Representative Office (KPPA) Formation

Indonesia continues to attract foreign companies looking to explore Southeast Asia’s largest economy. However, not every foreign company is ready to establish a full foreign-owned limited liability company, known as a PT PMA, from the beginning.

For companies that want to conduct market research, build business networks, coordinate with local partners, or prepare for future expansion, establishing a Foreign Company Representative Office, commonly known as KPPA, can be a practical first step.

Under the latest Indonesian business licensing framework, KPPA registration is processed through the Online Single Submission (OSS) system. The current framework is based on Government Regulation No. 28 of 2025 on Risk-Based Business Licensing, which has replaced Government Regulation No. 5 of 2021, and Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025, which has revoked BKPM Regulations No. 3, No. 4, and No. 5 of 2021.

What Is a KPPA in Indonesia?

A KPPA, or Kantor Perwakilan Perusahaan Asing, is a representative office established by a foreign company or a group of foreign companies outside Indonesia to represent their interests in Indonesia.

According to Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025, KPPA is an office led by one or more foreign nationals or Indonesian citizens appointed by a foreign company or a group of foreign companies outside Indonesia as its representative in Indonesia.

In simple terms, KPPA allows a foreign company to have an official presence in Indonesia without directly conducting commercial business activities.

Who Should Consider Establishing a KPPA?

A KPPA is suitable for foreign companies that want to:

• explore the Indonesian market before establishing a PT PMA;
• conduct market research and feasibility studies;
• build relationships with potential partners, distributors, suppliers, or clients;
• coordinate business development activities for the overseas parent company;
• supervise or liaise with affiliated companies in Indonesia;
• prepare future investment or PT PMA establishment.

KPPA is commonly used as an early market-entry structure when a foreign company needs a local presence but is not yet ready to operate commercially in Indonesia.

What Activities Are Allowed for KPPA?

A KPPA may carry out limited non-commercial activities. Under the latest regulation, KPPA may act as a supervisor, liaison, coordinator, and manage the interests of the foreign company or its affiliated companies. KPPA may also prepare the establishment and business development of a PMA company in Indonesia.

Typical allowed activities include:

• market research;
• business networking;
• coordination with local stakeholders;
• liaison activities for the parent company;
• supervision of business preparation;
• preparation for future PT PMA establishment;
• collecting market information and regulatory insights.

What Activities Are Restricted for KPPA?

A KPPA is not designed to generate revenue in Indonesia. The latest regulation clearly restricts KPPA from earning income from sources in Indonesia and from entering into commercial sale and purchase transactions of goods or services between the parent company and companies or individuals in Indonesia.

A KPPA is also not allowed to participate in the management of any company, subsidiary, or branch company in Indonesia.

This means a KPPA cannot:

• sell goods or services in Indonesia;
• issue commercial invoices to Indonesian customers;
• receive revenue from Indonesian sources;
• sign commercial sales or purchase agreements;
• directly manage an Indonesian company, subsidiary, or branch;
• conduct operational activities outside the scope permitted for KPPA.

If the foreign company wants to generate revenue, hire employees for commercial operations, sign client contracts, or carry out business activities in Indonesia, establishing a PT PMA is usually the more appropriate structure.

KPPA vs PT PMA: Which One Should You Choose?

Latest Legal Basis for KPPA Formation in Indonesia

The legal basis for KPPA registration should now refer to the updated risk-based licensing framework.

The key regulations are:

1. Government Regulation No. 28 of 2025 on the Implementation of Risk-Based Business Licensing
   This regulation came into force on 5 June 2025 and revoked Government Regulation No. 5 of 2021.
2. Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025
   This regulation came into force on 2 October 2025 and regulates the procedures for risk-based business licensing and investment facilities through the OSS system. It also revoked BKPM Regulations No. 3, No. 4, and No. 5 of 2021.
3. OSS System
   Business licensing for representative offices and foreign business entities must be submitted through the OSS system.

Because BKPM Regulation No. 4 of 2021 has been revoked, companies should avoid relying on outdated references when preparing KPPA registration documents.

Requirements for KPPA Registration in Indonesia

Under Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025, KPPA must have an NIB as its identity. The NIB is issued automatically through the OSS system after the applicant fills in the required information and uploads the required documents.

