Foreign companies in Indonesia can set up representative offices (KPPA, KP3A, KP BUJKA) with specific activity restrictions; KPPA cannot conduct commercial transactions or manage local operations.
Types of Representative Offices for Foreign Companies in Indonesia
Foreign companies can set up various types of representative offices in Indonesia, including the Foreign Company Representative Office (KPPA), Foreign Trade Company Representative Office (KP3A), and the representative office of a Foreign Construction Services Business (KP BUJKA). The KPPA primarily handles general corporate representation, while the KP3A focuses on trade activities. The KP BUJKA is specifically designated for foreign construction service providers. Each type operates under specific regulations, and Indonesia’s OSS framework recognizes these different forms, outlining their permissible activities.
Restrictions on KPPA Activities
A KPPA is limited in scope as it cannot generate income from Indonesian sources, enter contracts, or engage in commercial transactions such as buying or selling goods or services with local entities. It also cannot participate in managing a local company, subsidiary, or branch. Essentially, the KPPA’s role is restricted to representing and coordinating the interests of the foreign parent company without engaging in direct commercial activities within Indonesia.
Special Sector Designations and Construction Activities
Indonesia differentiates between traditional trade representative offices and those operating in electronic commerce. The OSS framework separately recognizes a KP3A for electronic trade activities, also known as PMSE. Additionally, a KP BUJKA enables qualified foreign construction companies to carry out construction services directly in Indonesia, allowing them to undertake specific projects under their designated structure.
| This article was first published by ASEAN Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the original article : Indonesia Representative Offices: What They Can and Cannot Do
