4 (FOUR) THINGS YOU SHOULD KNOW ABOUT THE REPRESENTATIVE OFFICE OF FOREIGN TRADE COMPANY (KP3A)

Previously we have discussed the Representative Office of Foreign Company (KPPA), so currently we wants to discuss the Second Type of Representative Office, which is Representative Office of Foreign Trade Company (Kantor Perwakilan Perusahaan Perdagangan Asing/KP3A).

1. KP3A BACKGROUND

The definition KP3A are similar with the KPPA, in which Pursuant to Article 1 paragraph 29 Regulation of Head of Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM) Number 15 of 2015 Concerning Guideline and Procedure for Licensing And Non-Licensing Investment (“BKPM Regulation No.15/2015”), the definition of KP3A is:

"Office which is lead by an Indonesian citizen or foreigner who is designated by a foreign company or joint foreign company overseas, as its representative in Indonesia."

We understand that KP3A should obtain the License from the BKPM to operate in Indonesia based on Article 24 Paragraph 4 BKPM Regulation No. 15 of 2015. Therefore, there id 2 (two) legal basis as for the reference to conduct the KP3A in Indonesia, as follows:

1. BKPM Regulation No. 15/2015; and
2. Regulation of the Minister of Trade of the Republic of Indonesia Number: 10/M-DAG/PER/3/2006 which has been amended by the Regulation of the Minister of Trade of the Republic of Indonesia Number 28/M-DAG/PER/6/2010 (“MOT Regulation”).

It should be noted that BKPM Regulation No. 15/2015 does not repeal the  MOT Regulation, the major changes between the two of regulations are (i) the centralization in applying for the license; and (ii) removing the obligation of Security Deposit for KP3A.

2. TYPES OF KP3A LICENSE & TERM OF KP3A

Pursuant to Article 25 BKPM Regulation No. 15/2015, we understand that there are several types and terms of KP3A license, which consist of:

1. Temporarily SIUP3A (valid for 2 (two) months after the date of issuance);
2. Permanent SIUP3A (valid for 1 (one) year after the date of issuance);
3. Extension of SIUP3A (valid for 3 (three) years unless otherwise specified for less than 3 (three) years in the Appointment Letter of Chief Representative and may be extended according to the period mentioned in the Appointment Letter);
4. Amendment SIUP3A; and
5. Branch Office of Foreign Trade Representative (valid for 3 (three) years unless otherwise specified for less than 3 (three) years in the Appointment Letter of Chief Representative and may be extended according to the period mentioned in the Appointment Letter).
3. PERMISSIBLE ACTIVITIES FOR KP3A

Article 24 Paragraph (1) 25 BKPM Regulation No. 15/2015 regulates that KP3As’ can only become as an Agent in the trading activities, either Selling Agent, Manufactures Agent, Buying Agent.

Furthermore, pursuant to Article 3 Regulation of the Minister of Trade the Republic of Indonesia Number: 10/M-DAG/PER/3/2006, KP3A can conducting the following activities:

1. introducing, promoting, and advancing the marketing of goods which produced by a foreign  company or a consolidated foreign company overseas, and providing information or directions for usage and importation of goods to company/user in Indonesia;
2. conducting market research and monitoring sales in the country in the framework of the marketing of goods from a foreign company or consolidated foreign company;
3. conducting market research for the goods needed by a foreign company or a consolidated foreign company in the foreign country who appoints it and connecting and providing information and instructions about the terms of the export of goods;
4. Engaging for and on behalf of the company which appoints it with the Indonesian company pertaining to the export activities.
4. Prohibited Activities for KP3A

We understand that KP3A is prohibited for conducting trading and selling activities, such as submitting tenders, signing contracts, settling a claim.

5. Obligation of Utilization the Indonesian Manpower (TKI) in KP3A

According to Article 24 Paragraph (3), BKPM Regulation No. 15/2015 regulates that KP3A shall employ at least 3 Indonesian manpower if KP3A hired foreign manpower (TKA) as the Chief of Representative of the KP3A.

HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining 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 prevailing laws and regulations.

SMART Consulting is an Indonesian Corporate Legal Services firm. SMART has assisted Clients in dealing with matters related to Investment Law, such as assist Client to establish many types of Representative Office in Indonesia. We also assist Clients regarding the Compliance and Corporate Legal Services.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
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