Business License Application in Indonesia
A Guide to Applying for the Licenses You Need to Conduct Business
Completing your business license application in Indonesia is a compulsory part of running a business in the country. This applies regardless of your company size. The licensing requirement provides assurance that your business is indeed legal. It also assures that your business has met all the requirements needed and is approved by the Indonesian Government. Without a business license, you cannot commence your business operations, tender for projects and even risk being shut down. You may also face a heavy penalty for failing to comply.
Requirements of Business License Application in Indonesia
Some business license especially if the license is for projects tendering might require you to provide your company’s operational license and financial audited report at the time of application.
The regulation is in place to allow foreign investors better understand their investment plan. It lets the Government gain a detailed understanding of the investments made by these companies too.
In 2018, the Government introduced Regulation 24, an Electronically Integrated Business Licensing Service or Regulation 24/2018 as it’s called. The regulation is divided into 5 categories:
- Online Single Submission (OSS) System
- Business Identity Numbers (NIB)
- Licensing reform
- Business licenses
- Commercial and operational licenses
The OSS system is the one that facilitates business license processing. It can be used by all types of business entities in Indonesia. All businesses must apply for their NIB using the OSS system.
To apply for a permanent business license, a PMA company must fulfil the following conditions:
- Surpassed a 3-year timeframe
- Been in the production stage
Types of Licenses in Indonesia for Businesses
Indonesia has several types of licensing options to choose from:
- Normal business license (general trading of goods and services)
- Industrial manufacturing licenses (not including thermal energy, gas, and oil)
- Food and beverage license
- Food supplement distribution license
- Construction business license
- National Agency of Drug and Food Control (BPOM) and medical distribution license (if you intend to sell medical devices)
- Cosmetic distribution license (if you intend to sell and distribute cosmetic products)
Business License Application Procedure
Business licenses application process in Indonesia can be frustrating without help from a professional service company like 3E Accounting. The steps to applying for a business license are as follows:
- A PMA company must apply to the Head of Investment Coordinating Board (BKPM). You may also apply to the Head of Region Investment Coordinating Board (BKPMD).
- The license will be issued depending on the type of business, domicile and the investment itself.
- Complete and sign the application form and submit it to the BKPM or BKPMD. All required documents must be attached.
- Your documents will be checked for eligibility, after which you will be issued with a permanent license.
Documents Required for Business Licence Application
To proceed with the business application process, you must prepare the following documents:
- A copy of the ID and passports of all foreigners for visa application.
- A copy of all permit approvals granted at the investments stage.
- A copy of your deed of establishment and Ministry of Law and Human Rights (“MOLHR”) Approval
- A copy of your deed of amendments and each MOLHR Approval
- A copy of your domicile which is still valid
- A copy of your NIB (including Izin Lokasi & Izin Usaha)
- A copy of your office rental contract (where your business office will be based).
- Complete list of industrial and office equipment for your business.
- Organisational structure of your business.
Business licenses will generally be issued within 14 days if all your documents are in order. Your license will be valid for 30-years unless otherwise stated.
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