{"id":4420,"date":"2026-10-06T00:33:57","date_gmt":"2026-10-05T17:33:57","guid":{"rendered":"https:\/\/prasetyolawoffice.com\/?p=4420"},"modified":"2026-10-06T00:34:00","modified_gmt":"2026-10-05T17:34:00","slug":"joint-venture-joint-operation-indonesia-en","status":"publish","type":"post","link":"https:\/\/prasetyolawoffice.com\/id\/joint-venture-joint-operation-indonesia-en\/","title":{"rendered":"Joint Venture or Joint Operation: Choosing the Right Business Cooperation Structure in Indonesia"},"content":{"rendered":"

Bahasa Indonesia:<\/strong> Baca artikel ini dalam Bahasa Indonesia<\/a><\/p>\n

By Adhit Prasetyo, S.H., CLA
Prasetyo Law Office<\/strong><\/p>\n

A Structure That Looks Simple Can Create Different Risks<\/h2>\n

Businesses planning to run a venture or project together often choose between a joint venture and joint operation in Indonesia<\/strong>. However, the label used in a proposal or agreement does not by itself determine the parties’ legal position, liability, licensing obligations, or tax treatment.<\/p>\n

The more important question is how the cooperation will actually operate. Who will sign customer contracts? Who will receive payments, hold assets, employ personnel, obtain licences, and bear losses? The answers may determine which legal structure should be used.<\/p>\n

Joint Venture Through a Limited Liability Company<\/h2>\n

In this article, a joint venture or JV refers to cooperation conducted through a limited liability company whose shares are owned by the participating partners.<\/p>\n

The company becomes a separate business vehicle with its own shareholders, Board of Directors, Board of Commissioners, assets, contracts, and licences. The relationship among the partners is commonly governed by the articles of association, resolutions of the company’s organs, and a shareholders’ agreement.<\/p>\n

This structure is generally considered when the cooperation is intended to continue for the longer term and requires joint investment, employees, assets, financing, brands, or licences held by one business vehicle.<\/p>\n

If the structure involves direct foreign investment, it must also be reviewed against Indonesia’s investment laws, business-sector requirements, foreign ownership limitations, and the applicable business licensing regime.<\/p>\n

Establishing a company does not resolve every risk. The parties must still regulate corporate control, funding obligations, strategic decisions, restrictions on share transfers, deadlock, and exit mechanisms.<\/p>\n

Joint Operation or Kerja Sama Operasi<\/h2>\n

A joint operation or JO is commonly implemented through a Kerja Sama Operasi or KSO agreement. The parties retain their respective business entities while combining selected capabilities for a joint project or activity.<\/p>\n

A KSO does not automatically become a separate legal entity in the same manner as a limited liability company. The agreement should therefore clearly identify who may represent the cooperation, sign contracts, use assets, invoice customers, and assume exposure to third parties.<\/p>\n

It is also incorrect to assume that a KSO is always simple from a tax perspective. Minister of Finance Regulation No. 79 of 2024, as amended by Minister of Finance Regulation No. 11 of 2025, regulates the tax treatment of a KSO by reference to the agreement and the way the cooperation is implemented. Certain KSOs must obtain a Taxpayer Identification Number as a corporate taxpayer, while other KSOs discharge their tax rights and obligations through their respective members.<\/p>\n

The obligation to register as a taxable entrepreneur also has separate criteria. Invoicing, revenue collection, member contributions, and expense payments should therefore be reviewed before operations begin.<\/p>\n

The Difference Goes Beyond Whether a Company Is Established<\/h2>\n

The choice between a JV and JO may affect:<\/p>\n