10 Essential Business License Types You Need in Indonesia to Run it Legally #StartFranchise
Table of Contents
- Business Identification Number (NIB)
- Taxpayer Identification Number (NPWP)
- Business Domicile Certificate (SKDU)
- Company Registration Certificate (TDP)
- Business Location Permit (SITU)
- Trade Business Licence (SIUP)
- Building Construction Permit (IMB)
- BPOM Licence
- Environmental Permit
- Industrial Business Licence (SIUI)
- Why These Essential Business Licenses Matter
StartFranchise.id - Opening a business in Indonesia can be like opening a door to unleash a massive opportunities as Indonesia is now offering a huge market for local and foreign brands. But, just like in every other country, Indonesia needs the proper paperworks for a business to be able to run. To ensure the business runs smoothly and legally and to be trusted by other people, the business person must secure several business licenses from the Indonesian government.
Here are the 10 business licenses in Indonesia that every business person who is interested in opening up a business in Indonesia must know before doing so.
Business Identification Number (NIB)
In short, NIB is like an ID card. NIB acts as the company’s ID Card in the eyes of the government. Issued through the Online Single Submission (OSS) system, this number is the gateway for many other requirements. With an NIB, every business registered will also get access to other documents like a Company Registration Certificate (TDP) and Importer Identification Number (API). Without NIB,the business from the business person will not show up in the government’s system. For any entrepreneur, local or foreign, securing an NIB is the very first stepping stone.
Taxpayer Identification Number (NPWP)
After securing the NIB, the next step for a business person before starting a business is to also make an NPWP. Like any other country, taxes play an important role in Indonesia. The NPWP is the official number given to a person by the Directorate General of Taxes. Without NPWP, the company won’t be able to report taxes, apply for loans, or even sign major contracts which will hinder the business in the future and even close to being shut down. Having an NPWP is proof that the business person is complying with the government’s rule.
Business Domicile Certificate (SKDU)
Another license that needs to be obtained before opening a business is the SKDU. The SKDU acts as proof of where your company is based, which is issued by the local district office in every city in Indonesia. Every business needs an address to be recognized legally whether it is in a physical office or a virtual one. SKDU makes the business “real” in the eyes of the law as the government will know the legitimacy of the business. It’s also often required before you can apply for other essential business licenses, making it a small but crucial piece of the journey in collecting the licenses needed to officially start your business legally.
Company Registration Certificate (TDP)
Once the company has existed on paper, the TDP gives it an official stamp of approval. It’s the government’s way of saying the business is registered and ready to operate. Having the TDP makes the company recognized in formal dealings, like signing agreements or expanding partnerships, which means that the company is able to do everyday business activities. Skipping this step can limit your credibility and raise questions about the legitimacy of the business.
Business Location Permit (SITU)
After having the certificate to operate a business, each business must comply with the rules and licenses needed to operate a specific type of business and where it operates. In Indonesia, not every neighborhood is meant to be a business place as there are local zoning rules. The SITU ensures that your business operates in the right area. For example, a business like a cafe cannot run in a residential-only zone to avoid noise complaints. By having this permit,the business is protected from complaints, fines, or even forced relocation later. SITU will help you be in the right spot for the business from day one.
Trade Business Licence (SIUP)
If the business involves selling goods or services, the SIUP will be the golden ticket to make sure every sale is legal. Issued by the Department of Trade, this license officially allows the business to trade. Whether it’s importing, exporting, or selling locally, SIUP tells the government and the business’s customers that they have the authority to do so. Without SIUP, the business’s trading activity may be considered illegal, putting the business at risk.
Building Construction Permit (IMB)
IMB acts as a license to allow all the business people who are planning to build or renovate their office, or any other business place. This permit helps the business owner to make sure their construction follows the proper technical and safety standards. It also secures future benefits, like connecting utilities, getting insurance, or avoiding demolition orders from authorities, making IMB also as a protection for the business.
BPOM Licence
A BPOM License is very important for the businesses that operate in food, beverages, cosmetics or maybe medicine. Issued by the Indonesian Food and Drug Authority, A BPOM License will assure consumers that your products are safe and regulated. Without the BPOM License, your product can not be sold in every retail store as it will be taken off the shelf instantly as an act of the government to protect the people. With this licence, the business will not only comply with the law but also win consumer trust.
Environmental Permit
If the business impacts the environment whether through waste, emissions, or resource usage. The business will need an environmental permit. This could involve an Environmental Impact Analysis (AMDAL) or simpler documentation like UKL-UPL, depending on the scale of the business. This permit not only acts as a compliance to the law, but also as a way to show the community that the business actually cares about the environment around them, which will help the business itself.
Industrial Business Licence (SIUI)
For manufacturing and industrial businesses that operate on a bigger scale,they need the SIUI. Issued by the Department of Industry, SIUI makes sure the production activities inside the business are legal and regulated. Without SIUI, factories or processing plants could face problems from the government which might result in closure. With SIUI, the business gain the right to produce, distribute, and even expand internationally while staying compliant with the Indonesian’s law
Why These Essential Business Licenses Matter
These business licenses really matter because it brings so much safety to the business that is going to be run in Indonesia.
They provide legal protection, keeping your operations safe from shutdowns or fines.
They build trust and credibility, making customers, partners, and investors more confident in working with you.
They give you access to financial services like loans or investments that are often impossible without proper licenses.
They help reduce long-term risks, from environmental issues to product safety problems.
Indonesia’s growing economy is full of opportunities for entrepreneurs, both local and international. But before jumping into the market, every upcoming entrepreneur must lay down a strong legal foundation. These 10 essential business license types are not just paperwork, but they are also the backbone of your business credibility and longevity.
For every entrepreneur looking forward to joining the Indonesian market or wanting to know more about franchising inside Indonesia, check this out for more information to help achieve success in Indonesia.
