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Comparison of Foreign Company Representative Office…
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Comparison of Foreign Company Representative Office and Foreign Trade Company Representative Office

Foreign companies that want to conduct business activities in Indonesia can open a representative office in Indonesia. A representative office is different from a foreign company. The function of a representative office is as a representative for a foreign company in Indonesia. But for foreign company the function is to do business in Indonesia. Referring to Article 9 paragraph (10) of the Investment Coordinating Board Regulation Number 4 of 2021 concerning Guidelines and Procedures for Risk-Based Business Permit Services and Investment Facilities ("Perka BKPM No. 4/2021"), representative offices are divided as follows:

    1. representative office of a foreign trading company ("KP3A");
    2. representative office of a foreign company ("KPPA");
    3. representative office of foreign construction services business entity; and/or
    4. representative offices of foreign electricity support services.

For non-construction and electric power companies, two types of representative offices can be proposed, namely KP3A or KPPA, but in order to ease in knowing the difference between the two representative offices, the following is a comparison between KPPA and KP3A:

Concerning

KPPA

KP3A

 

Legal basis

Presidential Decree No. 90/2000 on Representative Offices of Foreign Companies.

 

Perka BKPM No. 4/2021.

 

Regulation of the Minister of Trade No. 10/M-DAG/PER/3/2006 of 2006 concerning Provisions and Procedures for Issuance of Business License of Foreign Trade Company Representative.

 

Perka BKPM No. 4/2021.

 

Definition and Function

An office headed by one or more individual foreign nationals or Indonesian nationals appointed by a foreign company or a combination of foreign companies abroad as its representative with a view to:

  1. take care of the interests of the company or its affiliated companies; 
  2. prepare for the establishment and business development of foreign investment companies, in Indonesia or in other countries and Indonesia;
  3. not seeking any income from sources in Indonesia including not being allowed to carry out activities or do any agreement/ transaction of sales and purchases of commercial goods or services with companies or individuals in the country; and
  4. does not participate in any form in the management of any company, subsidiary or branch of a company in Indonesia.

Representatives of Foreign Trading Companies in Indonesia can be in the form of Selling Agents and/or Manufactures Agents and/or Buying Agents. KP3A has the following functions:

  1. carry out activities to introduce, promote and promote the marketing of goods produced by Foreign Companies or Foreign Company Associations abroad that appoints them;
  2. conduct market research and supervision of sales in the country;
  3. conduct market research on goods required by a Foreign Company or a Foreign Company Associations abroad that appoints it; and
  4. to close contracts for and on behalf of the company that appointed it with a domestic company in the context of export.

 

Location

Located in an office building in the Provincial Capital.

Located in the Provincial Capital and Regency / City throughout the territory of the Republic of Indonesia.

 

 

The two representative offices have their own differences, such as KPPA established with the aim of preparing for the establishment of PT PMA and KP3A serves to promotes foreign company products and other comparisons that can be seen in the aforementioned table.

The brief description above is an overview of the differences between KPPA and KP3A. If you are interested in knowing more about it, Suria Nataadmadja & Associates Law Office can help you.