Business Licensing

With the introduction of the Business Identification Number (NIB) registry and the Online Single Submission (OSS) platform, the Indonesian government aims to ease the process of doing business in Indonesia.

Indonesian Standard Industrial Classification

For 45 additional Indonesian business classifications, known as Klasifikasi Baku Lapangan usaha Indonesia (KBLI) it is no longer required to obtain additional production licenses.
The Indonesian Standard Industrial Classification or KBLI consists of a 5-digit code used by the government to classify business fields in Indonesia.
As a result, your business activity is categorized under a KBLI number.
This classification is used by the Central Statistics Agency and other government bodies to administer the licensing and investment process.
An overview of the KBLI codes can be found on the website of the Central Statistics Agency, called Badan Pusat Statistik (BPS).

Business Identification Number

Before the NIB, companies may had to obtain 3 separate licenses; the Tanda Daftar Perusahaan (TDP), the Angka Pengenal Impor (API) and the Nomor Induk Kepabeanan (NIK).

The NIB now basically functions as your primary:
  • Company Registration Certificate (TDP)
  • Import Identification Number (API)
  • Customs Registration Number (NIK)

The issuance of the NIB is in most cases sufficient to start your business operations in Indonesia, without applying for additional licenses for a range of activities, goods and services.

Principal License

A newly founded company will also get a principal license, called Izin Prinsip (IP). The IP allows you to start investing and develop your business activities.

Unlike the TDP, API and NIK, the IP is a temporary business license, which serves as your initial investment license. An IP for a PT. PMA is valid for a period of 1, 3 or 5 years, depending on the business sector. After that, it is possible to extend it for up to a maximum of 5 years. Extensions must be requested at least 30 days before the IP expires, but it is advisable to start preparing 3 months before expiration date of the principal license.

When the company has fulfilled all its legal requirements, it can apply for a permanent business license.

Permanent Business License

The permanent business license, known as Izin Usaha Tetap (IUT) is required for a PT. PMA if the company wants to continue operating in Indonesia as a fully grown business, before expiration of its principal license.

Basic requirements to apply for an IUT:
  • Physical company address; when you used a virtual office address during the start up phase, you should get a physical address in order to apply for the IUT.
  • Proof of investment; this includes submitting the investment plan, investment activity reporting (LKPM) and settling the paid up capital (if not done already). Depending on the type of business, additional financial statements may be requested by the Investment Coordination Board (BKPM).
Benefits of an IUT:
  • Acquire additional licenses and permits.
  • Foreign employee recruitment.
  • Visa extension.
  • Change of shareholders or sale of company.
  • Ease of doing business with local partners, customers and suppliers.

Therefore it is advisable to apply for the IUT as soon as you are able, even if you have no immediate expansion plans. Although the Indonesian government is not proactively checking whether every foreign investment company has acquired its permanent business license on time, active monitoring and implementation of the official regulation may occur in due time.

Note that getting a permanent business license also applies to domestic investment companies, called Penanaman Modal Dalam Negeri (PMDN).

Besides de permanent business license, there are 2 other primary business licenses (izin usaha), being the trading business license (SIUP) and the industrial business license (SIUI).

Trading Business License

The trading business license, known as Surat Izin Usaha Perdagangan (SIUP) is an operating license required for all companies who are involved trading, including the sale of goods and services. The SIUP is issued by the Ministry of Trade and can be applied for online or via the regional Trade Office.

Depending on company size, there are 3 types of SIUP:
  • Small; SIUP for small businesses with a net-worth between 50 million and 500 million Rupiah.
  • Medium; SIUP for medium-sized businesses with a net-worth between 500 million and 10 billion Rupiah.
  • Large; SIUP for large businesses with a net-worth of more then 10 billion Rupiah.

Note: these amounts do not include the value of the company’s land and building(s).

Companies exempt from acquiring a SIUP:
  • Companies who are not involved in any trading activities.
  • Companies who are in fact a branch office or a representative office.
  • Micro-sized trading companies; owned by individuals or families and with a net-worth below 50 million Rupiah excluding land and building.
Benefits of a SIUP:
  • Legal proof that the company is allowed to do trade; some suppliers may not want to do business with you if you cannot present the correct SIUP.
  • Allowed to participate in certain legal tenders and auctions regarding government projects.
  • Eased export-import process.

When you have a principal license (IP), you can already apply for the suitable trading business license.

Industrial Business License

The industrial business license, known as Surat Izin Usaha Industri (SIUI) is an operating license, required for companies who are mainly engaged in processing raw materials, production of goods, use of machinery and storage of industrial equipment.
The SIUI is issued by the Ministry of Industry in cooperation with the regional Industry Office.

Depending on company size, there are 3 types of SIUI:
  • Small
  • Medium
  • Large

Note: The authorities involved determine to which category your company belongs, mainly based on the investment size and the number of employees. Although there are no exemptions, the process for obtaining a SIUI is easier for small industrial companies.

The main criteria for a company who wants to obtain a SIUI:
  • A letter of approval if the industrial company will be located outside a designated industrial area.
  • A commitment that the industrial activities have no harmful environmental impact.
  • A permit for the storage of industrial equipment and goods associated with the industrial activity.
Based on the above criteria the process involves 4 main steps:
  1. Submit the requested industrial data, including an Environmental Impact Analysis (AMDAL).
  2. Statement from the Directorate-General for Industrial Areas if the company is permitted to be located outside a designated industrial area.
  3. Registry of the SIUI with the National Industrial Information System (SIINas).
  4. Abide by a technical verification procedure.
Benefits of an SIUI:
  • Legal proof that the company is allowed to produce; some customers may not want to do business with you if you cannot present the correct (S)IUI.
  • In full compliance with (local) government regulations.
  • Ease of doing business with local business partners.

When you have a principal license (IP), you can apply for the applicable industrial business license. Note that industries that are active in the energy or the construction sector have to obtain a separate license.

AdvintA can apply on your behalf or guide you trough the process in getting a permanent business license, a trading license a/o an industrial license.