Business Licenses in Indonesia: What Foreign Companies Need Before Operating

Key Takeaways

• Government Regulation No. 28 of 2025 is the current core regulation for risk-based business licensing and replaced Government Regulation No. 5 of 2021.
• A foreign company should confirm foreign ownership eligibility and select the correct Indonesian legal structure before treating licensing as a form-filling task.
• Each activity must be mapped to the correct current KBLI classification. The selected KBLI influences foreign investment conditions, risk level, required standards, sector approvals, and reporting.
• Low-risk activities generally use an NIB as their business authorization. Medium- and high-risk activities involve additional Standard Certificate or permit requirements.
• An unverified Standard Certificate or an NIB issued for a high-risk activity may support preparation, but it does not necessarily authorize operational or commercial activity.
• Spatial, environmental, building, product, import, workforce, and sector requirements can sit alongside the core OSS authorization.
• Licensing must reflect the company’s actual products, services, locations, capacity, workforce, and operating model. A broad company purpose in the deed does not automatically authorize every listed activity.

The Current Business Licensing Framework in Indonesia

Indonesia organizes business licensing through a risk-based system. The current legal foundation is Government Regulation No. 28 of 2025 on Risk-Based Business Licensing. The official BPK legal database records the regulation as in force from 5 June 2025 and confirms that it revoked Government Regulation No. 5 of 2021.

This change matters because many older articles, compliance checklists, and provider templates still describe the 2021 framework without addressing the 2025 replacement. The general risk-based concept remains, but companies should use the current regulation, current implementing rules, and the live OSS workflow when making a filing decision.

The Ministry of Investment and Downstream Industry/BKPM stated in February 2026 that the OSS system was being adjusted to implement Government Regulation No. 28 of 2025. Current OSS guidance also distinguishes transition projects from applications processed under the newer workflow. Businesses with legacy permits or partially completed projects should therefore assess transition treatment instead of assuming that a fresh application and an old OSS record work identically.

What Counts as a Business License in Indonesia?

“Business license” can refer to several different legal products. Government Regulation No. 28 of 2025 distinguishes core risk-based business licensing from licences that support business activities. The relevant package can include:

• NIB: the business identification number and the authorization used for low-risk activities;
• Standard Certificate: a statement or evidence that the business meets the standards assigned to a medium-risk activity;
• Permit: government approval required for a high-risk business activity before operational or commercial activity begins;
• PB UMKU: business licensing to support business activities, which may apply to particular products, services, facilities, professions, or operational functions; and
• Basic requirements: project-related approvals involving spatial use, the environment, and buildings, where applicable.

The practical result is that two companies with an NIB can have very different operating rights. A low-risk consultancy and a high-risk industrial facility may both hold an NIB, but the latter may still need verified standards, a sector permit, environmental approval, and building-related clearances before commercial operation.

IndoGateway’s NIB and OSS business licensing service provides a useful starting point for coordinating these layers.

Four Risk Levels and Their Licensing Outcomes

OSS determines the risk treatment assigned to each registered activity. The result is tied to the applicable KBLI, scale, product or service, location, and sector parameters rather than to the company name alone.

The official English translation of Government Regulation No. 28 of 2025 describes these outcomes in Articles 130–133. The exact standards and approval authority are found through the relevant sector rules and OSS record. For a focused explanation, see IndoGateway’s guide to the four risk levels in Indonesian business licensing.

What Foreign Companies Need Before Applying

1. A Lawful Investment and Ownership Structure

Foreign investors should first determine whether the intended activity is open to foreign investment and whether it carries a foreign shareholding limit, partnership requirement, special condition, or reservation for cooperatives and Indonesian micro, small, and medium enterprises.

Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021, remains central to the investment business-field analysis. The official database describes commercial activities as open to investment unless they are closed, reserved for central government, or subject to specified investment treatment. That principle does not mean every commercial KBLI is automatically open to unrestricted foreign ownership.

The ownership review should be performed against the precise KBLI and business model. Manufacturing a product, importing it, distributing it, operating a marketplace, and providing after-sales service can fall under different classifications and different investment conditions.

2. The Appropriate Indonesian Entity

A foreign-owned operating business commonly uses a foreign investment limited liability company, or PT PMA. Other structures, including representative offices and permanent establishments, serve different purposes and may face limits on revenue-generating activity.

