How to Establish a Foreign Representative Office (KPPA) in Indonesia


Setting up a business presence in Indonesia does not always require incorporating a full-fledged foreign direct investment company (PT PMA). For multinational companies looking to explore market potential, manage liaison activities, or conduct feasibility studies, establishing a Foreign Company Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA) offers an efficient, non-transactional operational footprint. Under the regulatory framework governed by Minister of Investment and Downstream Industry / Head of the Investment Coordinating Board (BKPM) Regulation No. 5 of 2025, the establishment and licensing of representative offices have been streamlined through the Online Single Submission (OSS) system. Here is a comprehensive overview of the legal definitions, permitted activities, required documentation, and compliance obligations for setting up a KPPA in Indonesia.


What is a KPPA and What Regulation Governs It?
According to Article 1 Point 56 of BKPM Regulation No. 5 of 2025, a KPPA is defined as an office led by one or more foreign or Indonesian citizens appointed by a foreign company or an affiliation of foreign companies abroad to act as its representative in Indonesia.

Scope of Activities and Operational Restrictions
A KPPA is strictly designed as an administrative and liaison entity rather than a commercial enterprise. Under Article 270 Paragraph (3), a KPPA is subject to specific statutory functions and restrictions:
  • Supervisory and Liaison Role: The KPPA serves as a supervisor, liaison, coordinator, and manager of the interests of the parent company and its affiliated entities.
  • Preparation for Investment: It acts as a preparatory vehicle for establishing and expanding a foreign direct investment company (PT PMA) in Indonesia.
  • Location Requirements: The office must be situated within an office building located in a provincial capital.
  • No Revenue Generation: The KPPA is strictly prohibited from generating any income from Indonesian sources. It cannot execute commercial contracts, issue invoices, or engage in trade transactions involving the purchase and sale of commercial goods or services with domestic entities or individuals.
  • No Direct Corporate Management: The KPPA cannot participate in any form in the operational management of any domestic company, subsidiary, or branch company in Indonesia.

Chief Representative and Employment Rules
Every KPPA must appoint a Chief Representative (Kepala Perwakilan) who operates under explicit regulatory conditions outlined in Article 270 Paragraphs (4) and (5):
  • Indonesian Domicile: The Chief Representative—whether an expatriate or an Indonesian citizen—must reside in Indonesia and assume full responsibility for the continuous operation of the office.
  • No Dual Roles: The Chief Representative is barred from conducting activities outside KPPA functions and cannot hold concurrent positions as a company director or as the chief representative of another KPPA.
  • Mandatory Local Employment: If the appointed Chief Representative is a foreign national or if the office hires expatriate staff, the KPPA is legally required to employ Indonesian workers (Tenaga Kerja Indonesia / TKI) in accordance with prevailing manpower regulations.

Licensing Mechanism and Required Documents
Under Article 270 Paragraphs (1) and (2), a KPPA is legally recognized upon obtaining a Business Identification Number (Nomor Induk Berusaha or NIB). The NIB is issued automatically via the OSS system once the applicant submits and uploads the following mandatory requirements:
  • Legalized Articles of Association / Incorporation: Official ratification and articles of incorporation of the parent foreign company compliant with home-country legislation.
  • Deed of Establishment: Certified establishment documents of the foreign parent entity under its home-country laws. Letter of Appointment: An official Letter of Appointment signed by the parent company's executive management or authorized proxy. The document must be apostilled (for member states of the Apostille Convention) or legalized by the relevant Indonesian Embassy/Consulate in the country of origin (for non-Apostille countries).
  • Valid Office Lease Agreement: A legally binding lease agreement entered into between the KPPA and the management or owner of an office building.
  • Statement from Indonesian Diplomatic Mission: A letter of statement from an official at the Indonesian embassy or consulate in the parent company's home jurisdiction.
  • Business Activity Profile: Detailed data outlining the representative office’s operational plan.
  • K3L Self-Declaration: An independent statement of commitment to health, safety, security, and environmental standards (Keamanan, Keselamatan, Kesehatan, dan Pelestarian Fungsi Lingkungan).

License Validity and Ongoing Reporting (LKPM)
  • Indefinite License Validity: Under Article 270 Paragraph (6), the NIB issued to a KPPA remains valid for as long as the KPPA continues its legitimate operations in Indonesia.
  • Mandatory Semi-Annual LKPM Submission: Pursuant to Article 294 Paragraph (1) and Article 295 Paragraph (1), a KPPA must regularly submit an Investment Activity Report (Laporan Kegiatan Penanaman Modal or LKPM) every 6 (six) months (semi-annually / per semester) via the OSS system.


Office Closure and License Revocation

Should the parent company decide to wind down its Indonesian operations, the closure must be executed through the OSS system in accordance with Articles 355 and 356. The Chief Representative must undergo data validation (identity, tax ID / NPWP, and historical LKPM filings) and upload:

  • A formal declaration stating that the KPPA has settled all accounts and has no outstanding debts or liabilities with any parties in Indonesia.
  • A board resolution or official decree from the parent company's board of directors mandating the formal closure of the representative office.