A business license is an important aspect of starting and owning a business in Indonesia. Certain commercial operations are prohibited by state law if the company in question does not have the necessary business license.
Any company that meets the requirements for a license or permit is eligible to apply. A business license will be issued if government officials are satisfied with the application.
Which Laws Regulate Business Licensing in Indonesia?
Government Regulation Number 24 of 2018 concerning Electronic Integrated Business Licensing Services is a fundamental regulation that regulates the issuance of business permits in Indonesia. “Regulation 24/2018” is the official name for this law.
OSS is a mechanism that makes it easier to obtain business permits. Can be used on behalf of governors, ministers, mayors, heads of government agencies, regents and other government officials.
OSS can also be used by various business entities, including partnerships, individuals, limited liability companies, and state-owned enterprises. Business permits, NIB, commercial and operational permits, and Foreign Worker Recruitment Plans are among the items that can be processed through OSS (RPTKA).
What is Regulation 24/2018?
Regulation 24/2018 further mandates that the competent authorities initiate the business license reform process. Reclassification, elimination, merger, name change, and change in permit requirements are examples of business permit reform.
It also outlines the requirements for obtaining a license. There are 20 business sectors that have permits that need to be reformed, including:
Agriculture
Forestry
Trade
Communication
Tourist
Higher education
Nuclear power
Licensing reforms in areas not covered by Regulation 24/2018 are implemented in accordance with the regulations applicable to the sector. According to Regulation 24/2018, there are three types of businesses that require a business license to operate.
Businesses that do not require infrastructure to run business operations
Businesses that need infrastructure but don’t have it yet
Businesses that need and have the infrastructure to carry out business activities are all included
Businesses that need infrastructure but don’t have it must first apply for a location permit, water permit and environmental permit, all of which are granted depending on commitment. Licensee may do the following:
Adjust their land area
Carrying out production and commissioning activities
Buy land
Human Resources
Facility
Infrastructure
Develop and operate buildings
Unless there are relevant rules or regulations that determine otherwise, the business permit remains valid until the business no longer carries out business activities.
Based on the commitment, commercial and operational permits will be issued. This relates to goods to be marketed or their procurement, as well as standardization, certification and licensing of business activities, as well as registration of goods and services needed to run a business. They are valid for the amount of time specified in their validity period.
Main Types of Business Licenses in Indonesia
Business permits are the most popular among Indonesian companies. They engage in general commercial activities as well as the provision of goods and services using this license.
An industrial business permit is required for companies that produce but are not involved in oil, gas or geothermal activities.
Before starting any commercial activity, a building company must obtain a construction business permit. Although other types of company permits exist in Indonesia, the three types mentioned above are the most common.
Why Should I Get a Business License in Indonesia?
All forms of business permits are required throughout Indonesia. Although business owners may apply for one or more of these permits, they may not be aware of the reasons why applying for a business permit in Indonesia is so important.
Of course, the most significant reason is to legalize business entities and their operations. Corporate entities that attempt to carry out commercial activities without the necessary permits have violated Indonesian business regulations and can face various penalties. As a result of the government’s mission, these companies may be punished by being forced to close their doors.
Companies that have business permits have proof that all their commercial activities are legal and proper. This also applies to product promotion and its structure. Those who know that a business has received official permits will know that the business and its owner are honest and trustworthy because they have gone through all the required verification procedures.