The Ministry of Law’s AHU guidance for establishing a limited liability company explains that a notary submits the incorporation application electronically through the Legal Entity Administration System. Legal-entity approval and OSS licensing are connected but distinct workstreams. Incorporating a PT PMA does not, by itself, authorize the company to begin every business activity stated in its deed.

Companies planning a new entity can review IndoGateway’s PT PMA registration support and the operational guide on setting up a PT PMA in Indonesia.

3. A Current and Defensible KBLI Selection

KBLI is Indonesia’s standard classification for economic activities. It is not merely an administrative label. The selected classification influences investment screening, risk level, permitted scope, applicable standards, sector authority, and reporting.

BPS Regulation No. 7 of 2025 established KBLI 2025 and revoked the previous 2020 classification. BKPM subsequently announced the implementation of KBLI 2025 in risk-based licensing.

Companies should map what they will sell, how they will earn revenue, whether they manufacture or outsource, who imports, who owns inventory, and where each activity occurs. Choosing a code only because its description sounds broad can produce an NIB that does not match the actual operation. IndoGateway’s NIB, OSS, and KBLI guide explains why this classification step should precede filing.

4. A Compliant Investment and Capital Plan

Foreign investment must meet the investment and capital rules applicable to its structure and activities. Government Regulation No. 28 of 2025 states a general foreign-investment minimum of more than IDR 10 billion for each five-digit KBLI business activity at each business location, excluding land and buildings. It also provides different aggregation treatment for specified wholesale trade, food and beverage service, construction, and industrial activities.

This investment-plan threshold should not be confused with authorized, issued, or paid-up corporate capital. The exact amount and aggregation method should be tested against the selected KBLI, location, industry structure, and current implementing rules before the corporate documents and OSS data are finalized.

5. A Confirmed Business Location

Licensing is location-sensitive. The address used for incorporation, the OSS business location, the site where operations occur, and any warehouse, factory, branch, or project location should be mapped consistently.

Depending on the project, the company may need confirmation of spatial-use conformity, environmental documentation, building approval, or a certificate confirming that a building is fit for use. Lease terms should allow the intended activity, and the landlord’s documents should support the required filings. An inexpensive office address cannot solve the licensing needs of a warehouse, production line, clinic, restaurant, or other site-dependent operation.

Basic Requirements That Can Affect Licensing

Government Regulation No. 28 of 2025 identifies a basic-requirements subsystem covering spatial-use conformity, environmental approval, and building approval and functionality. These requirements are not identical for every company. Their application depends on the activity, location, land status, scale, building use, and environmental impact.

These workstreams should be investigated during site selection. Signing a long lease before testing licensing feasibility transfers regulatory risk into a contractual commitment.

Step-by-Step Business License Indonesia Process

Step 1: Define the Operating Model

Document the products and services, customers, contracting entity, revenue streams, import flow, distribution model, manufacturing arrangement, facilities, workers, and locations. Separate primary activities from genuine supporting activities.

Step 2: Screen Foreign Investment Conditions

Check whether each intended activity is open to foreign investment and whether foreign ownership, partnership, scale, or sector conditions apply. Do this before agreeing the shareholding structure.

Step 3: Select and Establish the Entity

Choose the legal structure that can lawfully perform the intended activity. Align the company deed, corporate purpose, shareholders, directors, commissioners, beneficial ownership information, and capital plan.

Step 4: Map Activities to Current KBLI Codes

Use KBLI 2025 and validate the code against actual operations. Record which entity and location will conduct each activity and which activities will generate revenue.

Step 5: Resolve Location and Basic Requirements

Assess spatial, environmental, building, and premises requirements. For physical operations, complete legal and technical due diligence before committing substantial capital to the site.

Step 6: Register Through OSS and Obtain the NIB

Populate the OSS profile and project data consistently with AHU and tax records. Government Regulation No. 28 of 2025 indicates that the filing captures information for each five-digit KBLI and location, including products, capacity, workforce, and planned investment.

Step 7: Complete Risk-Level and Sector Requirements

For medium-high risk, complete the standard-verification process before operational or commercial activity. For high-risk activities, obtain the required permit. Apply for any relevant PB UMKU, product registration, professional authorization, or facility approval.

Step 8: Verify Operational Readiness

Before launch, reconcile the NIB attachment, Standard Certificates, permits, PB UMKU, premises, product approvals, customs status, employment documentation, and tax configuration. Confirm that each licence covers the correct legal entity, KBLI, location, capacity, and activity.

