Understanding Different Types of Business Licenses in Indonesia

Indonesia is one of the most dynamic and fast-growing markets in Southeast Asia. It presents significant opportunities for both local business owners and foreign investors. However, getting the right licenses is an important step every company must complete before starting operations. 

Business registration in Indonesia goes beyond just filling out forms. The Indonesia government has simplified the business licensing process with the introduction of the OSS (Online Single Submission) system, which makes it simpler for entrepreneurs to organise and complete the necessary steps quickly. Navigating the various license categories, which range from general permits to those unique to particular industries, can still be difficult, though. 

It’s critical to comprehend the licensing requirements in order to guarantee a seamless business setup in Indonesia. Every license is essential to maintaining legal compliance, operational preparedness, and long-term company growth, from company registration to industry-specific approvals.

Before applying for business licenses in Indonesia, it’s recommended to read this guide to starting a business in Indonesia to understand the full setup process.

Why Business Licensing Matters in Indonesia?

Before your company’s setup in Indonesia can be legally completed, it must go through a business licensing process as part of the country’s company formation and regulatory framework. This isn’t just a formality—it’s a fundamental part of building a compliant, credible, and sustainable business in one of Southeast Asia’s most promising markets.

The following are the main justifications for why any business wishing to conduct business in Indonesia must obtain the appropriate business licenses:

1. Legal Compliance

Acquiring the appropriate business licenses guarantees that your company is legally registered and functioning in compliance with Indonesia laws.

2. Regulatory Assurance

Licenses confirm that your business meets essential standards related to taxation, safety, and industry-specific requirements.

3. Risk Mitigation

Failure to obtain the necessary licenses can result in fines, operational delays, or even the forced suspension of business activities.

4. Operational Readiness

Early compliance enables the initiation of operations without encountering regulatory issues by expediting the startup process.

5. Credibility and Trust

A fully licensed business signals professionalism and reliability to regulators, investors, customers, and potential partners.

6. Access to Opportunities

Licensing enables the opening of corporate bank accounts, eligibility for support programs, and participation in government tenders.

7. Market Expansion

With proper licenses in place, businesses are better equipped to scale their operations and confidently enter international markets.

8. Foundation for Long-Term Growth

Beyond compliance, licensing establishes a trusted and stable foundation for sustainable business development and future success.

What is the OSS Licensing System in Indonesia?

Obtaining a business license is a preliminary requirement for starting a business in Indonesia. To simplify the business registration and licensing process, the Government of Indonesia introduced the OSS system—a digital platform designed to make the procedure faster, easier, and more transparent.

Instead of visiting multiple government offices or dealing with stacks of paperwork, you can now take care of most licensing steps in one place. If you are setting up a local business or launching a foreign-owned company, OSS helps you apply for a NIB (Business Identification Number) and other permits relevant to your industry—all online.

One of the key features of the OSS system is its risk-based approach. It categorises businesses into low, medium, or high risk, based on their activities. This matters because the complexity of the licensing process depends on how your business is classified in terms of risk:

• If you’re running a low-risk business, you’ll likely just need an NIB to get started. 
• For medium-risk businesses, you’ll need both an NIB and a basic compliance certificate. 
• Additional measures, like obtaining technical approvals or environmental permits, might be necessary if your company is classified as high-risk.

OSS’s basic concept is to eliminate uncertainty and bureaucracy, allowing companies to focus more on expansion and less on navigating their systems. OSS has evolved into an essential tool for anyone seeking to produce something in Indonesia legally and with confidence, although there may still be a learning curve to overcome.

What Are the Primary Licenses Required to Start a Business in Indonesia?

You must first acquire a few essential licenses before you can formally open your business in Indonesia. These licenses are referred to as primary business licenses because they form the foundation of all subsequent transactions. Getting them early puts you in a better position to run your company efficiently and helps you avoid issues later. The primary licenses to be mindful of are as follows:

1. Business Identification Number (NIB)

The NIB, or Nomor Induk Berusaha, is the first and most crucial license every business must have. Think of it as your company’s official ID—it confirms your business is registered and legally recognised in Indonesia.

What it allows you to do:

• Legally run your business across any sector 
• Register for taxes and open a business bank account 
• Access import/export services through customs 
• Enrol employees in BPJS (Indonesia’s social security and health system) 

Regardless of your industry, having a NIB is the foundation for operating legally and establishing trust.

2. Izin Usaha Industri – Industrial Business License (IUI)

If your business involves manufacturing, assembling, or processing goods, you’ll need an IUI (Izin Usaha Industri – Industrial Business License). It ensures that your operations meet Indonesia’s industrial safety, zoning, and environmental regulations.

What it allows you to do:

• Legally carry out industrial and manufacturing activities 
• Comply with environmental and technical standards 
• Operate in industrial zones without facing penalties 
• Build trust with partners, suppliers, and regulators 

This license is standard for businesses such as food processing units, textile factories, and electronics manufacturers.

3. Sertifikat Badan Usaha-Construction Business License (SBU)

The SBU (Sertifikat Badan Usaha-Construction Business License) is necessary if you are engaged in property development, infrastructure construction, or construction services. It attests to your company’s eligibility to legally perform construction work in Indonesia.

What it allows you to do:

• Tender for public and private construction projects 
• Offer services like civil works, engineering, or consulting 
• Comply with regulations set by LPJK (Construction Services Development Board) 
• Demonstrate professionalism and capability to clients and contractors 

If you’re building homes or highways, the SBU ensures you’re authorised to do the work.

