Challenges of Starting a Company in Indonesia

 Challenges of Starting a Company in Indonesia

Indonesia is growing its reputation in South East Asia and the world as a business hub, but fair to say; there are many challenges in running a business in Indonesia. Thus, if you are thinking of incorporating Indonesia company, you should be able to weigh them before they become big problems for you in the future.

These are the challenges of opening a company in Indonesia.

Complicated Registration Process

Indonesia has two different types of Limited Liability Companies. One is local, and another is international. If a shareholder of a local company is a foreigner, then the company automatically becomes international. Furthermore, even if local companies can do it with a virtual address, foreign companies need a physical registered address. The capital requirements are also different in these two business forms, and so is the registration process and document requirements.

The company registration process in Indonesia can be kind of hard to understand. However, these days, there are company registration services that help investors with.

Strict Regulatory Environment

Many foreign investors report that Indonesia’s regulations are so strict that they might negatively impact their business. Indonesia welcomes foreign investment; it is true. However, the country makes sure that in every way, the FDI gives the maximum value to the local economy, rather than the investors.

For instance, foreign companies can’t invest in as many sectors as locals. Furthermore, the process for foreign investors to even get their business started is way longer than for the locals. Foreigners also need to make a considerable investment to start a business in Indonesia.

Even if foreign investors feel more bound sometimes, the rules have been slowly changing into their favour. For instance, unlike many Asian countries, Indonesia actually allows foreign investors to own land and even houses in Indonesia. They can use the property to live or invest in it.

Bureaucracy

Even if the situations are improving, Indonesia has a big deal of bureaucracy when it comes to running a business. You will have to deal with a lot of organizations while operating your business, and it may be challenging to keep all these organizations happy.

Indonesian government wanted to provide ‘World Class Public Service’ by 2025. Even if the government has made it easier for businesses to contact the government and authority directly, it isn’t going to be easy for the country to reach that goal.

From creating jobs, hiring individuals to sometimes even importing and exporting, it may be a challenge for business people if they are used to freer economies. Corruption, therefore, is a problem in Indonesia- even if the rates are not among the highest in the world, the country ranked 85th out of 180 countries in 2019 according to transparency international.

Dealing with the Challenges of Opening Business in Indonesia?

Of course, there are challenges, but every problem has a solution. Despite its shortcomings, Indonesia is still a reforming country and still one of the best places to start a company in Southeast Asia. You should contact a registration service provider, who can also give you advice regarding how to face these challenges effectively. For more information regarding this, check cost of setting up a company in Indonesia.

David Curry

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