Your license may be invalid, delayed, or rejected.
Indonesia, as Southeast Asia’s largest economy, continues to attract a wide range of investors and entrepreneurs eager to tap into its growing consumer market and strategic regional location. However, whether you’re a foreign investor or a local business owner, the journey to doing business in Indonesia starts with one crucial step: obtaining the right business licenses. This may sound like a bureaucratic chore, but in reality, it’s a legal lifeline for your operations.
First and foremost, having a valid license means your business is legally recognized by the Indonesian government. It allows you to open a bank account, pay taxes, import goods, and—most importantly—operate with confidence. Many foreign investors underestimate the impact of not securing proper licenses, which can result in project delays, financial penalties, or even complete shutdowns. Hence, licensing is not just about legal formality—it’s about legitimacy, trust, and operational sustainability.
To understand licensing in Indonesia, it’s important to become familiar with several core legal instruments. The most pivotal is Law No. 6 of 2023 on Job Creation (commonly known as the Omnibus Law), which overhauled the investment climate by simplifying licensing through a risk-based approach. Supporting regulations include Government Regulation No. 28 of 2025 on Risk-Based Licensing and regulations from BKPM (Investment Coordinating Board). These rules aim to reduce red tape but still require thorough compliance and precise categorization of your business activities.
Every business operating in Indonesia must obtain a Business Identification Number (Nomor Induk Berusaha or NIB), which serves as the foundational license. Issued through the OSS (Online Single Submission) platform, the NIB consolidates multiple administrative requirements into one document—including tax registration, import licenses, and employment registration. Think of it as your business’s national ID card. It is the starting point for everything that follows.
Depending on the nature of your business activities, additional sector-specific licenses may be required. For instance:
Choosing the correct KBLI (Business Field Classification Code) is essential, as this determines what additional licenses your business must apply for. A single digit error here could result in rejections or delays.
Foreign-owned companies, referred to as PT PMA (Penanaman Modal Asing), face stricter requirements. In addition to NIB, they may need location permits, environmental approvals, or technical licenses depending on their industry. If your business falls under sectors with limited foreign ownership, further documentation and approvals will be necessary.
READ MORE:
Foreign investors must commit to a minimum investment of IDR 10 billion (approximately USD 670,000), with at least IDR 2.5 billion allocated as paid-up capital. This requirement ensures that only serious investors enter the Indonesian market. Additionally, businesses must align with the Positive Investment List, which outlines sectors open to foreign ownership.
Once the legal entity is established, obtaining an NIB is next. PT PMA must also provide a registered business address. Some KBLI codes allow for virtual offices, but others demand a physical office space, especially in industries like manufacturing or warehousing. This must be clarified early in the setup process.
Indonesia’s regulatory landscape is evolving rapidly. While reforms like the Omnibus Law aim to simplify things, inconsistent interpretations by ministries or local governments can be frustrating. For instance, one regional office might request extra documentation not listed on the OSS, causing unexpected delays.
Despite OSS’s promise of centralization, regional autonomy persists. Some local authorities may impose additional requirements or take longer to process applications, especially for environmental and location permits. These delays can impact project timelines, increase costs, and frustrate investors.
Before starting the licensing process, it’s essential to conduct legal due diligence. Identify the most accurate KBLI code that matches your business activities. If your company engages in multiple services, you may need to register under multiple KBLI codes, each with its own licensing implications.
Trying to navigate the OSS platform or local licensing procedures alone can be daunting. An experienced law firm, such as ours, understands the practical intricacies—from engaging with local governments to handling submissions. We help anticipate problems before they arise and ensure that your business gets off the ground quickly and safely.
Businesses operating without a license may face warnings, suspension of activities, or even license revocation. This is particularly common when companies expand operations into new sectors but fail to update their licenses accordingly.
More seriously, unauthorized business operations can expose directors to personal liability. If unlicensed activity causes public harm or financial losses, the company and its management may face lawsuits or even criminal charges under Indonesian law.
READ MORE:
At Kusuma & Partners, we’ve represented a diverse clientele—from foreign tech startups to local manufacturers—navigating the licensing labyrinth in Indonesia. Our key insight: success in licensing doesn’t lie in speed but in precision. Errors in KBLI selection, improper documentation, or local misunderstandings are common pitfalls.
Our firm provides comprehensive assistance, from KBLI advisory to preparing bilingual legal documents and following up with OSS and local government institutions. We act not only as your legal advisors but also as your compliance partners, ensuring every step is handled professionally and strategically.
Licensing is not just a legal requirement—it’s a strategic pillar for doing business in Indonesia. By understanding the rules, anticipating local nuances, and working with the right partners, you not only stay compliant but also build a foundation for long-term success.
If you’re planning to start or expand a business in Indonesia, don’t leave licensing to chance. Contact us today for tailored legal assistance.
Fill in the form below to get our expert guidance.
“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
Outsourcing has become a widely adopted strategy for companies seeking operational efficiency and cost reduction. In Indonesia, outsourcing arrangements are common — but often misunderstood. For foreign and domestic companies alike, outsourcing may seem like a straightforward solution, but beneath the surface lie several legal and regulatory complexities that, if not addressed properly, can expose […]
Every business in Indonesia, whether local or foreign-owned, may encounter financial turbulence. But when challenges evolve into financial distress, immediate action is not just prudent—it’s legally essential. Navigating financial distress in Indonesia requires more than accounting adjustments; it demands legal foresight, regulatory compliance, and strategic risk management. In this article, we’ll walk you through the […]
In today’s hyper-connected global economy, businesses are under increasing pressure to do more with less. That’s where Business Process Outsourcing (BPO) steps in. BPO allows companies to delegate specific business functions—such as customer support, payroll, IT, or data processing—to specialized third parties. This not only reduces costs but also enhances efficiency and allows companies to […]