Why an NIB May Not Be Enough

An NIB is foundational, but its legal effect depends on the risk level. For a high-risk activity, Government Regulation No. 28 of 2025 expressly distinguishes preparation from operational or commercial activity: the NIB can support preparation, while the permit completes the business authorization needed to operate. Medium-high risk activities likewise require a verified Standard Certificate for operational or commercial activity.

Companies should also check whether their activity requires licences outside the core NIB, Standard Certificate, or permit sequence. Examples can include product registrations, distribution permissions, importer arrangements, professional licences, sector recommendations, construction or facility approvals, and employment or immigration permissions. Which approvals apply is project-specific.

A useful launch-control question is not “Do we have an NIB?” but “Does each revenue-generating activity at each operating location have the approvals and verified status required for commercial operation?”

Licensing Dependencies Foreign Companies Often Miss

• Import and customs: Decide which entity will act as importer, own the goods, and manage customs compliance before building the licence package.
• Product market access: Food, cosmetics, medical devices, telecom equipment, halal-regulated products, and other controlled goods may require product-level approvals separate from company licensing.
• Manufacturing: Factory location, environmental impact, building use, machinery, raw materials, production capacity, and industrial reporting can change the approval route.
• Employment: Company readiness to hire employees and foreign workers should be planned alongside manpower registrations, social-security obligations, and immigration permissions.
• Tax: Invoicing, withholding, VAT status, transfer pricing, and permanent-establishment exposure should reflect the legal and commercial model.
• Investment reporting: Companies subject to investment activity reporting should keep OSS project data aligned with actual capital expenditure and operational progress.

For ongoing reporting, see IndoGateway’s LKPM investment reporting support. Tax and licensing records should also be coordinated with the company’s PT PMA tax compliance framework.

Common Business Licensing Mistakes

Selecting KBLI Codes After Incorporation

If commercial activities are defined only after the deed is signed, the company may discover that its corporate purpose, ownership structure, investment plan, and licences do not align. Map the business before forming the entity.

Treating Every NIB as Permission to Operate

The operational effect of an NIB changes with the risk classification. Check whether a Standard Certificate remains unverified or a high-risk permit is still pending.

Registering Broad Activities Without Operational Substance

Adding numerous KBLI codes can create additional investment, reporting, location, and compliance obligations. Register activities that the company has properly evaluated and can substantiate.

Leasing a Site Before Regulatory Due Diligence

A landlord’s assurance that a building is “commercial” does not establish compatibility with a specific factory, warehouse, clinic, restaurant, or regulated service. Verify the location and building records independently.

Ignoring Changes After Licensing

New activities, products, capacity, locations, shareholders, directors, or facilities may require corporate and OSS updates or additional approvals. Use a formal change-control process before implementing them.

Pre-Operation Licensing Checklist

1. Define the products, services, contracts, revenue flows, and operating locations.
2. Confirm the current foreign ownership conditions for every material activity.
3. Select the appropriate Indonesian legal structure.
4. Map activities to current KBLI 2025 codes.
5. Align the deed, investment plan, OSS data, and tax profile.
6. Test the location against spatial, environmental, building, and facility requirements.
7. Obtain the NIB and review every activity listed in its attachment.
8. Complete required Standard Certificate verification or high-risk permits.
9. Obtain applicable PB UMKU, product, import, professional, and sector approvals.
10. Confirm that operational status, entity, KBLI, location, and capacity match the planned launch.
11. Set owners and calendars for supervision, renewals, reporting, and regulatory changes.

Frequently Asked Questions

1. What is the main business license required in Indonesia?

The answer depends on the risk classification of the company’s activity. A low-risk activity generally uses the NIB as its business authorization. A medium-risk activity uses an NIB and Standard Certificate, while a high-risk activity requires an NIB and the applicable government permit. Additional PB UMKU, product, professional, location, environmental, building, or sector approvals may also apply. Therefore, there is no single licence that universally authorizes every Indonesian business. The company should review each KBLI activity, operating location, product, scale, and sector requirement before deciding that its licensing package is complete.

2. Can a foreign company operate in Indonesia with only an NIB?

Only in circumstances where the NIB has the required legal effect for the registered activity and all other applicable conditions have been satisfied. For a low-risk activity, the NIB serves as the core business authorization. For medium-high risk, an unverified Standard Certificate supports preparation but does not complete authorization for operational or commercial activity. For high risk, the NIB can support preparation while the relevant permit remains necessary before operation. Product, facility, import, workforce, and sector permissions may still apply regardless of the core risk result. Review the complete OSS output rather than the NIB cover page alone.

