The continuous digitalization of the professional world forces companies and firms to optimize their IT system in order to improve their daily operational activities, and also to increase their productivity. The massive demand for IT professionals in order to support the digitalization of these professionals in Indonesia opens up a huge opportunity for IT consultants to enter the market and build their business in Indonesia. With the rapid development of hardware and software, and the desire to make everything cost-effective, companies and firms in Indonesia are in need of savvy IT consultants who can keep up with their needs and requirements.
If you are interested to open your own IT consulting company in Indonesia, this article will explain to you the important things you should know about the IT consulting business before establishing your own IT consulting company. We are not going to explain about systems and codes (that is more of your specialty instead of ours!), but more about how IT consulting as a business field is viewed by the administrative and legal perspectives.
Here are the 4 (four) things IT Consultant (and others) should know on setting up IT Consulting Company in Indonesia:
1. TYPE OF IT CONSULTING COMPANY IN INDONESIA
Before incorporating your IT Consulting company, you should decide what type of IT Consulting Company you want to set up in Indonesia. Indonesian Government has divided the Computer Consulting Company into 2 (two) categories, which can be checked on the Indonesia Standard Business Classifications of 2015 (Klasifikasi Baku Lapangan Indonesia- “KBLI 2015”).
They are classified by types of activities conducted by the IT Consulting company, both under KBLI Code 62020, which are as follows:
a. Information Security Consulting Services – KBLI Code 62021
In this type of IT consulting business, you are allowed to give consulting services, to plan, to supervise, to conduct examination and/or to assure the safety of information of your client. You are also permitted to develop the programs and applications necessary to ensure such security of information. Basically, this type of IT Consulting company focuses on data protection and system security.
b. Computer Consultancy and Computer Facilities Management Activities – KBLI Code 62029
In this type of IT consulting business, you are allowed to give consultancy regarding type and configuration of software with or without software application, to plan and devise computer system and then integrate it with hardware, softaware and any other computer communication technology. The consultancy on this type of business usually based on user needs and then give the best solution of that needs.
This type of IT Consulting company is also allowed to provide hardwares and softwares integrated with your consultancy services. So not only do you consult and manage your Client’s system, but you can easily provide them with the hardware and software suitable to your system management. This opens up the opportunity for your company to become the one-stop-solution IT Consultant, providing Clients with a full range of services.
There are several other IT-related services not classified under IT Consultancy, such as Software Production (KBLI Code 58200), Computer Programming Services (KBLI Code 62010), Other IT and Computer Services (KBLI Code 62090), Data Processing (KBLI Code 63111), Data Hosting (KBLI Code 63112), and Portal Web Services (KBLI Code 63120).
Knowing what your business activity will help you a lot in setting your IT company. Especially for foreign IT companies, in which for 1 (one) business activity you will be required to invest more than IDR 10 billion (does not apply to local IT companies). So, be very wise in determining your business activity!
2. LIMITATION ON IT CONSULTING BUSINESS ACTIVITIES
One of the most important thing for an IT Consultant to know is that IT Consulting company in Indonesia is not allowed to do direct selling activities to end customers. The only hardwares and softwares that can be sold by IT Consulting company are ones fully integrated and deemed as an inseparable part of their consulting services.
This limitation is to separate IT Consulting company and trading companies specializing in electronics and IT products. In Indonesia, IT Consulting company will obtain consulting services permit, while trading company will obtain trading business permit.
3. LIMITATION ON FOREIGN OWNERSHIP OF IT CONSULTING COMPANY
IT Consulting is one of the business fields open for 100% foreign ownership. Therefore, you can determine whether to open a Local company, or a PMA company in Indonesia. It must always be noted that setting up a PMA company is a large scale operation which requires the shareholders to deposit at least IDR 2.5 billion as their paid-up capital, while setting up a local company has no such requirements.
For foreign IT consultants who do not wish to set up a PMA company, another option is to build a partnership with local IT Consulting companies in Indonesia, which can be supervised by opening up a representative office in Indonesia. Please note that representative offices cannot make profit from their activities, and all transactions must be conducted directly to the head office of the IT consulting company abroad.
4. ESTABLISHMENT OF FOREIGN-OWNED IT CONSULTING COMPANY
For foreign IT consultants who wish to set up a PMA company, they will be required to conduct a presentation on their business in front of an assestment team of Indonesia Investment Coordinating Board (BKPM). This presentation must be conducted by at least 1 (one) of the shareholders of the PMA company, and cannot be represented by consultants.
The presentation itself should contain the following matters: a) Business Activities; b) Service of Product; c) Human Resources Plan; d) Supporting Facility; e) Business Strategy; f) Target of Client; g) Financial Capacity of Company.
HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on establishing your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with investment regulation.
SMART Legal Consulting have worked with and assisted foreign investors and PMA Companies to restructure, maintain and operate their business in Indonesia in compliance with all prevailing laws and regulations under the current Indonesian foreign investment legal regime. We also provide legal services for your commercial needs and requirements, including reviewing and drafting conventional and digital agreements.
If you have any questions about IT consulting services and incorporation, you can arrange a consultation with SMART Legal Consulting at:
The Article was prepared by:
Lita P. Siregar / Sekar Ayu Primandani