joint venture indonesia - establishment guide

How do You Set up a Joint Venture in Indonesia?

  • InCorp Editorial Team
  • 3 June 2020
  • 3 minute reading time

The reasons for individuals or businesses to set up a joint venture in Indonesia are countless.

Most of the time, however, it comes down to business strategic factors to achieve business goals; compliance with requirements and regulations; development of new products; expansion into new markets particularly in a new foreign country.

A joint venture in Indonesia (JV) involves two or more businesses combining their expertise and resources to reach particular goals or pursue specific projects. It is a commercial enterprise not only combining different resources but also sharing its rewards and risks.

The benefits of setting up a joint venture in Indonesia include greater capacity, more resources, increased expertise, and gaining access to established markets and distribution channels.

However, entering into a joint venture is a big decision that involves many considerations. Cekindo provides you with this guide on how you can set up a joint venture in Indonesia so that you can assess if you are ready to start one.

Considerations Before Establishing a Joint Venture in Indonesia

joint venture in indonesiaIn Indonesia, it is easier to start a new joint venture company than buying shares in an existing one.

Other important things you need to consider while setting up a joint venture in Indonesia are stated below:

1. Determine the Business Sector

First of all, it’s vital to determine the business sector of your Indonesian joint venture. This is because not all sectors in Indonesia are open to foreign ownership.

Therefore, you need to know that the sector of your JV is open to foreign ownership, and what business activities are allowed under the JV.

2. Negative Investment List and Foreign Ownership

Check on the maximum percentage of foreign ownership you can have under the Negative Investment List (DNI). This list can change from time to time so make sure you have the latest version.

3. Determine the Locations

Once you have determined your business sector and foreign ownership of your joint venture company, you need to know where your JV is going to operate.

This is because certain business sectors don’t allow a joint venture to operate in certain Indonesian regions, or certain business sectors only allow a joint venture to operate in specific regions in Indonesia.

4. Taxation

The major taxation matters for a joint venture company is the withholding and income tax payable.

In most cases, foreign shareholders are responsible for 20% of the final withholding tax on dividends from an Indonesian joint venture company.

Once your JV is established, it is always advisable to outsource your taxation matters to the expert to ensure compliance and seamless operations in Indonesia.

How Cekindo Can Assist You

Cekindo as a leading consulting company in Indonesia can help you to establish a Joint Venture company in Indonesia.

We also provide services to support your business growth in Indonesia, including business license applications and business process outsourcing.

Get in touch with our incorporation specialists via the form below.

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.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

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.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

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.