3. Does a foreign investor need to establish a PT PMA before applying through OSS?

A foreign-owned operating business commonly establishes a PT PMA and obtains legal-entity approval before completing its OSS licensing, but the appropriate sequence and structure depend on the planned activities. Representative offices, foreign business entities, permanent establishments, and sector-specific structures can follow different rules and may not have the same authority to earn revenue. The legal structure should therefore be selected after checking foreign ownership eligibility, the intended contracts, local presence, tax position, and operating scope. Company incorporation and business licensing are related but separate: legal-entity approval does not replace the NIB, Standard Certificate, permit, or supporting licences.

4. How does KBLI affect an Indonesian business license?

KBLI identifies the economic activity being registered and drives several important licensing outcomes. It can affect foreign investment screening, risk classification, business standards, competent authority, project data, investment-plan treatment, and reporting. A code selected for wholesale trade does not automatically cover retail sales, manufacturing, consulting, import activity, or digital-platform operations. The description should be tested against what the company actually does, how it earns revenue, and where the activity occurs. Because KBLI 2025 is now in force and has been implemented in OSS and AHU, companies should not rely on an old KBLI 2020 mapping without checking the current classification.

5. What is the minimum investment requirement for a foreign-owned company?

Government Regulation No. 28 of 2025 states a general minimum planned investment of more than IDR 10 billion for foreign investment for each five-digit KBLI business activity at each business location, excluding land and buildings. The regulation provides different aggregation treatment for certain wholesale, food and beverage, construction, and industrial activities. This rule should not be confused with corporate authorized capital or paid-up capital, which requires separate analysis. The correct calculation depends on the company’s KBLI portfolio, locations, primary and supporting activities, industry configuration, and current implementing rules, so it should be verified before incorporation and OSS submission.

6. How long does it take to obtain a business license in Indonesia?

There is no dependable universal timeline. A straightforward low-risk filing with clean, integrated corporate and tax data can differ materially from a medium-high or high-risk project requiring location review, environmental approval, technical verification, or sector consent. Timing is also affected by document quality, OSS integration, authority workload, requests for revision, and the readiness of the premises. Service-level rules for one approval should not be presented as the end-to-end project timeline. Companies should use a dependency-based schedule covering incorporation, KBLI confirmation, basic requirements, OSS issuance, technical verification, supporting licences, and operational-readiness review.

7. Can one NIB cover several business activities and locations?

An Indonesian business entity receives an NIB, but the NIB’s attachments and OSS records identify the activities and project data associated with that entity. Each activity and location can carry its own risk classification, investment data, standards, and approval requirements. The existence of one NIB therefore does not make every new branch, warehouse, factory, service, or product automatically authorized. When adding an activity or location, the company should check the deed, KBLI, foreign investment conditions, spatial compatibility, environmental and building requirements, risk-level authorization, and supporting licences before starting operations at the expanded site.

8. What happens if a company operates before its licence is effective?

Operating before the required authorization is effective can expose the company to administrative enforcement, interruption of business, problems with customers or counterparties, and difficulties during later verification or supervision. The consequence depends on the missing approval, sector, activity, and facts, so a universal penalty should not be assumed. A company should first identify whether it lacks a verified Standard Certificate, high-risk permit, basic requirement, PB UMKU, product approval, or another authorization. It should then obtain qualified advice on corrective filings and whether activities should pause while the licensing position is regularized.

Conclusion

Business licensing in Indonesia works best when treated as an operating-model exercise. The foreign ownership structure, legal entity, KBLI classifications, investment plan, site, environmental and building position, risk level, and sector permissions must describe the same business.

Before launch, verify the legal effect of every OSS document. An NIB may be enough for a low-risk activity, while a medium-high or high-risk project may still be in the preparation stage until verification or a permit is completed. The most important question is whether the approvals cover the company’s actual revenue-generating activities at the actual locations where they will occur.

Regulatory note: Indonesian investment, licensing, tax, immigration, product, environmental and operating requirements may change and may depend on the business activity, ownership structure, location, products and project circumstances. This article provides general information and is not project-specific legal, tax or regulatory advice. Applicable requirements should be verified before implementation.

Plan Your Indonesia Licensing Route

IndoGateway helps foreign companies connect entity setup, KBLI selection, OSS licensing, location requirements, sector approvals, and ongoing compliance. To assess what your company needs before committing to premises or beginning operations, contact IndoGateway for a structured licensing review.