Indonesia, a top travel destination in Southeast Asia, is often associated with having many of the world’s most beautiful beaches and islands. It may not be known as an economic powerhouse like Singapore or China but Indonesia holds great business opportunities. As the world’s fourth most populated country with a growing middle class population, it is becoming a very attractive country for foreigner entrepreneurs, startups and SMEs.
5 Benefits of Incorporating in Indonesia
1. Population Size: After China and India, Indonesia boasts the largest domestic market in Asia. As the world’s fourth most populated country, Indonesia’s consumer-related market opportunities continue to lead growth. Moreover, the retail, health, education, telecom and financial sectors have also been rapidly expanding (trade.gov, 2022). Indonesians' per capita income and purchasing power is increasing. A higher purchasing power helps businesses to thrive and generate more profit. Moreover, the growing middle class are demanding more foreign products and services. This potential makes company registration in Indonesia attractive for foreign entrepreneurs.
2. Trade Agreements: Indonesia is part of many trade agreements and economic partnerships, which encourages trading activities. Indonesia is a part of the Association of Southeast Asian Nations (ASEAN) Free Trade Area. Moreover, it also has preferential trade agreements with major countries like Australia, China, India, Japan, Korea, and New Zealand (trade.gov, 2022).
3. Pro-Business Environment: To boost economic growth, the Indonesian government is implementing initiatives to encourage foreign investment and make it easier for foreigners to do business in Indonesia. For example:
- The corporate income tax (CIT) rate decreased from 25% to 22% from 2020 to 2021.
- Small enterprises are also entitled to a 50% tax discount on the standard rate (PWC, 2022)
- The government has also been simplifying the company registration process.
4. Foreign Ownership: The Indonesian government has been taking major steps to increase foreign investment in order to accelerate economic growth. As of March 2021, foreign entrepreneurs no longer need to have joint ventures with local Indonesians and can completely own 100% of the company (in most business classifications).
5. Cost of Living: The cost of living in Indonesia is relatively inexpensive e.g. food, transportation, utilities, rent and wages. In comparison to Western countries, the living cost and labour cost is much lower. This translates to lower business expenses and higher profits.
Looking to open a Corporate Bank Account in Indonesia?
Understanding how to open a bank account in Indonesia is an important first step that will help businesses settle in. It is relatively simple and straightforward to open a corporate bank account in Indonesia but here are a few things to note:
- In-person or online: It is possible to open a corporate bank account without being physically present in Indonesia.
- Leading local banks in Indonesia: Bank Mandiri, BRI and BAC.
- Top international banks in Indonesia: HSBC, CitiBank, Standard Chartered Bank, DBS Bank and Bank of China.
- Duration: If you have all the required documents prepared and ready, it shouldn’t take long to open a corporate bank account in Indonesia. However, some banks may take up to a week because of the different regulations and rules.
- Bank fees: Be aware that when opening a new bank account, some banks will charge opening fees and setup fees. In some cases, there may be additional fees for extra services such as internet banking or multi-currency accounts. A minimum deposit is also required when opening an account. (Common Fees: Minimum deposits, monthly average balance, a monthly account administration fee, early closure fees, ATM withdrawal fees, international transfer fees and additional service fees; International transfer fees can add up, especially if you are frequently sending or receiving money).
- Common documents required: Copy of tax identification number (NPWP) and tax certificate (SKT), Domicile letter, Business License, Business Registration Number (NIB) and Deed of Establishment (AKTA) (asiabriefing.com, 2022).
Expand Strategically with TranSwap’s Global Account
TranSwap makes going global easy with our multi-currency global account. In 2019, TranSwap obtained its license in Indonesia as a Fund Transfer Operator (FTO) by Bank Indonesia (BI). TranSwap users can operate like a local without having to go through the hassle of traveling to Indonesia to open a local business bank account. You get all the benefits of a digital business account but with added benefits that are built for a global scale:
- You can send, receive and hold Indonesian Rupiah (IDR).
- A hassle-free alternative to securing local bank accounts in each country of operation.
- Everything can be handled online. There is no need to visit a physical branch and no paperwork or phone calls.
- Smoothly manage cash flow and bolster your competitive advantage in the local markets by paying and receiving money in the local currency.
- Instantly make international payments with no hidden cost and not having to maintain a minimum account balance.
- Use real-time exchange rates with no unwelcome surprises.
- Pay to over 100+ countries.
- Business owners and managers no longer have to worry about currency fluctuation and exorbitant conversion fees but instead you can gain the upper hand over managing foreign exchange volatility.
- Our team works round the clock to help you successfully launch and grow in Indonesia.
Ready to conduct business in Indonesia? TranSwap's multi-currency global account is free to register and it only takes a few minutes to set up. Sign up today!