Each of these licenses plays a key role in getting your business up and running the right way. They go beyond legal requirements—they help build credibility, reduce risk, and create a strong foundation for sustainable growth. 

Non-Primary Business Licenses in Indonesia

The next thing to think about is whether your company requires any additional licenses after you’ve taken care of the fundamentals, such as getting your NIB (Business Identification Number) and formally establishing your business. These are referred to as non-primary licenses, and they usually have to do with the particular sector you work in.

While not necessary for all businesses, non-primary licenses are essential if you work in industries like retail, hospitality, commerce, or logistics. Ignoring them could cause legal issues later on or delay the establishment of your business in Indonesia.

Common Non-Primary Licenses in Indonesia:

1. Restaurant License

Necessary for businesses running cafés, catering services, or restaurants.

What it allows you to do:

• Operate a food and beverage business legally 
• Comply with sanitation and food safety regulations 
• Build customer trust through regulatory compliance 
• Avoid closure risks during health inspections 

2. Hotel or Accommodation License

Required for hotels, guesthouses, or serviced apartments.

What it allows you to do:

• Operate legally in the accommodation sector 
• Comply with tourism and zoning laws 
• List your property on platforms like Agoda or Booking.com 
• Fulfill hospitality-related registration requirements 

3. Import/Export License

For companies engaged in international trade.

What it allows you to do:

• Import and export goods in compliance with Indonesian law 
• Avoid customs delays and financial penalties 
• Partner with global logistics providers 
• Align business operations with international trade rules 

4. Transportation License

Essential for businesses providing freight, delivery, or passenger transport services using commercial vehicles.

What it allows you to do:

• Run delivery and logistics operations 
• Register company vehicles legally 
• Meet safety and transportation regulations 
• Establish credibility in the logistics sector 

5. Retail License

For businesses selling products online, in-store, or both.

What it allows you to do:

• Sell goods through online platforms and physical stores 
• Collaborate with e-commerce marketplaces 
• Comply with consumer protection laws and product labeling standards 
• Strengthen your brand’s credibility from day one

Why These Licenses Matter

Non-primary licenses might seem like minor steps, but they are key to building a fully compliant and future-ready business. They go beyond the basics of company formation and help ensure your business in Indonesia runs smoothly and legally for the long term.

Step-by-Step Process to Apply Through OSS

The OSS system is Indonesia’s official platform for registering businesses and applying for licenses—all in one place. Here’s a simplified step-by-step guide to get you started:

1. Register an OSS Account

Create an account on oss.go.id using your email and identification (e-KTP or passport).

2. Choose Your Business Structure

Select your company type—like PT (local company) or PT PMA (foreign investment company)—based on your ownership and business plan.

3. Fill Out Business Details

Enter essential info like your business name, address, shareholders, capital, and KBLI code (Indonesia’s business activity classification).

4. Apply for Your NIB

Submit your application for a Business Identification Number (NIB). It serves as your primary identification and includes your tax and import/export registration information.

5. Check Risk Level & Apply for Additional Licenses

Based on your KBLI code, OSS will determine your risk category:

• Low risk: NIB is usually enough 
• Medium/High risk: You may need extra permits (e.g., environmental, operational, sectoral) 

6. Download Licenses & Track Progress

Once approved, you can download your licenses directly from your OSS dashboard.

7. Handle Any Sector-Specific Requirements

Depending on your industry, you may also need to register with relevant ministries, such as Health, Tourism, or Transportation.

How to Choose the Right License in Indonesia?

Selecting the right business license in Indonesia is more than just a formality. It’s essential to make sure your legal documents clearly reflect how your company has operated from the start. Staying organised helps with following the rules and also makes everyday business management easier.

Here’s how to identify what you need:

1. Define your core business activities 

Start by clearly identifying what your business does on a daily basis.
Are you:

• Selling products? 
• Offering services? 
• Importing goods? 

Your main business activities will guide the type of license required.

2. Find the correct KBLI code

KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) is Indonesia’s official classification system for business activities.
The KBLI code you choose directly impacts what licenses your business needs.

3. Understand your risk level under the OSS system

• Low-risk businesses usually only require a NIB (Business Identification Number). 
• Medium- and high-risk businesses may need additional steps, like operational permits or environmental approvals. 

4. Check industry-specific requirements

Certain sectors often require extra licenses. These include:

• Hospitality 
• Food and beverage 
• Construction 
• Healthcare 
• Logistics 

5. Align your license with your growth plans

If you plan to expand, diversify services, or enter new markets, choose a licensing structure that supports future growth. This prevents the need for major revisions later.

Conclusion

At first, navigating Indonesia’s licensing landscape may seem overwhelming, but it becomes more manageable with the proper KBLI codes, the OSS system, and a clear understanding of your business operations. Selecting the appropriate licenses is essential for long-term success, not simply for maintaining compliance, regardless of your industry—retail, hotel, manufacturing, or logistics.

You can avoid future legal issues and save time and money by registering your business in Indonesia promptly. You put your firm in a position to expand confidently in one of Southeast Asia’s most promising marketplaces by aligning your operations with the relevant business licenses.

If you’re unsure which licenses apply to your business, it’s always a good idea to consult a local expert who thoroughly understands the process. Taking the time to get it right today will set you up for smoother operations—and fewer surprises—tomorrow.

Frequently Asked Questions