Requirements for Obtaining Business License Indonesia

A business license in Indonesia is essential to conduct business activities in any sector. In Indonesia, there are licenses or permits that need to be obtained in order to perform business activities legally.

Either setting up a company, market your products, or conducting trading activities. The government will issue the licenses once the business has already been fulfilling any requirements based on the regulations.

Why Obtain a Business License in Indonesia?

Obtaining a business license is mandatory for any business entity in Indonesia, whether they are small and medium enterprises or large-scale companies.

Licenses are becoming critical to companies since this would legalize their business activities in Indonesia. Without licenses, your business activities may potentially be closed by the government.

How are the regulations?

Based on the 2015 regulation, all newly-formed foreign companies should apply for a business license by providing their financial audit in order to be able to apply for permanent business licenses and other necessary licenses such as import licenses, etc.

Through this regulation, the government intends to ensure that every foreign investor will realize their investment plan instead of only submit their investment plan to the Investment Coordinating Board (BKPM) on the paper. Therefore foreign investments in Indonesia can be proved that are running well according to their purpose.

The Differences Between Business Licenses and Business Permits

When setting up a business, it’s important to understand the distinction between a business license and a business permit. While they both serve regulatory purposes, they apply to different aspects of business operations. Below is a breakdown of their differences:

Purpose

The main purpose of a business license is to give a company the right to legally exist and operate. It acts as the business’s formal identity in the eyes of the government. Meanwhile, business permit ensures that certain business functions or activities comply with local laws, safety regulations, zoning rules, and environmental standards. These permits are often tied to the protection of public interest and welfare. The examples are as follows:

• Business License: Business Identification Number (NIB), SIUP (Trading License).
• Business Permit: Building Permit (IMB/SLF), Environmental Permit (AMDAL), Food Distribution Permit (BPOM).

Scope

Business licenses have a broad scope. They apply to the entire operation of a company, regardless of the industry or specific activities. In contrast, business permits are narrow in scope and usually apply only to certain actions or areas of a business.

For example, a business may be licensed to operate, but it will still need separate permits for building construction, waste disposal, or importing goods.

Issuing Authority

Business licenses are usually issued by a central government body or an integrated system such as the OSS (Online Single Submission) platform in Indonesia. Business permits, however, are often granted by local governments or specific regulatory agencies, such as the Ministry of Health, BPOM, or local environmental agencies.

Requirement Level

A business license is mandatory for all businesses to operate legally. Without it, a company cannot exist in the legal sense. Business permits, on the other hand, are conditional and are only required when a business engages in regulated activities. Not all businesses will need the same permits, but they are essential when applicable.

Validity

Business licenses are typically long-term and may only need to be renewed periodically, depending on the jurisdiction. Business permits, however, might be temporary or subject to renewal based on the specific activity they regulate. For instance, a food permit may require annual renewal based on safety inspections.

Classifications of Business License for a PMA in Indonesia

• A company engaged in general trading, goods, or other services should have a business license;
• A company engaged in the manufacturing industry outside of oil, gas, and geothermal energy, should have an industrial business license;
• A company engaged in other industries, such as construction, should have a construction business license; and
• Other licenses based on the company’s business activities.

The Application Process of Business License Indonesia: Procedures & Requirements

Business License Requirements

A permanent business license will be given to a PMA Company once it meets the following requirements:

• Has been in the production phase
• Has exceeded the allotted time (3 years)

Application Procedures

• A PMA Company may apply for a permanent license to the Head of Investment Coordinating Board (BKPM) or Head of Region Investment Coordinating Board (BKPMD). Regarding the issuer, it depends upon the foreign investment license, the business activities, and also the domicile of the company;
• The applicant should complete and sign the application form for a business license at BKPM or BKPMD office and attach the required documents; and
• BKPM or BKPMD officers will check all the files and the eligibility and completeness of the application, and then issue the permanent license certificate.

Requirements for Business License Approval

• A copy of:
  • Permit approval for investments;
  • Deed of establishment and its amendments;
  • Company domicile, NPWP, and TDP;
  • Contract/rental of business premises and certificate from the owner of the building;
  • ID card and passport of KITAS for foreigners;
• Nuisance Act Permit and Location Permit (SITU);
• List of office equipment and industrial equipment; and
• Company organizational structure.

Process Time and Validity

• After fulfilling all documentation requirements, the processing time for a business license application takes 14 working days;
• A business license is generally valid for 30 years;

Obtaining Business Licenses in Indonesia with InCorp

Having years of experience in helping small, medium, to multi-national companies to establish their businesses in Indonesia, InCorp Indonesia (An Ascentium Company) can help you get a business license in Indonesia according to your business needs and targets.

Write down the details of your business needs below, our consultants will immediately contact you to discuss in more detail.