Before starting a business in Indonesia, it is a very good choice for you to read this article to help you understand the general process of starting a business until your business can operate. After the enactment of Government Regulation Number 5 of 2021 concerning the Implementation of Risk-Based Business Licensing, the process of establishing and obtaining permits in Indonesia has changed drastically. For those of you who previously had a business in Indonesia, you might be a little confused by this change, but you don't need to worry, we will describe a few things to help you understand the licensing process in Indonesia.
CHOOSE CLASSIFICATION OF BUSINESS ACTIVITIES
Before you start a business, the first thing you should prepare is your line of business. You can do a little research to find the right business activity classification for your business. Currently the basis for the classification of business activities that applies in Indonesia is the Standard Classification of Business Fields in Indonesia ("KBLI") in 2020, you can find out what KBLI suits your business here or here.
For those of you who are foreign nationals, this process is very important for you, because for foreign nationals there are several KBLI which closed/restricted and/or required to cooperate with local entrepreneurs.
What You Need to Know About the Investment Activity Report (LKPM)
DETERMINE BUSINESS LOCATION
After you find the suitable KBLI for your business, then you can determine the location of your business. In general, each KBLI can be run in any place as long as its business location is in accordance with local government policies, but there are some KBLI that may require the business to be operated in a certain location, so necessary to conduct further research to find out whether if your KBLI has specific requirements.
DETERMINE THE FORM OF BUSINESS
After you determine the location of the business, you can choose the form of business that will be run in what form of business entity. In Indonesia you can use various forms of business, including:
– Individual, meaning you can use your ID and tax ID to set up a business.
Non-individual, it means that you have to establish business with other people. This type of business takes many types, ranging from firms, partnerships, CVs, to PT
Especially for Foreign Citizens, you can set up a business in the form of a Representative Office or PT to start a business
DETERMINE BUSINESS CAPITAL
After you determine the form of your business entity, the next step is to determine the amount of your business capital, the size of your business capital, will determine your business license later. Foreigners who set up a PT in Indonesia are required to have an investment value of more than Rp. 10,000,000,000 (ten billion Rupiah) to be able to run a business.
ESTABLISHING BUSINESS LEGALITY
After you determine the business capital, it's time for you to determine the legality of your business. For individual businesses, you can directly apply for your license without determining the legality of the business, on the contrary for non-individual businesses are required to form or establish a business first. You can find a notary or find a consultant to help you set up a business
OBTAIN BUSINESS LICENSE
After the legality of your business is established, you must first register a Taxpayer Identification Number (“TIN”) which you can register online here, there are times when the TIN has been registered automatically through the system when you set up your CV/PT and will be sent to the registered CV/PT email address. After you get your NPWP, you have to take care of your business license by accessing the OSS website here. You need to know that not all businesses require a business license, it could be that the KBLI you use only requires an NIB. If in the past for KBLI trade you needed a Trading Business License (“SIUP”), now it is no longer needed. After you get a license, you need to make sure whether the business license can be used or need further action, if your business license can be used, it's time for you to start your business
Thus the article Important Things You Need to Know Before Starting a Business in Indonesia, hopefully it can help you.
