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flag Indonesia Indonesia: Operating a Business

In this page: Setting Up a Company | The Active Population in Figures | Working Conditions | Cost of Labor | Social Partners

 

Setting Up a Company

A Perseroan Terbatas is a Private Limited Company.
Number of partners: Minimum 2 shareholders.
Capital (max/min): Minimum IDR 50 million
Shareholders and liability: Liability is limited to the amount contributed.
Public Corporation
Number of partners: Minimum 2 shareholders.
Capital (max/min): Minimum IDR 50 million
Shareholders and liability: Liability is limited to the amount contributed.
A Partnership
Number of partners: Minimum 2 shareholders.
Capital (max/min): No minimum
Shareholders and liability: Unlimited Liability
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.
 
Setting Up a Company Indonesia East Asia & Pacific
Procedures (number) 9.0 7.0
Time (days) 47.0 36.0

Source: Doing Business.

 
Business Setup Procedures
Consult Doing Business Website, to know about procedures to start a Business in Indonesia.
ICL Directory

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The Active Population in Figures

201120122013
Labor force 117,400,000118,000,000120,000,000

Source: CIA - The world factbook

 
200920102011
Total activity rate -68.90%67.50%
Men activity rate 86.00%84.20%84.20%
Women activity rate 52.00%51.00%51.20%

Source: UN - United Nations

 
Employed Persons, by Occupation (% of Total Labor Force) 2008
Agriculture, Hunting and Forestry 38.6%
Manufacturing 12.2%
Transport and Storage 6.0%
Construction 5.3%
Hotels and Restaurants 4.0%
Education 3.2%
Households with Employed Persons 2.2%
Mining and Quarrying 1.0%
Real Estate, Renting and Business Activities 0.7%
Health and Social Work 0.7%
Electricity, Gas and Water Supply 0.2%

Source: International Labor Organization (ILO)

 
For Further Statistics
The Indonesian Labor Market
For Further Information About the Labor Market
Portal for official information about Indonesia

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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
55
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.

Labor Laws
Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.

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Cost of Labor

Minimum Wage
IDR 891,473 per month (source: ILO, 2011).
Average Wage
Average monthly gross earnings in Indonesia is IDR 1,199,187 (USD 118).
Social contributions
Social Security Contributions Paid By Employers: 8.24% to 9.74%.
Social Security Contributions Paid By Employees: 2.5% (3% in July 2015)

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Social Partners

Social Dialogue and Involvement of Social Partners
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
National Portal of Indonesia with information about work market and regulations

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Learn more about Operating a Business in Indonesia on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: February 2015