A business license is required for any business activity by small and medium enterprises as well as large-scale businesses, including foreign investment companies.  Having a business license identifies your business and its operation as legitimate and permitted by the appropriate authorities. Business Licenses are issued by the Investment Coordinating Board (BKPM) or Regional Investment Coordinating Board (BKPMD) to a company that was established within the framework of a foreign investment company (PMA). A business License is issued as an operating permit to conduct commercial business activities in the trade of goods and services.

There are two key licenses when it comes to incorporating a foreign owned company in Indonesia – Principal License (IzinPrinsip) and Permanent Business License (Izin Usaha Tetap – IUT).

  • Principal license is received during the incorporation process and you are given permission to start investing in Indonesia.
  • Permanent business license means that you have completed the preparations and are now fully operating in Indonesia.

Other business licenses include

  • Trading Business License/Surat Izin Usaha Perdagangan (SIUP)
    • A Trading Business License, known as the SIUP, is required only for companies engaged in any kind of trading business. This license is considered an operational permit and is required for obtaining bank loans and participating in government tender.
    • Industrial Business License/ Izin Usaha Industri (IUI)
      • Any industrial company that is located in an industrial area must obtain an Industrial Business License called an IUI. This license will also double as an operational permit and will be deemed invalid in the event that an IUI holder stops the industrial operation.
    • Construction Services License/Izin Usaha Jasa Konstruksi (IUJK)
      • A Construction Services License (IUJK) is required for a company engaged in any construction business or participating in any tenders in Indonesia. 
    • Mining Business License/  (IUP)
      • Mining Business License/IUP is for a company engaged in mining activities/tenders and requires one license (IUP) per type of coal or mineral per company. The IUP is regulated by the Ministry of Energy and Mineral.

Aside from the licenses listed above, there are some specific ancillary licenses to be obtained, such as:

  • Import License
    • An import license consists of an Importer Identification Number/Angka Pengenal Impor (API) and Customs Identification Number. Each business entity is only permitted to have only one of the two following types of import license:
      • General Import License (API-U)– is given to a company that import goods for trade or distribution purposes. Under MoTR 27/2012, the API-U holder is allowed to import more than one good type but required to have a special relationship with a company or distributor abroadThis license will be valid for 5 years and can then be renewed.
      • Producer Import License (API-P)- is given to a company that imports goods for production processes, such as raw material.
  • Product Registration
    • If you are interested in bringing products such as food, cosmetics, medicine and medical equipment into the Indonesian market, you must register the products. Regulations for the registration of food, cosmetics and medical products are obtained under the Agency for Drugs and Food Control (BPOM). Registration for medical equipments is obtained through the Ministry of Health.
  • Environmental License/AMDAL
    • Certain business activities such as industry, manufacturing or exploration require an environment impact analysis from the Ministry of Health.

Need more detailed explanation? Don’t hesitate to contact us.

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