Understanding the Concept of a Foreign Representative Office
A Foreign Representative Office in Indonesia known locally as Kantor Perwakilan Perusahaan Asing (KPPA) allows foreign companies to maintain a legal presence in Indonesia without conducting direct commercial activities.
It’s ideal for companies that want to:
- Explore market potential,
- Build partnerships, or
- Supervise affiliates in Indonesia.
Legal Framework in Indonesia
The establishment of a KPPA is governed by:
- Regulation BKPM No. 4/2021 (Investment Coordination Regulation)
- Law No. 25/2007 on Investment
- Ministry of Trade Regulation No. 10/2021
Foreign companies must obtain approval from the Indonesian Investment Coordinating Board (BKPM) before starting any operations.
Why Companies Choose a Representative Office
Setting up a Foreign Representative Office in Indonesia offers several strategic advantages:
- Faster market entry: No need for large paid-up capital like PT PMA.
- Simpler structure: Limited to non-commercial activities such as marketing, liaison, or research.
- Brand visibility: Builds early presence before full expansion.
- Lower cost: Fewer compliance requirements and taxes.
It’s often the first step for foreign companies planning to convert later into a PT PMA (Foreign Investment Company).
(Related: Foreign Investment Company)
Step-by-Step Process to Establish a KPPA
Step 1 – Prepare the Required Documents
- Parent company profile and incorporation certificate
- Letter of appointment for the Chief Representative
- Office lease agreement in Indonesia
- Power of attorney for application filing
Step 2 – Submit Application to BKPM
The application must include:
- Type of business activity
- Purpose and scope of representation
- Proof of parent company’s legal existence
Step 3 – Obtain BKPM Approval
Once approved, BKPM issues a Letter of Establishment for the Representative Office valid for 3 years (renewable).
Step 4 – Register and Operate
After approval, the company can:
- Hire limited staff (1 foreign representative + local employees)
- Rent office space in a designated commercial building
- Start market analysis and partner outreach activities
Key Legal Restrictions You Must Know
A KPPA cannot:
- Generate income or issue invoices in Indonesia
- Sign contracts on behalf of the parent company
- Engage in trading or commercial transactions
Violations may result in license cancellation or fines.
Therefore, many companies transition from KPPA to PT PMA once they’re ready to operate commercially.
Case Insight: Market Entry Strategy for a European Brand
A European luxury retail brand wanted to test Indonesia’s growing consumer market.
Instead of opening a full PT PMA, they set up a Representative Office in Jakarta with Swift Visa Indo’s help.
Within six months, the brand successfully:
- Conducted market studies
- Partnered with local distributors
- Prepared the foundation to register a PT PMA later
The process took only 4 weeks, saving the company over USD 10,000 in setup costs compared to a full legal entity.
How Swift Visa Indo Assists Global Companies
provides end-to-end assistance for foreign representative offices in Indonesia:
- Document preparation and BKPM submission
- Appointment of Chief Representative
- Legal compliance and renewals
- Conversion from KPPA to PT PMA when ready
They also offer Foreign Investor Visa and KITAS sponsorship for the Chief Representative to legally reside in Indonesia.
A Foreign Representative Office in Indonesia is a smart, low-risk way for companies to explore the Indonesian market before making full investments.
Swift Visa Indo ensures the setup process is smooth, compliant, and scalable so businesses can focus on market growth, not paperwork.
Ready to establish your representative office?
Contact Swift Visa Indo and get professional guidance for your company’s Indonesia entry strategy.
