Setting up an e-commerce business in Bali is essential for any business willing to grow their sales. Indonesia and Bali allow foreigners to set up online businesses and accept online payments. People willing to live in Bali, Lombok or any place in Indonesia can set up an online business and sell their products or services to Indonesian customers or to other countries in the world.
Before starting an online business, there are several factors to consider, and it is important to understand the local regulations in Indonesia for e-commerce and online payment. Although companies such as Stripe are not allowed in Indonesia, there are several alternatives for succeeding in creating a successful online business in Bali and the rest of Indonesia.
Definition of Market Place and E-commerce Business in Indonesia
Indonesia makes a differentiation in terms of business licence between setting up a marketplace or selling products to the end customer.
Marketplace
Good news for foreigners: for a long time, it was not possible to set up a marketplace such as Tokopedia or Alibaba, and setting a marketplace is open to 100% foreign investments. Foreigners can develop applications and websites to connect buyers and sellers to purchase and sell online products or services.
A marketplace facilitates the transactions of goods and services. In the context of an e-commerce business in Bali, the marketplace is not a PJP, payment, or payment service provider. This means the marketplace must use a third party to facilitate payments, as these services are regulated by the Bank of Indonesia.
Retail e-commerce
This activity is defined by the Indonesian regulator as retail trading activities through mail or the internet (e-commerce). Specifically, buyers make their choices through advertisements, catalogs, information on websites, examples, or other types of advertising. Moreover, in an e-commerce business in Bali, buyers place orders via mail, phone, or the internet, usually through special facilities provided by the website.
Furthermore, products that have been purchased can either be directly downloaded from the internet or physically delivered to customers.
Registering a company in Indonesia has never been easier
Setting up a business abroad can be challenging with so many documents, laws and regulations to consider. Luckily, the process will be a breeze, and we’ll give you expert advice on which business structure and setup will fit your needs.
Reach out to the ILA team today to set up a free consultation or read more about the company registration process.
How to set up a marketplace or e-commerce business in Indonesia
Setting up a PT PMA in Indonesia
As foreigners, there is only one structure of a company allowing to generate income in Indonesia. Foreigners can only set up a PT PMA, which is the only type of LLC (Limited Liability Company) available to them. The PT PMA (Penanaman Modal Asing), which can be translated to Foreign Direct Investment Company in Indonesia. Authorities consider a company a PT PMA if it has at least one foreign shareholder, even if an Indonesian person is also a shareholder.
Read More : How To Establish A PT PMA In Bali
Setting up a company can take between 3 days to 2 weeks, and businesses can complete the procedure online.
The company must have at least two shareholders, and it also allows legal entities to become shareholders. The regulations set the minimum share percentage at 0.1%, while the current minimum paid-up capital for a PT PMA is 10 billion IDR. With this possibility, a person having a company outside Indonesia can own a PT PMA at 100% without any other shareholders. The structure requires at least 1 director and 1 commissioner. The commissioner or director doesn’t have to be a shareholder and can also be a foreign national. After establishing the company, the director must be reappointed at least every five years.
Once the company is fully incorporated, business owners will receive the following documents:
- Akta (Deed of establishment)
- Ministry approval (SK)
- Company profile
- NPWP (tax card)
- NIB (business identification number)
- Sertifkat Standard
After this step the director of the company has to proceed with an investor KITAS or a working KITAS in order to receive a tax number and be able to declare the tax of the company. The KITAS is a limited stay permit allowing the foreigner to stay in Indonesia and become resident.
Applying for a PSE licence
For companies operating in Indonesia and having a payment gateway or receiving online payment, it is necessary to proceed with a PSE licence. You must apply for the PSE license at the Ministry of Telecommunications. Specifically, the purpose is to protect client data and register websites that receive payments. Moreover, the Ministry processes the PSE license application within a few days, and businesses can then display it on their website to reassure clients and build confidence.
Stay compliant with the regulation
After establishing a marketplace or online business and incorporating the PT PMA, you must ensure compliance with various ministries, institutions, and regulations. A company has several obligations despite you setting up your company in Bali, Lombok or Jakarta. Here are some of the obligations of a PT PMA in Indonesia
- Quarterly Investment Report to the BKPM. Businesses must complete and submit the LKPM report in OSS every quarter.
- Annual tax declaration on Coretax
- Monthly income tax declaration
- BPJS payment for the director, commissioner or employees
- Report of withholding tax on payments made to provider
Advantages to setting up a marketplace or e-commerce in Indonesia
Indonesia has huge opportunities for e-commerce and marketplace businesses. Its large population, with over 200 million internet users and a growing middle class. The government supports the sector with tax incentives and simplified regulations, including low corporate tax rates incentives. For example ,new businesses can be taxed at only 0.5% on their income the first 3 years if they do not exceed 4,8 billion IDR.
Digital payments through GoPay, OVO, and ShopeePay simplify transactions, while logistics improvements enhance delivery efficiency, making Indonesia one of the leading markets in e-commerce and marketplace.
