In the midst of increasing international collaboration on social, environmental, and humanitarian issues, many foreign Non-Governmental Organizations (NGOs) are seeking to operate in Indonesia. However, their presence is not entirely unrestricted. Indonesia enforces a stringent legal framework to ensure that all foreign NGO activities align with national interests and comply with prevailing laws and regulations.
Two Legal Schemes for the Presence of Foreign NGOs in Indonesia
According to Indonesian laws and regulations, there are two legal pathways for establishing the presence of foreign NGOs in Indonesia:
- Establishing a legal entity in the form of a foundation (yayasan) under Indonesian law; or
- Opening a representative office of a foreign civil society organization (Ormas) without establishing a legal entity in Indonesia.
Each scheme carries distinct legal implications and is governed by several key regulations, including the Law on Foundations, the Law on Civil Society Organizations, and Government Regulation No. 59 of 2016 concerning Civil Society Organizations Established by Foreign Nationals.
Scheme 1: Establishing a Foreign NGO as a Foundation (Yayasan)
The Indonesian government allows foreign nationals to establish a foundation in Indonesia, either independently or in partnership with Indonesian citizens (WNI). Such a foundation will be recognized as a legal entity under Indonesian law and must fully adhere to national regulations.
Key provisions to note include:
- Limited scope of activities: restricted to social, religious, and humanitarian purposes.
- Minimum initial capital: IDR 100 million, higher than the local foundation requirement (IDR 10 million).
- Mandatory Indonesian involvement: at least one member of the board must be an Indonesian citizen and occupy a strategic position (Chairperson, Secretary, or Treasurer).
- Mandatory domicile: the foundation must have a registered office in Indonesia to ensure effective government oversight.
The establishment process begins with a notarial deed drafted in Indonesian, followed by registration with the Ministry of Law and Human Rights to obtain legal entity status. Subsequently, the foreign NGO must apply for a principal permit and operational license, as stipulated in Government Regulation No. 58 of 2016.
This scheme is suitable for foreign NGOs intending to operate long-term, manage multi-regional projects, and maintain strong legal standing in Indonesia.
Scheme 2: Establishing a Representative Office Without a Legal Entity
Alternatively, a foreign NGO may choose to operate in Indonesia by establishing a representative office without creating a new legal entity. In this case, the NGO remains a legal entity under its country of origin but may conduct activities in Indonesia as a foreign civil society organization (Ormas Asing) with government authorization.
The key requirements include:
- The NGO’s home country must maintain diplomatic relations with Indonesia.
- The organization must be non-profit in nature.
- The NGO must obtain a principal permit from the Ministry of Foreign Affairs and an operational license from the relevant central or local government authority.
- The organization must employ Indonesian nationals as the majority of its staff, allowing a maximum of three foreign employees.
Required documentation typically includes:
- The articles of association and deed of establishment, duly legalized;
- The organization’s profile and proposed activities in Indonesia; and
- An official appointment letter for the head of the representative office in Indonesia.
This scheme is generally preferred by NGOs that plan to conduct short-term programs or specific projects without establishing a permanent legal presence in Indonesia.
Choosing the Appropriate Legal Scheme
Both the establishment of a foundation and the creation of a representative office are legally recognized means for foreign NGOs to operate in Indonesia. The choice depends largely on the intended duration, scope of activities, and legal needs of the organization.
- For NGOs aiming to build long-term operations and strategic partnerships across sectors, establishing a local foundation is the recommended approach.
- For NGOs with temporary activities or project-based engagements, opening a foreign representative office may serve as a more efficient option.
