Working with various counterparties is an integral part of doing business in Indonesia. Before signing a cooperation agreement, it’s important to make sure the company or individual is capable of fulfilling their obligations, has no hidden issues, and operates within the law. You can verify this by conducting a comprehensive counterparty audit. In this article, you’ll learn how to properly audit a counterpartry in Indonesia.
A counterparty is a company or individual you enter into a commercial agreement with. For example, this could be:
• A supplier providing goods. (You can read more about how to find a supplier in Indonesia in this article.)
• A contractor carrying out construction work.
• A logistics company providing transportation services.
• A consulting company offering business support services in Bali.
• Importers and exporters cooperating with each other.
Since we’re talking about Indonesia, a market unfamiliar to many foreign entrepreneurs, working with local contractors comes with specific risks. Therefore, conducting a thorough audit is critical to minimize risks, avoid financial losses, and prevent fraud.
Request the following documents to verify that the company operates legally:
✓ Valid NIB — this is a registration document indicating the business license number and the types of activities the company is authorized to conduct. You can also check the company’s status yourself on the official Indonesian OSS website — there is a search by NIB available in the menu on the right of the main page.
✓ Tax number (NPWP) — a unique tax identification number assigned to every legal entity or individual in Indonesia. Request the counterparty's NPWP and ensure they are properly registered in the tax system. You can verify the NPWP by sending an official request to the tax office at pengaduan@pajak.go.id. A valid NPWP confirms the company meets its tax obligations, while refusal to provide it is a red flag indicating potential risks.
✓ Activity licenses and other permits (certificates, patents, approvals) — a company must have the necessary licenses corresponding to its industry and with current validity dates. Without them, it has no legal right to operate.
✓ Company ownership information (SK) — the list of shareholders, relationships, and the company’s history (founding dates, ownership or management changes). Using this information and public registries or specialized agencies, you can check the owners’ reputation, identify any “nominee” shareholders with no real influence, or detect signs of financial or legal issues.
✓ Asset documentation — if the company provides services involving assets (e.g., warehouses, premises, equipment, vehicles), always request documents proving ownership or legal lease. This helps confirm the counteparty has legitimate control over the assets they offer in the contract.
✓ Proof of business capacity — since financial statements aren’t always available, you can request a certificate confirming the counterparty has sufficient assets, resources, or property obligations to fulfill the contract terms. This is especially important for large orders or long-term contracts.
At this stage, you assess how the counterparty operates with other partners. Useful sources include:
✓ Company website — look for signs of an active website, such as up-to-date copyright dates in the footer/header, privacy policies, user policies, and team pages.
✓ Reviews — local forums, business platforms, and feedback from previous clients or partners. Look for insights from people who have dealt with the company.
✓ Media — check how and where the company is mentioned in news, articles, social media, etc.
✓ Legal cases — make sure the company hasn’t been involved in fraud schemes, lawsuits, contract violations, or similar issues.
Visiting your potential partner in person is the best way to ensure their business is real and operational. If visiting isn’t possible, hire a local agency to perform the inspection on your behalf.
1. Double-check everything.
Don’t rely solely on documents provided by the counterparty. Cross-check all information through reliable official sources and reputable analytics firms.
2. Take your time.
If a counterparty is rushing you into signing a deal, it could be a warning sign of potential fraud. Spend time verifying everything you need.
3. Ensure the contract is accurate.
Before signing a contract, make sure it’s drafted in accordance with local law and includes clauses on dispute resolution, penalties for breaches, and obligations of both parties.
4. Use professional services.
An auditor can help you conduct thorough checks, a lawyer can review documents and draft contracts to protect your rights, and consulting agencies can connect you with reputable suppliers.
5. Stay vigilant.
Never agree to suspiciously good deals without solid proof. Overly attractive offers often hide risks or fraudulent schemes.
In order to successfully open a business in Indonesia, auditing your potential partner — your counterparty — is an essential step. By conducting a comprehensive audit with the help of qualified professionals, you can find a reliable counterparty for long-term cooperation. And if you need to find a partner quickly, our consulting company, Good Luck Group, works only with vetted specialists. We can help you find the right partner!
