesia subsidiary laws vary based on the type of entity you choose to incorporate as. Your SRL requires at least 1 director, 2 local shareholders, and 1 commissioner. The commissioner does not have to be a resident, but they must supervise the company, examine the annual report, and approve a budget plan.
The paid-up share capital you need to meet Indonesia’s subsidiary laws depends on your company’s size. The 3 sizes and their corresponding share capital amounts are:
- Small company: USD 3,745-37,435
- Medium-size company: USD 37,435-748,740
- Large company: Above USD 748,740
You must incorporate as a medium-size company if you plan to sponsor international employees instead of hiring employees from Indonesia. All issued share capital for any size company must get deposited into your company’s bank account in Indonesia right after you incorporate.
Benefits of setting up an Indonesia subsidiary
Setting up your Indonesia subsidiary is the start to legally operating in the country. SRLs provide benefits for parent companies and subsidiaries. The parent company will have limited liability for the subsidiary’s activities, and the subsidiary can operate according to Indonesia’s culture and specific employment laws.
If you decide to set up your Indonesia subsidiary alone, it takes about 2 to 3 months to incorporate. But with G-P, you don’t have to worry about entity setup and can begin operations starting in just minutes. Our team of experienced legal experts will help you comply with Indonesia’s subsidiary laws, so you can focus on growing in your new location.
Other important considerations
Before you start the Indonesia subsidiary setup process, you should create an action plan that includes the time and money you will need. Set aside time in your schedule to travel back and forth to Indonesia to hire employees, establish your payroll, and more. We also recommend working with your accounting or finance department to budget the right amount of money you’ll need for subsidiary costs.
Enter new markets with G-P — no new entities required.
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Get in touch today to learn more about how we can streamline the global growth process.