Getting a Business License and Permit in Indonesia

Operating a business legally in Indonesia requires obtaining the correct business licenses and permits through the government’s risk-based licensing framework.

Since the introduction of the Online Single Submission (OSS) system, licensing has become more centralized and transparent, but the requirements still vary depending on the nature and risk level of the business activity.

A business license is an official authorization that allows a company to legally conduct its business activities.

In Indonesia, all businesses, regardless of size or sector, are required to hold the appropriate licenses, as operating without them may result in sanctions or forced closure by government authorities.

Understanding Risk-Based Business Licensing in Indonesia

Indonesia applies a risk-based approach to business licensing. This system determines whether a business can operate immediately or must first fulfill certain technical, environmental, or administrative requirements.

Not all businesses require the same level of licensing. Some activities can operate with minimal approvals, while others require additional permits and ongoing supervision.

All licensing is processed through the Online Single Submission (OSS) platform, which is managed centrally and integrates multiple government authorities.

The Role of NIB (Business Identification Number)

Under the OSS system, every business must obtain a Business Identification Number (Nomor Induk Berusaha – NIB).

The NIB serves as:

• The official identity of the business
• Proof of legal registration
• Authorization to begin business preparation activities

The NIB is issued electronically with a digital signature after the business owner submits:

• Business actor data
• Business activity plans
• Spatial conformity information
• Initial risk assessment data

The OSS system automatically evaluates the risk level of the business activity based on standards set by relevant ministries and agencies, as regulated under BKPM Regulation No. 4 of 2021.

Business Licensing Based on Risk Level

Low-Risk Business Activities

For low-risk businesses, the NIB alone is sufficient to carry out:

• Business preparation
• Operational activities
• Commercial activities

In this category:

• Business actors submit a statement of commitment to environmental management and monitoring
• The NIB also functions as an SPPL (Environmental Management Statement)

No additional license is required beyond the NIB.

Medium-Low Risk Business Activities

Medium-low risk businesses must:

• Submit a statement of commitment to comply with business standards
• Determine whether environmental documents (UKL-UPL) are mandatory

If UKL-UPL is mandatory:

• The business must submit a UKL-UPL form and environmental commitment statement via OSS
• The system issues an NIB and a Standard Certificate

If UKL-UPL is not mandatory:

• The business submits an SPPL instead
• An NIB and Standard Certificate are issued

For this category, the NIB remains sufficient for operational and commercial activities.

Medium-High Risk Business Activities

Medium-high risk businesses require additional verification before full operation.

The process includes:

• Submitting a commitment to comply with business standards
• Filing either UKL-UPL or SPPL documents (depending on requirements)

Initially:

• OSS issues an NIB and an unverified Standard Certificate
• These allow only business preparation, not full commercial operation

To begin operations:

• Business standards must be fulfilled and verified through OSS
• Environmental documents are reviewed by the Ministry in charge of environment and forestry
• Verification outcomes may be approved, revised, or rejected

Only after verification can the business legally operate.

High-Risk Business Activities

High-risk businesses must obtain formal licenses before operating.

In addition to the NIB:

• A business license must be approved by the Central or Regional Government
• Environmental approval is required, often in the form of an AMDAL feasibility decree. AMDAL (Analisis Mengenai Dampak Lingkungan), or Environmental Impact Assessment (EIA), is a mandatory Indonesian, comprehensive study evaluating

If UKL-UPL applies:

• Environmental documents are submitted and verified similarly to medium-high risk businesses

High-risk businesses may also need:

• Business Standard Certificates
• Product standard certifications

All requirements must be fulfilled through the OSS system in accordance with ministry-specific regulations.

Learn more: Investment Limitation in Indonesia for Foreign Investors

Types of Business Licenses in Practice

Indonesia recognizes several practical license categories based on commitment requirements:

Licenses without commitment fulfilment (Type 1)

• Issued via OSS and effective immediately.
• Common for low-liability services such as consulting businesses.
• Typical issuance time: 1–2 working days.

Licenses with commitments (Types 2–4)

Business licenses with technical requirements (type 2), Business license with fee requirements (type 3), Business license with technical and fee requirements (type 4).

• Issued through the OSS system but not immediately valid for operation
• Becomes effective only after the required commitments are fully fulfilled
• The specific rules for these business and operational licenses are determined by the Head of BKPM

Industries commonly included in Types 2–4:

• Hotels and accommodation
• Medical device imports
• Construction
• Mining
• Health and spa services
• Travel agencies
• Financial services and fintech
• Food and beverage distribution

Once commitments are completed, licenses are generally issued within 1–2 working days.

How the Business License Application Process Works

1. Establish a Legal Entity: Determine the business structure, PT PMA (Foreign Investment) for foreigners, then make a Deed of Establishment through a notary and register it with the Ministry of Law and Human Rights.

2. NIB registration through OSS-RBA: Register on the OSS-RBA website to obtain a NIB. The NIB serves as a Company Registration Certificate (TDP) and Import Identification Number (API).

3. Determine KBLI: Determine the appropriate Indonesian Standard Classification of Business Fields (KBLI) to ensure licensing compliance, especially for digital businesses.

4. Risk-Based Permit Fulfillment:

• Low Risk: Just NIB.
• Medium Risk: NIB + Standard Certificate.
• High Risk: NIB + Permit (requires verification from relevant ministries/agencies).

5. Additional Permits (If Required): Manage special permits such as environmental documents, company NPWP, or location permits (SITU) at the relevant agency or One-Stop Integrated Service Office (PTSP).

6. Advanced Compliance: Fulfilling periodic investment activity reports and personal data compliance.

General requirements include company legal documents, business premises rental contracts, and the management’s KTP/passport/KITAS.

Learn more: All You Need to Know about Investor KITAS

OSS and Centralized Licensing Authority

Since September 2019, all business licensing applications must be submitted through OSS.

In November 2019, the government assigned licensing authority to the Investment Coordinating Board (BKPM), consolidating approvals previously handled by multiple institutions.

This centralization significantly improves efficiency and legal clarity for investors.

Temporary vs Permanent Business Licenses

New companies initially receive a temporary business license, which allows operations during the setup phase.

Permanent licenses are issued after:

• Capital is fully paid
• The investment plan is executed

Permanent licenses allow:

• Semi-annual investment reporting (instead of quarterly)
• Sponsorship of foreign employees for KITAS (work permits)

Required Documents for Business Licensing

While requirements vary by business line, standard documents include:

• Articles of Association (AOA)
• Ministry of Law and Human Rights approval
• Business Identification Number (NIB)
• Company Tax Identification Number (NPWP)
• Investment value details
• Additional documents depending on industry and risk level

Final Notes for Foreign Investors

Business licenses in Indonesia are not optional. Operating without the correct permits exposes a company to administrative sanctions or closure.

Understanding the risk-based licensing system is essential, especially for foreign-owned companies. With the OSS RBA framework, licensing is more transparent, but accuracy in classification, documentation, and compliance remains critical.

Visa BaliEasy assists foreign founders by identifying the required licenses, preparing compliant documentation, and ensuring businesses can operate legally and confidently in Indonesia, supported by 24/7 human customer service for ongoing guidance and assistance.