As Indonesia’s digital economy rapidly grows, foreign companies engaged in trading through electronic systems (PMSE) are increasingly recognizing the importance of establishing a local presence. The Indonesian government, through the Regulation of the Minister of Trade Number 50 of 2020, mandates that foreign companies meeting certain criteria must appoint a representative office, known as KP3A PMSE (Representative Office of Foreign Trading Companies in the Electronic Systems sector), in Indonesia.
Also read: The Types of Representative Offices in Indonesia
What is a KP3A PMSE?
A KP3A PMSE is a representative office appointed by a foreign company engaged in electronic trading systems (PPMSE) to operate in Indonesia. This office is led by an individual—either an Indonesian citizen or a foreign national—who acts on behalf of the foreign PPMSE. The KP3A PMSE plays a crucial role in ensuring that the foreign company fulfills its consumer protection obligations, improves domestic competitiveness, and resolves disputes within the Indonesian market.
Criteria for Establishing a KP3A PMSE
Foreign companies engaged in electronic trading (PPMSE) are required to appoint a KP3A PMSE if they meet the following criteria:
- The company has conducted transactions with more than 1,000 consumers within a one-year period.
- The company has delivered more than 1,000 packages to consumers within a one-year period.
These requirements ensure that foreign companies with a significant presence in Indonesia’s digital economy are represented locally, enabling smoother operations and greater compliance with local regulations.
Also read: What is KPPA in Indonesia and How to Open One
Legal Requirements for KP3A PMSE Establishment
To establish a KP3A PMSE, the foreign PPMSE must adhere to several key legal requirements, including:
- Proof of Appointment: The appointment of a KP3A PMSE must be validated by a notary and supported by a certificate from the Trade Attaché of the Republic of Indonesia or another official of the Indonesian representative office in the foreign country.
- Articles of Association: The foreign company’s articles of association must be translated into Indonesian by a sworn translator.
- Proof of Identity: The leader of the KP3A must submit valid identification, such as a Residential ID for Indonesians or a passport for foreigners.
- Manpower Statement: A letter stating the number of employees and their employment status must be submitted.
- Consumer Service Details: The foreign PPMSE must submit details of its website or application, along with a phone number and email address for customer complaint services.
Also read: BUJKA in Indonesia: Definition and It’s Requirements
Securing a Business Permit (SIUP3A)
Once the above requirements are met, the KP3A PMSE must obtain a business permit, known as SIUP3A (Surat Izin Usaha Perwakilan Perusahaan Perdagangan Asing), through Indonesia’s Online Single Submission (OSS) system. The SIUP3A is crucial as it legitimizes the KP3A’s operations and ensures the office complies with Indonesia’s legal framework.
The SIUP3A for the PMSE sector is valid as long as the KP3A continues to represent the foreign PPMSE. The representative office is prohibited from engaging in activities beyond the interests of consumer protection, domestic competitiveness improvement, and dispute resolution.
Also read: KP3A in Indonesia: Types and Requirements
Geographic Scope of KP3A PMSE Operations
A KP3A PMSE must be located in the capitals of provinces, regencies, or cities across Indonesia. With approval from the foreign PPMSE, the office can set up branch offices, but it is restricted to representing just one PPMSE. This ensures that the representative office is fully focused on fulfilling its responsibilities toward the company it represents.
Also read: JPTLA in Indonesia: Definition and Requirements
Consequences of Non-Compliance
In the event of a unilateral termination of the KP3A relationship by the foreign PPMSE, a new representative must be appointed within 14 days. Failure to do so will result in administrative sanctions, including written reprimands and potential temporary blocking of the PPMSE’s services by the Indonesian authorities. A total of three reprimands may be issued, with a 14-day grace period between each reprimand. Should the foreign PPMSE fail to comply, its services may be temporarily blocked by the government at the request of the Director-General of Consumer Protection and Trade Order.
Establishing a KP3A PMSE in Indonesia is essential for foreign trading companies conducting significant business through electronic systems. By appointing a local representative, foreign companies can ensure compliance with Indonesian laws, improve their operational efficiency, and maintain customer satisfaction in this rapidly growing market.
However, it is crucial that foreign companies comply with all legal requirements when establishing a KP3A PMSE in Indonesia. Failing to do so may lead to administrative sanctions, including the blocking of services. Therefore, foreign businesses should ensure they navigate the legal landscape effectively when entering the Indonesian market.
Also read: Set Up Representative Office in Indonesia: 2024 Complete Guide
Consider leveraging professional services like InvestinAsia to help you with representative office registration in Indonesia. We offer expert guidance and assistance, ensuring a smooth and efficient establishment of your representative office in Indonesia.
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