Indonesia is already known around the world as the largest archipelago. There are more than 300 ethnic groups, breathtaking scenery and an abundance of natural resources. However, there is much more to Indonesia than just being a popular tourist destination. Situated close to large economies, like China, India, Singapore and Malaysia, this country could be ideally suited as a place to invest. You can also think about registering your business in Indonesia at the same time.
If you’re wondering who the preferred global partner is when it comes to entry and expansion into countries like Indonesia, then the answer is simple, Seamless. From helping you hire locally, with payroll and accounting and even handling the backend, Seamless can help you integrate your business in Indonesia. But why Indonesia?
1. The Trade Agreements
The national government is interested in boosting the economic growth of the country. This makes it easier for foreign investors. A simple way in which businesses can do this is through trade agreements. Indonesia already has many trade agreements in place, such as with Japan and Pakistan. Other recent agreements include the one between Indonesia and Australia. The Regional Comprehensive Economic Partnership was signed by fifteen countries, which account for a third of the global economy.
2. Doing Business is Easier
A report from the World Bank ranks Indonesia 73rd of the 190 total economies. It gives Indonesia a score of 69.2 when it comes to ease related to doing business. This is due to the initiatives put forward by the government. Foreign investors can now expect to finish the process of registering their entity in as little as one and a half months
As an added bonus, if your business is located in Jakarta, then you won’t have to submit a company domicile either. The Online Single Submission System ensures that businesses can start operating right away. You just need to ensure that your Business Identification Number is obtained using the system.
3. Incentives for Investment
The national government has already lowered the corporate income tax. This used to be 25% and now is 22%. The CIT rate is expected to be lowered to 20% by the end of 2022. There are also tax incentives that are designed to encourage foreign investments. If your business is engaged in research and development, then you can enjoy nearly a 300% reduction when it comes to gross income. Businesses that are in industries considered ‘trailblazing’ can get a 60% reduction on their net income.
Foreign investors can also enjoy fiscal as well as non-fiscal incentives available for businesses that choose to operate within the 13 economic zones of the country.
4. Labour Costs, Population, and the Growth of the Middle Class
In 2020, there were nearly 273 million people living in Indonesia. This is around 3.51% of the total population of the world. The middle class of the country is also growing at a rapid rate. This means that the spending power of the people is increasing. As a result, more and more businesses can thrive and generate profits in Indonesia.
More than 40% of the total population are of their working-age, says the World Bank. This means that the pool of labourers available is expansive. You can enjoy the benefits of competitive labour costs as well when compared to the cost of hiring labour in China and Singapore. Seamless can help you hire local talent, whilst establishing your business.
5. Foreign Investors Owning Land
If you’re a foreign investor, then you’ll be able to own land in Indonesia. You’ll need to establish either a locally owned company(PT) or a foreign-owned company(PT PMA), in order to do this.
If you opt for the PT PMQ, then you can obtain the right to build in the country. Your ownership will also be protected by a legal agreement. With your right to build, you can not only build property, but you can also generate income by renting or selling property.
Keep in mind that the right of ownership can only be given to citizens of the country. But as a foreign investor, you can get your right of ownership by establishing a locally owned business using a local nominee.
Indonesia has emerged as a top destination for foreign investors to turn to. If you need help establishing your business, hiring remote teams, or for your Indonesia expansion, then contact us.
Seamless can help you turn your business into a global business. In this age of globalisation, if you want to expand your business into Indonesia, then Seamless can help you. Use this guide to learn tips related to whether you should establish a business in Indonesia or not.
Get in touch with Seamless to ensure that your business is established successfully, while you focus on growing your business. We will help you with everything from setting up to providing advice pertaining to business growth.