The minimum documents generally include:

1. Article of Association / Incorporation
   This document must refer to the laws and regulations of the KPPA’s country of origin.
2. Deed of Establishment
   This must also refer to the laws and regulations of the KPPA’s country of origin.
3. Letter of Appointment
   The appointment letter must be signed by the management of the foreign company in the country of origin or by an authorized party.
4. Legalization or Apostille
   For countries that are parties to the Apostille Convention, the document must be legalized by the competent authority. For non-member countries, legalization must be carried out by the Indonesian representative office in the country of origin.
5. Office Lease Agreement
   The lease agreement must be valid and legally enforceable between the KPPA and the building owner or building management.
6. Statement Letter from the Indonesian Representative Office Abroad
   This is issued by the relevant Indonesian representative office in the country of origin of the foreign business entity.
7. Business Activity Data
8. Self-Declaration on Safety, Health, Security, and Environmental Function Preservation, or K3L

Location Requirement for KPPA

A KPPA must be located in an office building in a provincial capital city. This means foreign companies should carefully choose a compliant office address before submitting the KPPA registration through OSS.

Using an incorrect or non-compliant office address may create issues during document verification, banking, tax registration, or future compliance checks.

Chief Representative Requirements

The KPPA must appoint a head of representative office. Under the latest regulation, the head of representative office must reside in Indonesia and is fully responsible for the operation of the KPPA. The head of representative office is also not allowed to conduct activities outside the permitted KPPA scope and cannot concurrently serve as a director of a company or as the head of another KPPA.

If the appointed head of KPPA is a foreign national or if the KPPA employs foreign workers, the KPPA must employ Indonesian workers in accordance with applicable manpower regulations.

Step-by-Step KPPA Formation Process in Indonesia

1. Initial Legal Assessment

Before starting the registration process, the foreign company should confirm whether KPPA is the right structure. If the company plans to directly sell products, invoice Indonesian clients, or generate revenue, PT PMA may be more suitable.

2. Prepare Parent Company Documents

The parent company should prepare incorporation documents, articles of association, appointment letter, and other supporting documents. Some documents may need legalization, apostille, or certification depending on the country of origin.

3. Appoint the Chief Representative

The foreign company must appoint an individual to act as the head of the KPPA in Indonesia. This person may be a foreign national or an Indonesian citizen, subject to applicable regulatory and immigration requirements.

4. Secure a Compliant Office Address

The KPPA must have an office address in an office building located in a provincial capital city.

5. Submit Registration Through OSS

The KPPA registration is submitted through the OSS system by filling in the required information and uploading the relevant documents.

6. Obtain NIB for KPPA

After submission, the KPPA obtains an NIB as its official identity. The NIB for KPPA remains valid as long as the KPPA conducts its activities.

7. Handle Post-Registration Matters

After obtaining the NIB, the KPPA may need to proceed with tax registration, bank account opening, employment compliance, immigration matters, and other operational setup requirements.

Post-Registration Compliance for KPPA

After registration, KPPA should maintain ongoing compliance, including:

• maintaining a valid office lease;
• ensuring activities remain within the permitted KPPA scope;
• avoiding revenue-generating activities in Indonesia;
• ensuring the chief representative resides in Indonesia;
• complying with manpower and immigration rules if foreign workers are involved;
• preparing activity reports or other reporting obligations when required;
• keeping corporate and appointment documents updated.

KPPA must be treated as a limited representative presence, not as a commercial operating company.

Common Mistakes When Setting Up a KPPA

Foreign companies often face delays or compliance risks due to:

• using outdated legal references, especially BKPM Regulation No. 4 of 2021;
• preparing documents without proper legalization or apostille;
• appointing a chief representative who does not meet regulatory expectations;
• using a non-compliant office address;
• treating KPPA as a sales office;
• signing commercial contracts under the KPPA name;
• failing to plan the transition from KPPA to PT PMA when commercial operations begin.

These mistakes can delay registration, create compliance risks, or affect future business expansion in Indonesia.

How Accura Can Help

Accura assists foreign companies in establishing a compliant representative office in Indonesia. Our team can help with:

• KPPA legal assessment;
• document checklist and preparation;
• Letter of Appointment review;
• Power of Attorney preparation;
• OSS registration assistance;
• NIB application for KPPA;
• tax registration support;
• office address and lease document review;
• bank account opening assistance;
• KITAS and work permit guidance for foreign chief representatives;
• transition planning from KPPA to PT PMA.

Whether you are entering Indonesia for market research, partner coordination, or future investment preparation, Accura helps ensure your KPPA is structured correctly from the beginning.

Start Your Indonesia Market Entry with Accura

Setting up a KPPA can be an efficient way to explore the Indonesian market before committing to a full PT PMA structure. However, foreign companies must ensure that their documents, office address, representative appointment, and activities comply with the latest OSS and risk-based licensing regulations.

Planning to establish a Representative Office in Indonesia? Contact Accura today for a free consultation and let our team guide your KPPA formation process from document preparation to OSS registration.