Why You Should Establish a Manufacturing Company in Surabaya

Why You Should Establish a Manufacturing Company in Surabaya

  • InCorp Editorial Team
  • 2 June 2023
  • 4 minute reading time

The COVID-19 pandemic has had a massive effect on various industries. However, the manufacturing company, in particular, has suffered greatly as most businesses have had to halt operations due to the restrictions imposed.

Business actors focused on altering their operations to the government regulations relating to COVID-19 precautions, which mirror the number of cases within the nation. The Chairperson of the Indonesian Chamber of Commerce, Arsjad Rasjid, revealed that the manufacturing industry, in particular, is even threatened with potentially reducing their employees.

The requirement of closing down the work area if an employee is infected with the virus also makes it difficult for companies to operate regularly. The apparent slowdown of the industry can be quantitatively seen through the Manufacturing Purchasing Managers’ Index, which has significantly slowed down.

This is not only experienced by Indonesian manufacturers but also in other developed and developing countries such as Malaysia, the Philippines, India, and the United States.

The Indonesian Ministry of Finance is extra careful and anticipates any future risk such that it should not significantly hamper economic growth. Despite global demand steadily growing, the ongoing geopolitical conflict and restrictions suppress the flow of supplies and have dramatically impacted the timing of delivery.

The circumstances caused the manufacturing sector to hold back on its production. The prices of raw materials have also pressured the growth of the manufacturing industry as a whole.

The Optimism of Manufacturing Industry Recovery

Planning The Realization

The manufacturing industry has seen an upward trend. This can be especially seen through the realization of foreign investments in the manufacturing sector, which has totaled the approximate amount of USD 5.4 billion and has contributed 52.9% to the total FDI achievement.

Agus Gumiwang Kartasasminta, the Indonesian Minister of Industries, has gone so far as to point out that the manufacturing industry has contributed the most to the realization of the FDI, solely in the first quarter of 2022.

This achievement is primarily due to the implementation of downstream policies which to support the acceleration of various projects, including but not limited to the electric vehicle ecosystem and the battery factories.

For the manufacturing industry to continue its recovery, there is a need for legal certainty such that businesses feel supported in the current business climate. The G20 presidency for Indonesia also is expected to open up opportunities for increasing investment cooperation, especially in manufacturing sectors.

Various government representatives consistently point out that synergy and collaboration of multiple stakeholders are integral in attracting global investors and achieving the targets.

Manufacturing Industry Climate in Surabaya

The manufacturing industry, both within Indonesia and around the world, is transforming to accommodate the industrial revolution. This era emphasizes the collaboration between the manufacturing process and the digital world.

The Minister of Industries set up a specific Research Center that focuses on enhancing the development of electronics and telematics industries as there are the primary industries that are selected as pioneers.

Availability of Infrastructure and Investment Plan

Building an industrial company goes hand in hand with building quality human resources and is the key to success. The efforts of the Indonesian government are seen through the signing of a Memorandum of Understanding on the Preparation and Distribution of Competent Manpower in the Kendal Industrial Estate.

This MoU was signed by the Badan Pnegembangan Sumber Daya Manusia Industri (BPSDMI), the Government of Singapore, and the Kendal Regency Government. The Ministry of Industries has built a Furniture and Wood Processing Industry Polytechnic in the area to encourage industrial investment growth by providing competent local workers.

The Singapore Minister of National Development, Desmond Lee, has also acknowledged the progress of roads and existing companies’ infrastructures. He believes this is an excellent attempt to attract more investment to Kendal.

How To Establish a Manufacturing Company

Why You Should Establish a Manufacturing Company in Surabaya

Establishing a manufacturing company in Indonesia could be equally exciting and daunting. Cekindo provides business licenses and company registration services to ease this otherwise stringent process.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.