Indonesia has tightened the methods for setting up and restoration of foreign company Representative Office (RO) and stipulates more stringent supervision of rep office services. For multinationals, this means improved compliance efforts and costs for setting up and restoration of their RO or rep office in Indonesia.

General representative office (KPPA) also requires to be more vigilant in ensuring they operate within the limits of permissible activities and comply with all registration terms as the new provisions enhance the powers of the authorities when dealing with illegal cases.

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In a company's international expansion, most companies face increased paperwork as a series of documents need to be notarized and authenticated when the rep office applies for renewal, especially in pilot cities. Further, the notice permits setting up of rep office only for companies existing for more than two years.

The representative office term of duration has decreased and will need to renew their registration certificate every year as against the earlier permissible term of three years. For existing rep offices, the one year limit begins when they apply for renewal upon expiry of their existing term.

The cap on the number of Representatives is restricted to four. Existing ROs that already have more than four representatives may not need to prune their staff but cannot add to that number. The local officials require authorities are required to conduct on-site verification of legal address and other Representative Office registration items.

This has to be done within three months of the Representative Office obtaining its registration certificate. Any unreported change of address is subject to penalty and the rep office may even be blacklisted in non-compliance records.