Establishing a Factory in Indonesia: A Guide

Establishing a factory in Indonesia, especially for foreign direct investment (FDI), is a complex process that requires thorough preparation. It involves obtaining various permits and approvals from government agencies.

General Stages and Requirements

1. Feasibility Study:

   • Conduct a comprehensive analysis of the project, including market potential, technology to be used, and cost estimates.

   • The feasibility study serves as the basis for obtaining a principal permit.

2. Principal Permit:

   • Submitted to the Investment Coordinating Board (BKPM).

   • Required documents:

     • Complete business proposal

     • Company organizational structure

     • Manpower utilization plan

     • Environmental impact assessment (Amdal), if required

     • Certificate of company domicile

3. Location Permit:

   • Obtain a location permit from the local government.

   • Requirements vary by region, but generally include:

     • Approval of the Spatial Planning and Land Use Plan (RTRW)

     • Land use approval

     • Environmental approval

4. Building Permit:

   • Submitted to the relevant department of the local government.

   • Requirements:

     • Building design drawings

     • Location permit

     • Environmental approval (if required)

5. Environmental Permit:

   • If the project has the potential to cause significant environmental impact, an environmental permit from the Ministry of Environment and Forestry (KLHK) is required.

   • The process involves a comprehensive environmental impact assessment (Amdal).

6. Operational Permit:

   • After construction is completed, the company must apply for an operational permit.

   • Requirements:

     • Certificate of operational readiness (SLO) from the relevant agency (e.g., Health Department for food industries)

     • Production test certificate

     • Other documents as required by the type of industry

General Supporting Documents:

• Articles of association

• Company NPWP (Tax Identification Number)

• ID card and passport of directors/commissioners

• Power of attorney (if authorized)

• Proof of land ownership or lease agreement

• Performance guarantee

Tips for Success:

• Prepare documents completely: Ensure that all documents prepared are complete and in accordance with the applicable regulations.

• Follow regulatory developments: Permitting regulations often change, so it is important to stay up-to-date on the latest developments.

• Build relationships with local government: Building good relationships with local governments can facilitate the permitting process.

Dana Consultants can help

Dana Consultants is a leading tax consultancy firm that can provide comprehensive tax services to foreign investors operating in Indonesia. Our experts can assist with:

• Company Registrations and Legal matters

• Permit and Compliance: make sure your company following compliance WLKP, OSS, and others

• Business management and Finance Management

• Tax compliance: Ensuring that your business adheres to all applicable tax laws and regulations.

• Tax planning: Developing effective tax strategies to minimize your tax burden.

• Tax audits: Representing your company in tax audits and resolving any disputes with the tax authorities

If you are a foreign investor considering establishing a factory in Indonesia, Dana Consultants can help you navigate the complex permitting process and ensure that your business is compliant with all applicable tax laws. Contact us today to schedule a consultation.

Contact us today to schedule a consultation:

• Email: askcfo@dana-consultants.com

• Phone: +628112742314