IMB Indonesia for UMKM: The Complete Guide You Need to Know

Understanding the Shift from IMB to PBG for UMKM in Indonesia

  • InCorp Editorial Team
  • 18 October 2024
  • 7 reading time

Every investor looking to start a business in Indonesia must know the country’’ building permit regulations. Previously, the IMB (Izin Mendirikan Bangunan) was the essential permit required for constructing or modifying buildings.

However, as of November 2021, the IMB has been replaced by the PBG (Persetujuan Bangunan Gedung), a new regulatory framework that governs building approval. Understanding the PBG process is crucial for investors to ensure compliance and a smooth business setup in Indonesia.

What is IMB in Indonesia?

IMB stands for Izin Mendirikan Bangunan, a legal permit or building registration document in Indonesia that allows the construction of buildings and ensures that the constructed buildings are consistent with the land allocations.

An IMB also ensures that the building’s design and structure meet the purposes of use, comfort, and safety criteria under Indonesian law.

An IMB is used from construction until the end of a building’s lifetime. Buildings under the IMB permit are used primarily for residential and commercial purposes.

PBG Replaced IMB as of November 2021

Under Regulation No. 16 Year 2023, since November 2021, the IMB Building Permit has been replaced with the Persetujuan Bangunan Gedung (PBG), the Building Approval Permit, streamlining the process and adapting to modern regulatory standards.

The Importance of IMB (PBG) in Indonesia

The IMB (Izin Mendirikan Bangunan) and its successor, the PBG (Persetujuan Bangunan Gedung), are essential for a building’s entire lifecycle, from construction to its operational phase. This is particularly crucial for investors looking to start a business in Indonesia.

An IMB is mandatory for business owners who wish to buy or rent a building anywhere in the country. Since the introduction of the PBG in November 2021, the PBG has become the primary permit governing construction processes. However, properties with an existing IMB remain valid under specific regulations.

Acquiring or renting a building without a valid IMB or PBG is against the law and may result in significant penalties.

Not only is it important to obtain either permit, but you must also ensure that the permit obtained from the authority or landlord clearly states the intended use that aligns with the actual purpose of the building for residential or commercial activities.

Before applying for an IMB or PBG, reviewing the spatial planning and land zoning regulations in the area where you intend to build is essential. Different land categories and zones designate specific allowable uses for buildings.

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The Differences Between PBG and IMB

The transition from IMB to PBG introduces several significant changes in the regulatory framework:

AspectsPBGIMB
PurposePBG (Persetujuan Bangunan Gedung) regulates the construction process and allows owners to apply for a permit during or after construction.The IMB (Izin Mendirikan Bangunan) was required to be obtained before or at the start of construction, necessitating the building owner’s submission of technical details.
Stages and ApplicationPBG can be processed during or after construction, provided the building’s function is reported and aligned with relevant spatial planning regulations.Under the IMB, the application had to be submitted before construction began, and the owner was required to specify the building’s intended function at that time.
Requirements and SanctionsPBG mandates that building planning complies with layout, reliability, and prototype design standards, with penalties for not reporting changes in function.The IMB imposed administrative and technical requirements that building owners needed to meet, but it did not have sanctions for failing to report changes in the building’s function.
Validity PeriodPBG allows for mixed functions within buildings.The IMB remains valid if obtained before the implementation of Government Regulation No. 16 of 2021, while the new regulations govern the PBG.

PBG Application Requirements

The application process for the PBG (Persetujuan Bangunan Gedung) involves several steps, including submitting specific documents. Here’s a detailed guide on how to obtain a PBG while ensuring compliance with existing regulations, including the previous IMB requirements:

  • Architectural Plan Documents: This includes details about the architectural planning service providers, design concepts, floor plans, and other related designs.
  • Utility Plan Documents: This covers the calculations for clean water, electricity, waste management, and fire protection systems, along with drawings of sanitation systems and other related designs.
  • Structural Plan Documents: These documents comprise drawings of lower, upper, and basement structures, as well as structural calculations, including soil investigation data for buildings exceeding two floors.
  • Technical Specifications Documents: A comprehensive description of the materials used, including their type, characteristics, and quality.

Once the required documents are prepared, follow these steps to apply for a PBG:

  • Create a new account on the SIMBG website and confirm your email.
  • If you already have an account, log in to the SIMBG website and complete your data.
  • Fill in the relevant forms and save your data.
  • Begin the PBG application process online at simbg.pu.go.id.
  • Upload all technical and administrative documents, then monitor your SIMBG account for notifications regarding document completeness.
  • If your documents are verified as complete, attend consultations with the Professional Expert Team (TPA) in Architecture, Structure, and MEP.
  • Make any necessary revisions to your documents based on the TPA consultation.
  • Determine the local retribution fee and obtain the Regional Retribution Determination Letter (SKRD) from DPMPTSP.
  • Pay the local retribution fee as outlined.
  • Issue the Statement of Compliance with Building Technical Standards (Rekomtek).
  • DPMPTSP will issue the PBG upon completion of all processes.

Guide to IMB and PBG for UMKM in Indonesia

Recent regulatory changes include provisions for a new type of IMB explicitly designed for warehouses catering to micro, small, and medium enterprises (UMKM).

However, it’s essential to note that the IMB has been replaced by the Persetujuan Bangunan Gedung (PBG) since November 2021, which now governs the building permit process. Here are the details regarding permits for UMKM buildings:

UMKM Buildings Smaller than 1,300m²

  • These buildings can qualify for simplified approval processes under the PBG.
  • The business function index calculation is set at 0.5% for the PBG retribution amount.

UMKM Buildings of 1,300m²

  • Prototype designs are often utilized for these structures.
  • The PBG issuance process includes assessing technical plan documents, obtaining necessary written approvals, and issuing the PBG document.
  • The regional government is required to complete this process within three business days of submitting the PBG application.
  • The business function index calculation remains 0.5% for the PBG retribution amount.

UMKM Buildings Larger than 1,300m²

  • Like smaller buildings, complex buildings not utilized for public interest must follow the appropriate regulations under the PBG framework.
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The Cost of IMB (PBG) in Indonesia

The cost of obtaining a PBG in Indonesia varies depending on the building project’s location, size, and complexity. Fees can differ between regions due to local government regulations.

InCorp can provide accurate cost estimates tailored to the specific project details and location.

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Obtain PBG in Indonesia with InCorp

Navigating the evolving regulations around obtaining a PBG in Indonesia can be complex. As pro-business policies and regulations change, many investors need help staying informed and compliant.

A lack of awareness about the current business environment can lead to costly delays and missed opportunities. At InCorp, we simplify the PBG application process with:

  • Expert guidance on Indonesia’s building regulations, ensuring a smooth and efficient application process.
  • Regulatory updates about the latest business and construction regulations change to avoid unnecessary roadblocks.
  • Tailored solutions for your project needs, from small-scale businesses to large commercial ventures.
  • From document preparation to final permit approval, we handle every step of the PBG application on your behalf.
  • Avoid common mistakes and unnecessary expenses, ensuring your project stays on track.

To speak with one of our consultants, submit your details through the form below, and we’ll contact you shortly.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.