Comparison of Company Registration Jurisdictions: Singapore vs Indonesia

FOREIGN OWNERSHIP
Singapore does not impose any restrictions on foreigners who wish to do business in the country. It allows 100% foreign ownership (i.e. shareholding) of a Singapore private limited company. In other words, foreign entrepreneurs do not need a local partner to register a private limited company in Singapore. The company can engage in any lawful business activity.
In Indonesia, the foreign entrepreneurs can set up a foreign direct investment company with 100% ownership but with the following restrictions:
•    The business activities are restricted to only those that are open to foreign investment.
•    Within 15 years from the commencement of commercial operations, the foreign shareholder is required to divest at least 5% of the shares to an Indonesian citizen or legal entity.

MINIMUM INCORPORATION REQUIREMENTS
In Singapore, the minimum incorporation requirements include: a local registered address; at least 1 local resident director (a Singapore Citizen, a Singapore PR, or a foreigner holding a valid work visa or Dependent Pass); a local resident and qualified company secretary (must be a natural person); a minimum of 1 and maximum of 50 shareholders (natural persons or corporates); and a minimum paid up capital of SGD 1.00 (no authorized capital required).
Foreigners who wish to register a company in Indonesia must comply with the following requirements: a local registered address; at least 1 director (need not be a local resident); minimum of 2 and maximum of 50 shareholders (natural persons or corporates) and a commissioner. Although there is no mandatory minimum share capital requirement, authorities normally approve companies with a minimum share capital of USD 100,000 - USD 250,000.

INCORPORATION PROCEDURE
Company registration in Singapore is fully-computerized and can be completed within 1 day via electronic means. There are only two major steps involved in company formation - name approval and filing incorporation documents.
By contrast, company incorporation in Indonesia is tedious, time consuming and can take up to 12 weeks to complete all formalities. You must submit a company incorporation application along with supporting documents to the Capital Investment Coordinating Board (BKPM). Application processing takes around 5 weeks, upon which the BKPM will issue an in-principle business license valid for 3 years.

INCORPORATION TIMELINE
Company incorporation in Singapore can be completed in a record time of less than 24 hours, with minimal formalities. In Indonesia, it can take anywhere between 3-6 months to incorporate a company.

ANNUAL FILING REQUIREMENTS
In Singapore, an Annual Return must be filed with Companies Registrar and Income Tax Return with the Singapore tax department each year. In minimize the administrative burden on small companies; they are exempt from filing audited accounts.
In Indonesia, companies must submit Annual Return along with audited annual accounts to the Companies Registry. Income Tax Return along with audited accounts must be filed with the Indonesian tax authority each year.

CORPORATE TAXES
In Indonesia, according to the latest tax amendments, the corporate tax rate has been reduced to a flat corporate tax rate of 28% for 2009 and will be further reduced to 25% from 2010. Dividends paid to individuals, interest, rents and royalties are subject to 15% withholding tax.
Taxes in Singapore are significantly lower than Indonesia. Singapore charges a corporate tax rate of approximately 8.5% for profits up to S$300K and a flat 17% for profits above S$300K. There is no dividend tax in Singapore.

ON A FINAL NOTE
Setting up a company in Singapore is significantly easier than incorporating a company in Indonesia. Unlike Indonesia, Singapore does not impose any restrictions on foreign ownership nor does it limit the business activities that are open to foreign investment. Most entrepreneurs prefer Singapore as an investment destination, as Singapore company registration can be completed in 1 day's time with minimal formalities. Given Indonesia's 3-6 month time line for company incorporation, which is hampered by bureaucratic delays and the complicated visa approval process, investors usually rank Indonesia as an undesirable offshore business destination.