Indonesia

Operating a business

Setting up a company

Legal business entities

Different types of companies	Number of partners/shareholders	Maximum and/or minimum capital	Liabilities	Registration fees
A Perseroan Terbatas is a Private Limited Company.	Minimum 2 shareholders.	Minimum USD 250,000.	Liability is limited to the amount contributed.	About 0.5 % of the capital plus registration fees for the Articles.
A Representative Office	Minimum 2 shareholders.	Minimum USD 250,000.	Liability is limited to the amount contributed.	About 0.5 % of the capital plus registration fees for the Articles.

Business setup procedures: According to the chosen form of company, PT or Representative Office, different formalities are to be carried out; they are given in detail on the website of the ICL Directory.
The competent organization: To create a Perseroan Terbatas (PT), the competent organization is the Bureau for the coordination of investments ((BKPM). To create a Representative Office, the competent organization may be, according to the sector of activity, the Ministry of Commerce, the Ministry of Finance, the Ministry of Public Works, or the Bureau for the coordination of investments.

Working conditions

Legal weekly duration

The legal duration of work is 7 hours a day and 40 hours a week for 6 working days in a week, or 8 hours a day and 40 hours a week for 5 working days in a week.

Retirement age

Working contracts

The work contract is essentially governed by the law and to a lesser extent by individual negotiation and collective agreements. Hiring conditions are strict and the formality of the work contract is rather rigid.

There are two types of contracts: fixed term and open-ended.

Cost of labor

Minimum wage: The minimum wage is fixed by decree by the different provincial governors. It varies according to the provinces and the districts, and according to the sector concerned. In 2007, the average minimum wage was 673 300 Rp/month.
Average wage: 883 693 Rp (2007)
Social contributions: Social security contributions paid by employers: 7.24% to 11.74%.
Social security contributions paid by employees: 2%

Social partners

Bargaining power: We can mention the ASPEK Indonesia union.
Unions: Trade union congress of Indonesian workers (KSPI)
National Front for the Indonesian workers' struggle (FNPBI)
Unionization rate: Less than 4% of the active population (formal and informal sectors) and 14% of the active population (formal sector).
Labor regulation bodies: Ministry of Labor and Transmigration