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Best Business To Start In Indonesia – Indonesia is one of the fastest growing economies in the world. Economic growth has been more than 5% in the last 10 years and is expected to continue growing in the next few years. With a strong financial background, it is best to start a business in Indonesia. In this article, our team at Tetra Consultants has highlighted 7 advantages of establishing a business in Indonesia once you have decided to register a company in Indonesia.
In 2008, the Economic Partnership Agreement with Japan entered into force. A trade agreement means that trade activities can benefit from customs benefits when importing or exporting to selected countries in the trade agreement. In 2012, a preferential trade agreement was signed with Pakistan.
Best Business To Start In Indonesia
To stay competitive and increase Indonesia’s economic growth, there are many trade agreements signed by the government.
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Until now, trade agreements have still been signed in Indonesia. Some of the latest are the historic signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) and the Regional Comprehensive Economic Partnership (RCEP) which entered into force in 2020. The latter covers fifteen countries including 10 ASEAN. Along with New Zealand, Australia, China, Japan and South Korea. This is very beneficial because it is one of the largest trade agreements in the world, accounting for about a third of the global economy. So if you are deciding where to open a trading company, Indonesia can be a good place for such purposes because of the trade agreements.
The corporate tax rate has decreased from 25% to 22% from 2020 to 2021, and is scheduled to be reduced to 20% in 2022. So with a lower tax rate, your profits will be higher and it will allow you to start business in Indonesia. Very attractive to foreign investors.
In addition to reducing the corporate tax rate, export services produced in Indonesian territory are eligible for zero-rated value added tax (VAT). Companies in R&D industries and pioneering industries are entitled to a deduction of 300% on gross income and 60% on net income respectively. In addition, businesses operating in one of the 13 Special Economic Zones in Indonesia can enjoy financial and non-financial incentives.
There are also financial and non-financial incentives for businesses operating in one of the 13 special economic zones in Indonesia.
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Indonesia ranks 73 out of 190 economies for ease of doing business according to the World Bank in 2020. This is due to Indonesia’s openness to foreign investment and government initiatives.
Previously, the company registration process in Indonesia was a lengthy process that took at least two months. But as the process has now been reduced by half a month, progress has now been made for company registration. Apart from the time it takes to register a company in Indonesia, the process is now significantly simplified as there is no need to submit a Company Domicil (SKDP) from May 2019. The SKBP is a document that contains the residential address of a company. It is used to apply for business licenses, tax identification numbers, etc.
With the new Online Single Submission (OSS) system, businesses can start their business immediately as the Business Identification Number (NIB) can be obtained through the system without the need to obtain additional licenses. This applies to selected business sectors such as call centres, event organisers, ticketing and education and/or training in travel agencies.
Finally, investor kitas allow foreign investors who are shareholders, board members or commissioners to start work immediately if they meet the requirements for the invested shares. There are also other benefits such as simple application and waiver of work permit fee (DPKK).
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In 2020, Indonesia’s population was approximately 273 million, accounting for 3.51% of the world’s population. It is expected to increase further in the coming years. Not only is the population of Indonesia growing, but the middle class is also growing rapidly. Therefore, Indonesia’s population is increasingly prosperous with strong purchasing power. With greater purchasing power, companies can thrive in such an environment, and generate greater profits in the right markets.
As mentioned earlier, Indonesia’s population is growing and more than 40% are of working age. Therefore, according to the World Bank, Indonesia has a large number of workers. On top of that, labor costs in Indonesia are competitive with low minimum wages. Therefore, labor costs in Indonesia are low and profits are high.
Indonesia is trying to reduce the problem of corruption which is a problem in Indonesia. To do so, the Corruption Eradication Commission (Komisi Pemberantasan Korupsi – KPK) was established to fight corruption. Additional measures have also been implemented, such as the UN Convention against Corruption (UNCAC) and the national strategy for the prevention and eradication of corruption 2012-2025.
Since then, according to the Corruption Perceptions Index, the corruption situation in Indonesia has gradually improved over the years.
Business Enabling Environment
A foreign-owned company (PT PMA) or a domestic-owned company (PT) is allowed to own land in Indonesia.
You can apply for Right to Build (Hak Guna Pangunan – HGB) with PT PMA. PT PMA’s name will be mentioned on the land certificate, where the company is given a legally protected title. HGB makes it possible for the company to build the property and generate income through the sale or rental of the property.
Self-ownership or property rights (Huk Milik – HM) is limited to Indonesian citizens. Foreign investors with NPT can, however, secure HM under a local nomination scheme.
There are many advantages to starting a business in Indonesia. But to understand whether this is right for your business, you may want to engage Tetra Consultants for a consultation. With Tetra Consultants on your side, your business registration process in Indonesia will be smooth and hassle-free. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, complete the registration process, obtain necessary licenses, open a business bank account and ensure you comply with government regulations.
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Contact us to find out more if you want to register a business in Indonesia and our dedicated and experienced team will get back to you within 24 hours.
Tetra Consultants is a consulting firm that acts as your advisor and reliable partner in your business expansion. We tell our customers what they need to know, rather than what they want to hear. Most importantly, we are known as a one-stop solution for our valued customers. For a free and no-obligation consultation, contact us at enquiry@ Our team of experts will contact you within 24 hours.
7 Best Small Businesses to Start in Australia in 2023 Next 4 Advantages of Registering a Company in Australia Compared to New Zealand The decision to establish a business in a new market is critical. Operations that involve significant investments in a new country present major challenges as different economic, cultural, political and technological conditions lead to greater risk.
Professional help is important to ensure that the business is set up correctly. Like any other market, Indonesia has its own characteristics. A proper understanding requires deep insight into its culture, customs and business environment.
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Thanks to our local team and extensive expertise, we can advise you on the most appropriate way to enter the market effectively. It also offers services for the registration of large companies, such as the registration of construction companies in Indonesia.
Establishing a legal presence in Indonesia can be done in two ways: Representative Office and Foreign Direct Investment – Limited Liability Company (known as PT PMA in Indonesia).
To dissolve a company, a set of legal actions must be taken based on the Indonesian Company Law. Dissolution of a company in Indonesia must be resolved legally.
Undoubtedly, offshore company has become one of the best and best business tools for foreign investment and international trade.
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In Indonesia, if you want to expand your business or distribute your product, you need to apply for at least several types of licenses. At we can help you with all the licenses you need for your specific business.
Product registration is one of the bureaucratic requirements for product distribution in Indonesia. Product manufacturers or Indonesian distributors must register their products before importing, selling and using them in Indonesia.
Adequate knowledge and understanding of a new market is important before deciding to enter that market. A successful market access strategy usually involves extensive market research to understand the local market situation.
Small and medium-sized foreign companies that do not want to pursue foreign direct investment can pursue direct export by using a local partner to import their products or by creating a contractual agreement for projects.
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Fill out the form below and submit your question. Our advisory team will respond to you quickly via email. You can visit our office to learn more about the process of establishing a business in Indonesia.
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