Other Types of Representative Offices in Indonesia

Beside the Foreign Trade Representative Office, there are other types of representative offices, such as the general Foreign Representative Office and a Foreign Construction Service Representative Office. In this column we will focus on the foreign trade representative office.

Allowed Activities of Foreign Trade Representative Office

According to article 2 of trade regulation 10/M-DAG/PER/3/2006 (“Trade Regulation”), a foreign trade representative office can be shaped in the form of a selling agent, a manufacturers agent and/or a buying agent. Subject to their business shape, the foreign trade representative offices may be involved in the following activities:

1. Activities to introduce, promote and advance the marketing of goods produced by overseas parent company;
2
. Supply of information or instructions for the use and importation of goods to local companies/users in the country;
3
. Market research activities and surveillance in domestic sales in order to market the goods of the overseas parent company;
4
. Market research activities on goods required by the overseas mother company and supply information and instructions about the terms of the export of goods to local companies;
5
. Conclude contracts on behalf of the overseas parent company with the local company related to export.

Based on article 12 of the Trade Regulation, a foreign trade representative office is allowed to employ foreign employees. The Trade Regulation requires, however, that for every foreign employee, at least 3 Indonesian staff members are hired.

Restricted Activities of Foreign Trade Representative Office

According to article 4 of the Trade Regulation, a foreign trade representative office is prohibited to be involved in direct trading activities and sales transactions from the beginning until the completion of a project. Such commercial activities include the submission of tenders, the signing of contracts, the settlement of claims, and so forth.

Moreover, for the services as stated under point 1 and 2 above, the foreign trade representative offices must designate a national company as an agent for the products being promoted. Such designation must be approved by the overseas parent company.

Time Restrictions of Foreign Trade Representative Office

Based on article 7 of the Trade Regulation a foreign trade representative office can be established for an initial period of maximum 3 years. The foreign trade representative office may be extended through letter of appointment. The Trade Regulation does not restrict the amount of times a foreign trade representative office can be extended.

This column is provided by PNB Law Firm

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