Foreign Company Representative Office/ Kantor Perwakilan Perusahaan Asing (KPPA) is the representative office established by foreign company or foreign companies outside the territory of Indonesia with a view to manage the interests of the company or the affiliated companies in Indonesia and/or in other countries and/or to prepare the establishment and development of foreign investment companies in Indonesia and/or other countries. Peraturan Kepala BKPM No.12 of 2009 (“Perka BKPM 12/2009”) provides that each foreign company in relation to the investment activity shall obtain Government’s license before establishing a foreign company representative office in the territory of Indonesia. This is necessary to maintain the order of business regulations between the two countries.
Application for Foreign Company Representative Office License
Principally, all activities undertaken by the KPPA shall obtain license from PTSP BKPM. However, based on Article 43(1) of Perka BKPM 12/2009, the application for license from PTSP BKPM is not required for all activities that are conducted inside the financial sector.
In order to obtain the KPPA license, the application may be submitted to PTSP BKPM using the model form of KPPA as stated in the Annex XI of Perka BKPM 12/2009.
The Form of Foreign Company Representative Office License
As regulated in the Annex XII of Perka BKPM 12/2009, KPPA shall comply with the regulations in the Surat Keputusan Kepala BKPM No.22/SK/2009, as follows:
- KPPA activities are limited to its role as supervisor, liaison, coordinator and to manage the interest of the company or the affiliated companies inside or outside Indonesia;
- KPPA is not allowed to seek income from resources in Indonesia, including to conduct an engagement / sell and purchase transaction on goods and services with a company or individual inside the state;
- KPPA will not participate in any form of management of a company, subsidiary company or branch of the company in Indonesia;
- The manager of KPPA shall be resided in Indonesia;
- The manager of KPPA shall be fully responsible for the smooth running of the office;
- The manager of KPPA may employ foreign employees with certain skills;
- The manager of KPPA shall not conduct any activities outside the office activities;
- The manager of KPPA shall comply with all existing Government regulations;
- The manager of KPPA shall submit an annual report, no later than January 31st next year to the Head of BKPM using the KPPA report form;
- The location of KPPA shall be in the available office building;
- Amendment upon the provisions as regulated in this Letter of Agreement/ Surat Persetujuan shall obtain prior agreement from BKPM before the implementation of the amendment, which covers: (i) the amandmentof the name of the company; (ii) the Amendment of the Head of the representative office; (iii) the moving of the office’s location to the other province; and (ivthe amendment of the number of foreign employees employed.
In accordance with Article 43 paragraph 4 of Perka BKPM 12/2009, the period of the issuance of the Surat Izin KPPA/ License Letter of KPPA by BKPM shall be at the latest within 5 (five) working days since the receipt of a complete and correct application. The license on the KPPA activity valid onwards, unless revoked due to the non-fulfillment of the requirements set out by the Government or because it is closed or dissolved by itself.
Based on Article 43(3) of Perka BKPM 12/2009, in the issuance of the KPPA license, such license will be signed by the Head of the BKPM or the appointed official with copies to:
1. Minister of Finance;
2. Minister of Trade;
3. Minister of Labor and Transmigration;
4. The Head of the RI’s Representative in the Foreign Company’s Origin State;
5. The Governor/ Regents/ Mayors