Foreign companies interested in exploring business opportunities in Indonesia often establish representative offices as a first step. These offices allow international companies to conduct market research, build relationships, and prepare for direct investment without engaging in commercial activities.
This article outlines the permitted activities across various types of representative offices in Indonesia and explains how to ensure compliance with local regulations.
Also read; The Types of Representative Offices in Indonesia
Authorized Functions Based on the Type of Foreign Representative Office in Indonesia
General Foreign Representative Office (KPPA)
KPPA allows companies to conduct preliminary business activities without direct sales. Permitted functions include supervision, coordination, and promotion for the parent company. However, KPPA cannot sign contracts, invoice customers, or derive revenue from Indonesian sources.
Foreign Trading Representative Office (KP3A)
KP3A offices are tailored for foreign trading companies. These offices may promote, market, and conduct research on behalf of their parent company. They are also allowed to close contracts for exports but cannot sell goods directly.
Operations under KP3A may include:
- Selling agent: promotional work
- Manufacturing agent: market analysis
- Buying agent: liaison and procurement activities
Foreign Construction Representative Office (BUJKA)
BUJKA allows international construction companies to participate in Indonesia’s infrastructure development sector. It permits participation in tenders, collaboration with local firms, and project execution under strict regulatory compliance.
BUJKA can:
- Gather project data
- Bid on public tenders
- Employ both local and international workers
Electricity Support Services Representative Office (JPTLA)
Designed for firms offering electrical consulting and support services, JPTLA is permitted to manage multi-billion rupiah infrastructure projects and maintain large-scale installations.
Electronic Systems Trading Office (KP3A PMSE)
Foreign digital companies dealing with high transaction volumes (e.g., 1,000+ transactions or deliveries per year) are required to set up KP3A PMSE offices. These entities must adhere to Indonesian e-commerce regulations and ensure customer protection.
Regardless of type, all representative offices face the following restrictions:
- Required to function from a physical office located in the capital city of a province.
- Cannot use virtual office addresses
- Cannot generate revenue in Indonesia
- Prohibited from issuing invoices or engaging in sales
- Must avoid direct involvement in Indonesian branch management
Also read: Common Mistakes When Opening a Representative Office in Indonesia: Complete Guide from InvestinAsia
Licensing and Compliance Requirements
All representative offices must:
- Obtain an NIB via the OSS system
- Register for a Taxpayer Identification Number (NPWP)
- Secure a Letter of Approval from BKPM
Special licenses include:
- SIUP3A for KP3A and KP3A PMSE
- Construction licenses and SBU for BUJKA
- Electronic Operator Certificate for KP3A PMSE
Also read: Required Licenses and Permits for a Foreign Representative Office in Indonesia
Validity and Renewal
Permits are issued for an initial period of three years and may be renewed twice, up to a total of five years. After this period, companies must restructure or establish a different legal entity, such as a PT PMA (foreign investment company), to continue operations.
Navigating these regulations can be challenging without local expertise. Selecting the right type of representative office, applying for the correct licenses, and ensuring compliance is crucial. Errors or regulatory breaches may result in fines or temporary suspension of operations.
That’s where InvestinAsia’s Indonesia Representative Office Setup Service comes in. We specialize in helping foreign businesses establish compliant, fully licensed representative offices across Indonesia—offering end-to-end support from entity selection to licensing and legal advisory.
With a strong understanding of regulatory frameworks and hands-on experience with BKPM and OSS systems, InvestinAsia ensures a seamless market entry with minimal risk and full compliance.
Chat with us now for FREE consultation and get a special offer!
Frequently Asked Questions (FAQs)
Can a representative office in Indonesia engage in sales?
No. Representative offices cannot generate income, issue invoices, or engage in direct commercial transactions.
What’s the difference between KPPA and KP3A?
KPPA focuses on supervision and coordination, while KP3A is oriented toward trade promotion and contract facilitation for exports.
Is it possible to operate a representative office using a virtual address?
No. Every representative office must maintain a physical presence in a provincial capital city.
How long can I maintain a representative office license?
Up to 5 years (3 years initially, with two 1-year extensions).
Can a KP3A office close deals on behalf of the parent company?
Yes, but only for export purposes and not for domestic sales.
