Hiring Employees – PEO versus Entity Setup in Indonesia

Indonesia is a popular choice for businesses expanding into Asia. Not only is it the largest economy in Southeast Asia, but it also has relatively low costs of production and valuable trade opportunities in the region and abroad.

Foreign businesses considering their options to enter the market and hire staff in Indonesia should consider two key opportunities to employ people:

  1. Company incorporation
  2. Hiring staff through a Professional Employer Organization (PEO) in Indonesia.

Company incorporation enables the business to establish a formal commercial presence in Indonesia with a physical domicile. This is helpful for businesses wanting to set up a permanent location such as an office or branch, and also allows for more immediate brand awareness and development.

The second option may be more advantageous for businesses wanting to enter the market with a smaller scale capital investment. A Professional Employer Organization, or PEO in Indonesia, can hire employees within the country on behalf of the foreign company. They do this through what is called a ’co-employment model,’ whereby the signs a contract enabling the PEO to hire staff on its behalf, and act as the employee’s Employer of Record in the eyes of the Indonesian government.

Working with a PEO can be especially helpful for companies unfamiliar with local employment regulations and obligations, as the PEO can file non-revenue generating paperwork and make social security and other required contributions on behalf of the hiring company.

Our payroll management specialists have prepared the following presentation offering key details for the two employment options for companies in Indonesia. For further personalized advice and support, reach out to our team of specialists to receive a quote customized to your business needs.

Learn more about our payroll management experts, and the human resource support we can provide as your PEO in Indonesia.

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