.: ECAII :.

The three most common types of Representative Office that can be opened by an overseas company in Indonesia are ? I. Trading Representative Office, II. Public Works Representative Office and III. Regional Representative Office. A summary of the requirements for establishment of these Representative Offices by overseas companies (updated September, 2002) is given below (Source : PT PricewaterhouseCoopers FAS, Jakarta).

Scope of activities
The Minister of Trade decree No.402/MPP/Kep/11/1997 stipulates in article 2 and 3 that an overseas company (?principal company?) is permitted to establish a trade representative office (TRO) in Indonesia. The TRO can act as either a selling and manufacturer?s agent or buying agent.

is permitted to represent its principal company in Indonesia by introducing and promoting its products, which are manufactured overseas. In addition, a TRO may also provide product information to companies / consumers in Indonesia including guidelines in importing such products.
is permitted to conduct market research and to supervise the sales and marketing of the products in Indonesia.
is not permitted to carry out direct trading activities in Indonesia in the form of securing contracts, selling or entering into transactions, either at the initial or final settlement stage e.g. submission of bids, signing contracts, claim settlements etc.

is permitted to conduct market research in relation to supplying of products from Indonesia as required by the principal company. In addition, a TRO may also liaise and provide information and guidelines to any prospective Indonesian counterpart on the requirements for the exportation of products.
is permitted to conclude contracts with an Indonesian entity or business counterparts on behalf of the principal company.

Application procedures
An overseas company intending to establish a TRO must submit a letter of intent to the Directorate General of Domestic Trade attention to the Director of Company Registration and Business Development. A standard letter of intent is available at the Ministry of Industry and Trade (MOIT).

The Director of Company Registration and Business Development will issue a Temporary TRO license upon approving the letter of intent. The Temporary TRO license will expire three months after the issuance date.

The temporary TRO license will allow the Chief Representative to arrange an office by entering into a lease agreement and any other agreements deemed necessary to support the TRO?s activities such as car rental, employee contracts, housing, opening bank accounts, etc.

The Chief Representative has to arrange for the Permanent License before the Temporary TRO license expires.

MOIT requires TROs to pay a refundable guarantee fee in order to obtain the TRO permanent license. Payment must be transferred through PT Bank Negara Indonesia. The amount of guarantee fee is as follows:

? Rp 5,000,000.00 if the Chief Representative is expatriate; or
? Rp 1,000,0000.00 if the Chief Representative is Indonesian national.

The Minister of Trade decree No.402/MPP/Kep/11/1997 article 8 provides that each expatriate working for the TRO must recruit and employ at least three Indonesian national experts and / or administrative staff. This requirement is commonly referred to as ?3:1 ratio?.

In relation to processing for a TRO permanent license renewal, the Chief Representative must ensure that the TRO has complied with the 3:1 ratio before submitting the application.

Reporting requirements
The TRO is required to submit the following reports to the related government offices.

	Type of Report	Department/ office
1	Monthly and annual employee tax returns	The Indonesian Tax Office
2	Six-monthly activity report on export and import realization	The MOIT
3	Annual manpower report	The Ministry of Manpower and Transmigration (MOMT)

Fee and scope of work
The professional fee to provide assistance in processing TRO license will be approximately US$ 8,000. The scope of work will include the following:

Preparing the application letter;
Reviewing the supporting documents, that are provided by the overseas principal company;
Submitting the application letter (attaching with the supporting documents) to MOIT;
Monitoring the temporary TRO license approval process;
Arranging for the necessary immigration documentation such as work and stay permits for the candidate expatriate Chief Representative;
Arranging for the necessary documentation to obtain the permanent TRO license;
Preparing the application for permanent TRO license;
Submitting the application for permanent TRO license and monitoring the approval process;
Arranging for the Company Registration (TDP);
Filing the required manpower report.

Scope of activities
The Ministry of Public Works Decree No.50/RPT/1991 stipulates that an overseas engineering and/or engineering consulting company (?principal company?) intending to operate in Indonesia must establish a Public Works Representative Office (PWRO).

The Construction Services Board of the Ministry of Settlement and Regional Infrastructure (MSRI), previously the Ministry of Public Work, is the Government agency responsible in issuing the PWRO license. There are certain requirements to meet for establishing a PWRO. The MSRI requires the principal company to have a sound financial position and technical skills in addition to a minimum three years experience in undertaking projects.

Although MSRI does not define a specific benchmark to gauge the project performance of the principal company, our experience shows that MSRI may require the principal company to be equivalent to a company with an ?A? qualification construction project license in Indonesia. An ?A? qualification is defined as a company capable of carrying out projects with a total minimum value of Rp.500 million or equivalent per year.

