The Indonesian archipelago has been an important trade region since at least the seventh century. Indonesia is the largest economy in Southeast Asia, and one of the emerging market economies of the world.
Indonesia offers various competitive advantages for investors, including:
- Large domestic market and competitive workforce arising from its economy and population
- Market-based macroeconomic policy and free foreign currency exchange regime
- Potential outsourcing partners stemming from a large pool of small and medium enterprises throughout the country
- An abundance of diversified natural resources including agriculture, plantations, fisheries, mining, oil and gas
- Strategic location spanning across several vital international sea transportation routes
- A democratically elected government committed to reforming and promoting a climate conducive to investment.
Indonesia’s steady economic growth and diverse market are valuable opportunities to start a business.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
Sole Proprietorship in Indonesia
Sole proprietorships (Usaha Dagang - UD), are among the most common forms of business entities in Indonesia. Only one person owns the company, making this the simplest entity option. It can easily be established by a single person without any legal issues. Anyone can establish a sole proprietorship (UD) by completing the documents through a notary, as well as organizing for the reception of business permit documents.
Characteristics of a sole proprietorship in Indonesia:
- Relatively easy to set up and also dissolve;
- Liability is unlimited and can involve personal property;
- There are no taxes, there are levies and fees;
- All benefits are enjoyed alone;
- Difficult to regulate the company’s wheels because it is regulated by the owner;
- Small profits that sometimes have to sacrifice a larger income;
- The period of business entity is unlimited or for life;
- At any time, it can be transferred to another owner.
Registration of a business in Indonesia
First, you have two options for your business:
- Licensed Sole Proprietorship: Have an operational permit from the technical department. For example, if an individual company is engaged in trade, it can have licenses such as the Trade Business Registration Certificate (TDUP), the Business Trading License (SIUP).
- Unlicensed Sole Proprietorship: For example, individual businesses carried out by street vendors, grocery stores, etc. As the sole owner, you get to decide on the minimum capital. If you have a lower capital to start with, this could be the ideal option for you.
How to register a sole proprietorship in Indonesia
Even though there are no official regulations, a UD registration usually requires the following documents:
- Tax Identification Number - NPWP
- Company Domicile Certificate - SKDP
- Business license
- Company Registration Certificate - TDP
Business registration in Indonesia cannot be done online. It is advised to hire a local notary to do it. Before you go to a notary, prepare a photocopy of the Identity Card (KTP), name, and address of your UD.