Representative Office (KPPA) in Indonesia: A Strategic Market Entry for Foreign Businesses
Indonesia remains one of Southeast Asia’s most attractive destinations for foreign investors, professionals, and global companies. With a population of over 275 million, strong domestic consumption, and continued infrastructure and tourism development, Indonesia offers vast opportunities—particularly in real estate, F&B, healthcare, travel, and professional services.
For foreigners who want to test the Indonesian market without immediately establishing a full foreign-owned company (PT PMA), a Representative Office, known as KPPA (Kantor Perwakilan Perusahaan Asing), is often the most strategic first step.
What Is a Representative Office (KPPA) in Indonesia?
A KPPA (Representative Office of a Foreign Company) is a legal presence in Indonesia that allows a foreign company to represent its head office interests, conduct market research, build business networks, and coordinate with local partners without conducting direct commercial transactions.
KPPA entities are regulated primarily by:
- BKPM / Ministry of Investment.
- Ministry of Trade.
- Relevant sectoral ministries, depending on business activities.
In contrast to PT PMA, KPPA cannot generate income, issue invoices, or sign commercial contracts in Indonesia. However, KPPA provides a legally recognized structure for foreign companies to explore the market while complying with Indonesian regulations.
Who Should Consider Setting Up a KPPA?
A KPPA is ideal for foreign individuals and companies who want a low-risk, compliant market entry.
This structure is particularly suitable for:
- Entrepreneurs and business owners exploring expansion into Indonesia.
- Real estate companies and property developers studying the Indonesian market.
- Real estate brokers and property managers building networks and sourcing projects.
- F&B brands conducting feasibility studies and supplier sourcing.
- Doctors and healthcare groups evaluating partnerships or clinics.
- Travel and tourism businesses developing local operations.
- Marketing directors and investment consultants coordinating regional strategies.
- Foreign directors overseeing Indonesian operations before incorporation.
For many investors, a KPPA serves as a bridge before upgrading to a PT PMA once the market potential is validated.
Types of Representative Offices in Indonesia
Indonesia recognizes several types of representative offices, depending on the sector:
- General KPPA (Non-Trade)
For service-based businesses, consulting firms, investment companies, and professional services. - KP3A (Trade Representative Office)
For foreign trading companies under the Ministry of Trade, commonly used by manufacturers and exporters. - BUJKA (Construction Representative Office)
For foreign construction companies involved in large-scale infrastructure projects.
Each type has different licensing authorities, reporting obligations, and operational limitations, making professional guidance crucial.
Permitted Activities of a KPPA
Based on Indonesian regulations, a KPPA is allowed to conduct non-commercial activities, including:
- Market research and feasibility studies.
- Promotion of the parent company.
- Liaison and coordination with Indonesian partners.
- Supervision of local agents or distributors.
- Business development and networking.
- Reporting and communication with the head office.
However, a KPPA is not allowed to:
- Sell goods or services directly.
- Receive payments or generate revenue in Indonesia.
- Participate in tenders as a commercial entity.
- Issue tax invoices.
Understanding these boundaries is essential to avoid regulatory violations that could result in license revocation.
KPPA vs PT PMA: Which Is Right for You?
Aspect | KPPA | PT PMA |
Legal Status | Representative Office | Foreign-Owned Company |
Commercial Activities | Not allowed | Fully allowed |
Revenue Generation | No | Yes |
Market Entry Risk | Low | Medium to High |
Setup Cost | Lower | Higher |
Suitable For | Market testing | Full operations |
Many foreign investors begin with a KPPA, then transition to a PT PMA once business certainty and profitability are established.
Start Your Indonesia Market Entry the Right Way
Setting up a Representative Office (KPPA) is not just about paperwork—it’s about strategy, compliance, and long-term success in Indonesia.
If you are:
- Exploring business opportunities in Indonesia
- Planning to invest, work, or expand your company
- Unsure whether a KPPA or PT PMA is right for you
Contact Indoned Consultancy today for a FREE consultation. Our legal consultants will guide you step by step and help you choose the most efficient structure for your goals in Indonesia. Indoned Consultancy — Your Trusted Partner for Business and Investment in Indonesia.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
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FAQ
In general, PMA stands for Foreign Direct Investment while PMDN stands for Domestic Direct Investment. From the perspective of the meaning, in short, PMA is an investment activity to conduct business in the territory of the Republic of Indonesia which carried out by foreign investors, both those who use foreign capital wholly or in joint ventures with domestic investors. Then, PMDN is an investment activity to conduct business in the territory of the Republic of Indonesia which carried out by domestic investors using domestic capital.
Basically, subjects in domestic investors are Indonesian citizens (WNI), Indonesian business entities, the Government of Indonesia, or regions that make investments in the territory of Indonesia. Meanwhile, foreign investors are foreign citizens, foreign business entities, and/or foreign governments making investments in the territory of the Republic of Indonesia.
With the new regulations and system changes, the process of establishing a company, both PT PMDN or PT PMA, does not take a long time. It takes at least 10-15 working days after the complete document requirements are fulfilled.
Yes. To be able to carry out the establishment process of PT PMA, the authorized capital that must be written in the deed of establishment is Rp. 10 billion excluding the value of land and buildings. In making the deed of establishment, the Notary appointed by us will provide a statement letter to the shareholders who sign that they will deposit the said amount of capital. However, the statement will usually not include the fulfillment period. After the company is established, the company will carry out investment reporting on a regular basis which will later become one of the proofs for the company's activities with its capital.
Generally, the set-up company process is divided into 2 stages. Where, the first stage is the establishment stage. Where at this stage, you will process your company's basic documents and permits, such as: deed of establishment, legalization document, Company NPWP (Taxpayer ID Card), Business Identification Number, Company Bank Account Opening and other documents according to your sector and business field. Furthermore, the second stage is the operational stage. At this stage, before and/or during your company's operations, you are required to fulfill the company's obligations. Such as, payment of related taxes, fulfilling operational permits, reporting LKPM (Investment Activity Report), BPJS Employment and Health Registration, and other obligations according to the sector and business field.
BPJS stands for Social Security Administering Board, which is a special institution tasked with administering health and employment insurance for the public, civil servants, and private employees. BPJS has 2 types, namely: BPJS Healthcare and BPJS Employment. Where every registered company that has employees is required to register its employees in the BPJS program, both BPJS Healthcare and BPJS Employment.
LKPM stands for Investment Activity Report. It is a report on the progress of investment realization and problems faced by business actors that must be prepared and submitted periodically.
Yes, you do. When you do the establishment of a company, a correspondence address is fundamental. It is needed because later all correspondence documents from the government or related agencies will be sent to your company's office/correspondence address. In addition, a company is required to have a domicile which is one of the requirements for making a deed of establishment.
Do you have a location in mind where you plan to establish your company in general? For example, are you planning to do it in Bali, such as in Kuta, Ubud, Sanur or Jimbaran area? We have several specific place references that may help you determine the location of your company office. Just please let us know.
At the stage of the company establishment process, you are not required to come to Indonesia. Although it is no required to come, you may visit Indonesia with the visa which the service we can assist you to have it.
Some process in the establishment company can be carried out by giving your power of attorney to one of our team whom handles the process of establishing your company. Our team is experienced enough in their field therefore the necessary matters will be prepared and informed to you.
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