As discussed in our previous column, on January 2 the Investment Authority (BKPM) enacted Regulation 13/2017 regarding Guidelines and Procedures for Investment Licensing and Facilities (BKPM Regulation). In this column we discuss the different types of representative offices regulated by the BKPM Regulation. Under the new regulation, BKPM added one type of representative office, namely the Oil and Gas Representative Office. We discuss all four types of representative offices under the BKPM Regulation.
Types of Representative Offices
The BKPM Regulation regulates the following types of representative offices:
- General Representative Office of a Foreign Company (KPPA),
- Representative Office of a Foreign Trading Company (KP3A),
- Representative Office of a Foreign Construction Service Company (BUJKA), and
- Representative Office of a Foreign Oil and Gas Company (KPPA MIGAS)
General Representative Office of a Foreign Company (KPPA)
The activities of a KPPA are limited to the following activities:
- Supervisor, liaison, coordinator, and caretaker of the interests of the mother company abroad or its affiliated companies;
- Preparing the establishment and development of a foreign investment company (PT PMA) in Indonesia;
The KPPA is not allowed to perform the following activities:
- Look for or generate any income from sources in Indonesia, and thus is not allowed to be involved in any sales or purchase transactions of any commercial goods or services within Indonesia; and
- Participate in any form in the management of any company, subsidiary or branch company in Indonesia.
Besides above limitation in activities, the following restrictions apply:
- Located in an office building in the provincial capital cities;
- This KPPA license shall be valid for a maximum of 3 and may be extended in accordance with the validity period of the appointment specified in the letter of appointment.
Representative Office of a Foreign Trading Company (KP3A)
There are three types of KP3A, namely:
- Selling Agent, performing promotional or liaising activities
- Manufactures Agent, performing market survey activities
- Buying Agent, performing supervising or liaising activities
Above types of KP3A are not allowed to perform any trading activities or sales activities. A KP3A is allowed to open branch office (this is not possible under a KPPA) and may be located in provincial capital cities or in any other city / district within Indonesia.
Representative Office of a Foreign Construction Service Company (BUJKA)
A BUJKA can only opened by construction companies with a large business qualification (B1 or B2). Other than with a KPPA and KP3A, a BUJKA is allowed perform projects in Indonesia. In order to perform projects must establish a Joint Operation with a local construction company (BUJK), which is 100% owned by Indonesian shareholders.
This permit of the BUJKA is valid for a maximum of 3 years and may be extended. For application of a new BUKA license, renewal or replacement, there is an administrative fee of USD 5,000 or USD 10,000 depending on the business field in which the BUJKA is active.
Representative Office of a Foreign Oil and Gas Company (KPPA MIGAS)
This representative office is added to the BKPM Regulation and was previously not regulated by BKPM. Companies which are active in the business field of oil and gas may now open a KPPA MIGAS representative office.
The BKPM Regulation does not regulate the exact restrictions of a KPPA MIGAS, however we assume these are similar as regulated under the general KPPA.
This permit may be valid for 3 years and may be extended.
This column is provided by PNB Law Firm Jakarta