All companies who intend to operate in the industry business sector, especially manufacturing in Indonesia, must first obtain the Industrial Business License (Izin Usaha Industri). Here are the four things you need to know in applying for the license.
The Industrial Business License, commonly known as Izin Usaha Industri or “IUI” is mandatory for manufacturing companies who intend to start their operation in their respective industries. The IUI applies for enterprises and companies in all industry classifications: small, medium, and big industry. PMA Companies are classified as a big industry, which also has the obligation to obtain the license.
In applying for Industrial Business License, the company must be aware of the following interconnecting factors, which consists of:
- INDUSTRIAL SECTOR
Classification of Industrial Sector, and for PMA Companies, industrial production capacity, determines whether the industrial sector is allowed to be run by personal industrialists, or a business entity, or must be in the form of legal entity, such as by limited liability companies.
- INVESTMENT STRUCTURE AND MANPOWER
Pursuant to Minister of Industry Regulation No. 64/M-IND/Per/7/2016, the investment structure of a manufacturing company determines which classification it falls into: small, medium, or big industry. The amount of manpower also determines the classification.
For convenience, you can peruse the table below to understand the classifications:
Industrial Business License can only be issued if the industrial project location is situated in an industrial zone, or other zones specifically purposed for industrial activities.
For industrial activities that are conducted outside an industrial zone, there is a risk of not getting an Industrial Business License since some areas are prohibited for industrial activities. Therefore, it becomes important to ensure that your project location is allowed for industry.
- LEGALITY OF DOCUMENTS
The required documents to apply for Industrial Business License are as follows:
- Deed of Establishment, Articles of Association, and its amendments, including the Approval from MOLHR (Minister of Law and Human Rights);
- Identity Documents of Director and Commissioner;
- Tax ID of Company;
- Building Permit (IMB), with the correct Industrial Purpose;
- Domicile Letter of Company;
- Environmental Documents, such as AMDAL and UKL/UPL, or SPPL, pursuant to the environmental impacts resulting from the industrial activities and project location;
- Environmental License;
- Nuisance Permit (Hindze Ordonantie);
- Factory Blueprints; and
- Industrial Business Process and Flowchart.
It is most important to ensure the legality of the above documents before submitting the license application. There are also local requirements for each district/city where the Industrial project is located, which may require additional documents.
HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing industrial laws and regulations.
SMART Consulting is an Indonesian Corporate Legal Services firm. We have assisted local and multinational companies in handling their industrial legal matters, including matters related to industrial business licenses and permits in compliance with the applicable laws and regulations.
Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.