Foundations in Indonesia are known under Yayasan and are regulated by the Foundations law (Law No. 16 of 2001 amended by Law No. 28 of 2004 (“Foundation Law”), and Law No. 17 of 2013. In this articles we are reviewing how to establish and create a foundation in Indonesia and the criteria to do it.

A foundation is a type of legal entity created for purposes such as social, religious, or humanitarian work and is designed to operate indefinitely. Its primary goal is not to generate profit for distribution among its founders or the members.

Different types of foundation in Indonesia

If you plan to open a foundation in Indonesia or a place like Bali, the government makes a distinction between foundations based on the founders of the Yaysan.

Local Foundation

A local Yayasan is considered local when all the founders are Indonesian. The contribution of the founders to the local Yayasan is only 10 000 000 IDR. The process to establish is fast and easy. The founders need to sign a deed (Akta) at the notary and get the ministry approval (MOHLR).

Foundation founded by a foreign entity

If you are planning to open a branch of your foundation in Indonesia there is not real option to have a capital relation or contribution between the entities. However Indonesia offers the possibility to establish a Foreign Yayasan if you already own a company in Indonesia. This entity should exist for 5 years already.

The capital contribution should be 10 000 000 IDR which is the same as the PT PMA (LLC).

The foundation need to get a recommendation from the ministry of Foreign Affairs (MOFA) and then get an approval from the Ministry of Law and Human Rights (MOLHR)

Foundation founded by foreign individuals

Similar to the previous one, Yayasan with at least one foreign founder, needs to follow the similar process of approval with the MOFA and MOLHR. The foreigner must have been resident in Indonesia for at least 5 years. However the initial contribution is lower at 1 000 000 IDR.

Type of YaYasanInitial Contribution
Local1 000 000 IDR
Foreign with at least one foreign founder1 000 000 000 IDR
Foreign founded by foreign entity (PMA)10 000 000 IDR

Yayasan in Indonesia. Foreign foundation

Organisation of a foundation – NGO – YaYasan in Indonesia

Founders

The founders are the person or entity initiating the creation of the foundation, YaYasan in Indonesia.

Board of Trustee

Chairman

The chairman is appointed by the board of Trustee (BOT). The chairman can be one of the founders.

Members of the BOT

If the foundation is a local YaYasan, foreigners cannot work under the BOAT. However if the YaYasan is a foreign one, the BOT can hire foreigners to sit on the board. The foreigner has to apply for a work permit and get a limited stay permit (KITAS)

Scope of the BOT

The members can dismiss the board of management and supervisors. The BOAT prepares and approves the budget and defines the orientation of the foundation.

Board of Management

Chairman – Secretary – Treasurer

The chairman is appointed by the board of trustees (BOT). The members are appointed for a period of 5 years. At least one Indonesian has to sit at the BOM. However only Indonesians can sit in a local foundation.

Scope of the BOM

The board of management is responsible for handling the operations on a daily basis.

In a foundation, they may face personal and joint liability in cases of bankruptcy or if financial statements are misleading due to their wrongful actions or negligence. They are also at risk of personal liability for failing to fulfil their responsibilities.

Board of Supervisors and Advisors

Members

At least 1 supervisor. Foreigners can sit in the BOS if the YaYasan is a foreign YaYasan. Foreigners need to apply for a work permit and a limited stay permit (KITAS).

Scope of the BOM

The BOS is responsible for supervising the BOM and can held as accountable in case of bankruptcy or illegal activity of the YaYasan.

FAQ

Can I hire foreigners under a YaYasan?

A foundation can hire foreigners and has to apply for a working permit and get a KITAS for its employee

Can foreigners create a foundation in Indonesia or Bali?

Yes foreigners can create a foundation is they have been resident for 5 years

Can I get a salary from the foundation?

Members of a board cannot get a salary from the foundation except if they are members of the Board of Management only.