To undertake construction services and/or engineering consulting activities, which include civil, electrical, mechanical and architectural work. The PWRO must form a joint operation (JO) with an Indonesian construction company to execute either a Government or other projects;
To promote and secure contracts in its own right on behalf of its principal company;
To establish contact with Indonesian individuals, companies or Government institutions in an attempt to explore market potential for engineering construction and/or consulting services on behalf of the principal company;
To participate in pre-qualification bids for international projects through the JO;
To carry out other activities within the scope of work as defined in the construction contract up to the project completion.

An individual (Indonesian or expatriate) can be appointed as the Chief Representative in a PWRO.

Joint operation requirement
The Indonesian joint operation partner has to meet the following requirements:

An ?A? qualification construction and/or Consultant company;
A member of the Association of Indonesian Consultants (INKINDO) or the Association of Indonesian Contractors (GAPENSI);
Holder of a Construction Business license (SIUJK).

Application procedures
To obtain a PWRO operating license, the principal company must submit an application letter to MSRI attention to the Head of Construction Services Supervisory Board.

Guarantee fee
This guarantee fee must be paid directly to the Indonesian Central Bank (Bank Indonesia). The amount of guarantee fees varies depending on the type of activities the PWRO is planning to carry out.

Expiration date
Three years after issuance date extendable. In renewing the license, the principal company must submit a letter requesting for an extension of license to the Construction Services Supervisory Board.

Reporting requirements
The PWRO is required to submit the following reports to the related government offices.

Time frame
The PWRO license could be issued within three to four weeks after the submission of complete documentation. Timeframe to arrange the required immigration documents and work and stay permits are excluded.

Fee and scope of work
The professional fee to provide assistance in processing the PWRO license will be US$ 8,000. The scope of work will include the following:

Preparing the application letter;
Reviewing the supporting documents, that are provided by the overseas principal company;
Submitting the application letter (attaching with the supporting documents) to MSRI;
Monitoring the PWRO license approval process;
Arranging for the necessary immigration documentation such as work and stay permits for the candidate expatriate Chief Representative;
Arranging for documentations such as Tax Registration Number (NPWP);
Arranging for the Company Registration (TDP);
Filing the required manpower report.

Scope of activities
The Presidential Decree No. 90/2000 allows an overseas company (?principal company?) to establish a Regional Representative Offices (RRO) in Indonesia.

The Capital Investment Coordination Board (BKPM) is the Government agency responsible for issuing the RRO license. BKPM requires the principal company to have an affiliate, subsidiaries or branches in any other Asian countries (at least two) as evidenced by the following documents:

The main objectives of establishing an RRO are to facilitate the operation and activities of a group of multi-national companies and to search for investment opportunities in Indonesia.

Carry out supervisory functions ;
Act as liaison office to the affiliated companies or subsidiaries or branches of the principal company; and
Make preparation relating to the establishment and business development of a foreign investment in Indonesia.

The RRO could be managed by an Indonesian or expatriate Chief Representative i.e. Representative Office Executive. The principal company may also appoint additional expatriate manager(s) to assist the office manager.

Expatriates working in an RRO are exempt from foreign exit tax (currently Rp 1,000,000, approximately US$ 100).

Application procedures
A standard application form i.e. Model KPWPA is available for the principal company to complete. The application form and the relevant supporting documents shall be submitted to BKPM for approval.

Following the issuance of the RRO license, the candidate expatriate Chief Representative must prepare the Expatriate Manpower Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing ? RPTK).

The Chief Representative has to indicate in the RPTK the position and terms of appointment of any expatriates planning to work for the RRO. The RPTK approval can be sought from the MOMT.

Following the RPTK approval, the RRO can start arranging the expatriate work and stay permits.

Time frame
The RRO license could be issued within two to three months after the submission of completed documentation. Timeframe to arrange the required immigration documents and work and stay permits are excluded.

Fees
The professional fee to provide assistance in processing the RRO license will be US$ 11,500. The scope of work will include the following:

Preparing the Model KPWA application;
Reviewing the supporting documents, that are provided by the overseas principal company;
Submitting the Model KPWA application (attached with the supporting documents) to BKPM;
Monitoring the RRO license approval process;
Preparing the RPTK application;
Submitting the RPTK application and monitor the approval process;
Arranging for the necessary immigration documentation such as work and stay permits for the candidate expatriate Chief Representative;
Arranging for documentations such as Tax Registration Number (NPWP);
Arranging for the Company Registration (TDP);
Filing the required manpower report.