Why Indonesian Businesses Should Set Up a Holding Company in Singapore

Koh Management
Sep 3
5 min read

Introduction

Indonesia, with its vast population and growing economy, has become a powerhouse in Southeast Asia. Its strengths in natural resources, manufacturing, agriculture, and digital innovation make it a fertile ground for businesses. However, as Indonesian companies seek to expand regionally and globally, they often encounter challenges such as complex regulations, investor hesitancy, and difficulty in protecting assets.

To overcome these hurdles, many Indonesian entrepreneurs are choosing to establish a holding company in Singapore. A holding company serves as a parent entity, owning shares in subsidiaries and managing investments without directly engaging in operational activities. This structure brings multiple advantages: tax efficiency, investor confidence, international credibility, and asset protection.

This article explores in depth why Indonesian businesses should set up a holding company in Singapore and how it can transform their growth trajectory.

1. Singapore’s Strategic Location

Singapore’s geographical position is one of its strongest advantages. Located on the Straits of Malacca, one of the busiest shipping routes in the world, it serves as a key connector between East and West.

For Indonesian businesses, a holding company in Singapore offers:

A regional base for managing subsidiaries across ASEAN.
Proximity to Indonesia, allowing close coordination while leveraging Singapore’s global access.
A springboard into Asia-Pacific markets, including China, India, Australia, and Japan.

This central location makes Singapore ideal for Indonesian firms planning international expansion.

2. Attractive Tax Regime

Singapore is famous for its business-friendly tax system, which is particularly advantageous for holding companies. Key features include:

Corporate tax capped at 17%, often reduced further with exemptions.
No capital gains tax, making it profitable to sell subsidiaries or investments.
No withholding tax on dividends, ensuring efficient profit repatriation.
Over 80 double taxation agreements (DTAs), reducing or eliminating tax on cross-border income.

For Indonesian businesses, this translates to significant tax savings and optimized group structures when managing regional and global subsidiaries.

3. Investor Confidence and Fundraising Opportunities

Many international investors, venture capitalists, and private equity firms prefer to invest through Singapore entities rather than directly into Indonesian companies. Concerns over regulatory complexity, governance, and enforcement often limit direct foreign investment in Indonesia.

By setting up a Singapore holding company, Indonesian businesses gain:

Higher credibility with global investors.
Easier access to venture capital, private equity, and institutional funds.
Simplified investment instruments, such as preference shares and convertible notes.

This credibility boosts fundraising efforts and allows Indonesian firms to attract more substantial international backing.

4. Intellectual Property and Asset Protection

For technology firms, startups, and manufacturers, intellectual property (IP) is a key asset. Singapore offers strong IP protection and internationally recognized enforcement mechanisms.

Indonesian businesses can:

Register trademarks, patents, and copyrights under their Singapore holding company.
License IP to operating subsidiaries in Indonesia and other countries.
Protect valuable assets from risks associated with local operating environments.

This enhances long-term business value and ensures investor confidence.

5. Efficient Subsidiary Management

As Indonesian businesses expand, managing multiple subsidiaries across various countries can be complicated. A Singapore holding company streamlines this process:

Provides centralized ownership and governance.
Simplifies financial consolidation and reporting.
Facilitates profit distribution among global subsidiaries.
Ensures better alignment of international operations.

This efficiency reduces administrative burdens and strengthens global oversight.

6. Political Stability and Transparent Legal Framework

Singapore is consistently ranked among the most politically stable countries in the world. It offers a transparent, corruption-free government and an internationally respected judicial system.

For Indonesian businesses, this environment ensures:

Legal certainty in contracts and disputes.
Equal treatment of local and foreign shareholders.
A secure base for long-term global operations.

This contrasts with more unpredictable jurisdictions, making Singapore an attractive location for managing risk.

7. Access to Free Trade Agreements (FTAs)

Singapore’s network of more than 27 FTAs and 80+ DTAs allows businesses incorporated there to enjoy significant advantages:

Reduced tariffs when exporting goods to key markets such as the U.S., EU, and Japan.
Preferential access to markets not covered by Indonesia’s agreements.
Reduced double taxation, improving efficiency of cross-border operations.

Indonesian businesses can thus position their products more competitively in international markets.

8. Ease of Incorporation

Setting up a holding company in Singapore is fast and straightforward. Requirements include:

At least one shareholder (individual or corporate).
One resident director (can be appointed through nominee services).
A registered local office address.
Paid-up capital of just SGD 1.

This ease of incorporation allows Indonesian businesses to establish their Singapore entity within days, without excessive bureaucracy.

9. Financial and Capital Market Access

As Asia’s leading financial hub, Singapore provides Indonesian companies with access to:

International banks offering multi-currency accounts and financing solutions.
Trade finance and venture debt, supporting global operations.
The Singapore Exchange (SGX) for potential future IPOs.
A large network of private equity and venture capital firms.

This financial infrastructure strengthens fundraising capacity and long-term growth prospects.

10. Succession Planning and Family Business Continuity

Many of Indonesia’s largest companies are family-owned. Succession planning is critical to ensuring continuity across generations. A Singapore holding company provides:

Separation of ownership from day-to-day business operations.
Ability to create family trusts or foundations under Singapore law.
Efficient transfer of ownership with minimal tax exposure.

This structure helps Indonesian family businesses maintain stability and preserve wealth for future generations.

11. Reputation and International Credibility

Singapore is recognized worldwide for its transparency, good governance, and pro-business environment. Incorporating a holding company there enhances the reputation of Indonesian businesses.

This reputation:

Improves negotiation power with international partners.
Builds trust with global buyers and suppliers.
Positions Indonesian companies as credible global players.

In industries like energy, logistics, and technology, this credibility can be decisive in forming successful partnerships.

12. Talent and Workforce Mobility

While Indonesia offers abundant local talent, Singapore provides access to international expertise. A Singapore holding company allows Indonesian businesses to:

Attract global executives with regional experience.
Use Singapore’s employment pass system to bring in specialized talent.
Position the group as an international entity to appeal to top-tier professionals.

This blend of Indonesian operations and Singapore-based leadership provides competitive advantages.

13. Synergies Between Indonesia and Singapore

Indonesia and Singapore complement each other economically. Indonesia has resources, scale, and production capacity, while Singapore offers global connectivity, financial expertise, and legal certainty.

Examples of synergy include:

Indonesian commodity exporters managing international contracts through a Singapore holding company.
Tech startups in Jakarta raising funding through their Singapore parent entity.
Indonesian conglomerates housing international subsidiaries under a Singapore holding structure.

This dual-country model maximizes strengths and reduces risks.

14. Long-Term Global Expansion

A Singapore holding company is not just for immediate benefits—it sets the stage for long-term global expansion. With this structure, Indonesian businesses can:

Acquire subsidiaries in other countries.
Form joint ventures with multinational corporations.
Access international stock exchanges and capital markets.
Diversify investments while managing risks centrally.

This flexibility ensures resilience and scalability for future growth.

Conclusion

Indonesia’s strong domestic economy makes it an attractive place for production and innovation. However, scaling internationally requires credibility, investor trust, tax efficiency, and legal stability. A holding company in Singapore provides exactly that.

By establishing a Singapore holding entity, Indonesian businesses can:

Gain investor confidence.
Protect intellectual property and assets.
Optimize tax structures.
Manage subsidiaries efficiently.
Position themselves as credible international players.

The combination of Indonesia’s production power and Singapore’s financial and legal infrastructure creates one of the most effective business strategies in Southeast Asia. For ambitious Indonesian entrepreneurs, a Singapore holding company is not just an option—it is a critical step toward global leadership.