Indonesia, with its thriving economy and strategic location, attracts many foreign businesses seeking to establish a presence in Southeast Asia. One common way to achieve this is by setting up a representative office. Representative offices serve as a liaison between foreign companies and potential clients or partners in Indonesia. However, they come with certain limitations that businesses need to be aware of.
In this article, we will explore the restrictions and challenges that come with operating a representative office in Indonesia.
Also read: What is a Representative Office: Definition and Advantages
What are the Limitations of Representative Office in Indonesia?
Representative offices in Indonesia are limited to non-commercial activities. This means that they cannot engage in any activities that generate revenue, such as selling goods or services, signing contracts, or issuing invoices. Representative Office are also not allowed to participate in the management of a parent company’s branch office or subsidiary in Indonesia.
Some specific examples of activities that are not allowed for Representative Office in Indonesia include:
- Importing and exporting goods
- Selling goods or services to Indonesian customers
- Executing agreements on behalf of the parent corporation.
- Issuing invoices
- Participating in the management of a parent company’s branch office or subsidiary in Indonesia
Also read: The Types of Representative Offices in Indonesia
Allowed Activities for Representative Office in Indonesia
Representative Office in Indonesia are allowed to conduct the following activities:
- Conducting market research
- Promoting the parent company’s products or services
- Providing liaison and support services to the parent company
- Preparing for the PMA registration in Indonesia
Also read: Benefits of a Representative Office in Indonesia
Other Limitations of Representative Office in Indonesia
Representative Office in Indonesia are also subject to the following limitations:
- They must be located in a commercial high-rise building in the capital of an Indonesian province.
- They are not allowed to apply for an import license.
- Their licenses are granted for three years initially and can be extended twice up to five years in total.
- They cannot be extended after that time period.
Also read: Representative Office vs. Subsidiary: What’s the Difference?
Overall, Representative Office can be a useful way for foreign companies to establish a presence in Indonesia and explore the market before committing to a more permanent investment.
However, establishing a representative office could be pretty complicated. To simplify the process, you can rely on InvestinAsia’s services for Representative Office Set Up in Indonesia.
So, does your company ready to expand its business in Indonesia?
