What are operating licences in Indonesia
An operating licence in Indonesia is the administrative authorisation that allows a company or an individual to carry out a specific economic activity in compliance with applicable regulations. Depending on the sector, this authorisation can take the form of a standard business licence issued through the OSS system, a sectoral permit issued by a technical ministry, or a combination of several documents required before operations can legally begin. A licence is never a generic stamp: it is tied to the precise activity declared by the business, to its location, and to the legal entity carrying it out.
In Indonesia, the licensing framework has been substantially reshaped by the Job Creation Law and its implementing regulations, which introduced a risk-based approach. The level of scrutiny, the documents required and the issuing authority all depend on the risk level assigned to the declared activity, not on the size of the company alone. This is why two businesses operating in what looks like the same industry can face very different licensing paths.
Why certain activities require specific authorisations
Indonesian authorities use licensing as a tool to supervise activities that carry environmental, safety, fiscal, consumer protection or land-use implications. A villa rental business, a restaurant, a construction company, a tour operator or a manufacturing unit do not present the same risks, and the regulator calibrates its requirements accordingly. Some activities are classified as low risk and only require a standard registration, while others are classified as medium or high risk and require additional certifications, technical approvals or even closed lists reserved to specific categories of investors.
For foreign-owned structures, an additional layer applies: the Positive Investment List (Daftar Positif Investasi) defines which business fields are open to foreign capital, under what ownership ceiling, and under what conditions. A licence cannot be obtained for an activity that falls outside the scope authorised for the type of investor involved. Understanding this layer early avoids structuring a business around an activity that cannot legally be licensed as planned.
The role of KBLI codes in determining applicable licences
The KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) is the standard classification of business activities used by Indonesian authorities. Every business, whether a sole proprietorship, a CV or a PT PMA, must declare one or several KBLI codes that accurately describe its actual activities. The KBLI code is not a formality: it directly determines the risk category assigned to the business, the licences required, the foreign ownership ceiling applicable, and in some cases the minimum capital threshold expected.
A common and costly mistake is to select a KBLI code that is too generic, too narrow, or simply inaccurate compared to the activity actually performed. This can result in licences that do not cover the real operations, in unexpected restrictions on foreign ownership, or in compliance gaps discovered only during an inspection. Mapping the correct KBLI code or combination of codes is therefore the first and most decisive step of any licensing project.
Main categories of licences by sector
Licensing requirements vary significantly depending on the sector of activity. Tourism and hospitality businesses, including villa rentals operated commercially, generally require a standard business licence combined with sector-specific certifications related to safety, sanitation or tourism standards. Food and beverage activities add health and hygiene certifications to the standard licence. Construction and property development trigger technical approvals tied to building standards and land-use compliance. Trading and distribution activities may require specific import or distribution permits depending on the goods involved. Professional services, consulting and technology activities are generally subject to lighter sectoral requirements but still depend on accurate KBLI classification.
Within each of these broad categories, the exact combination of licences depends on the specific risk level assigned to the declared activity, on the region where the business operates, and on whether additional local government permits apply. A precise diagnostic is required before any administrative step is taken.
Usual steps of the procedure
A licensing project generally follows a sequence that starts with the analysis of the activity and the identification of the correct KBLI code or combination of codes. This is followed by the determination of the applicable risk level and the resulting list of licences and certifications required. The company then proceeds to register or update its NIB through the OSS system, which serves as the central gateway for most business licences in Indonesia. Depending on the risk category, this registration may be sufficient, or it may need to be followed by the submission of technical documents, sectoral certifications, or inspections conducted by the relevant ministry or local agency.
Once all requirements are satisfied, the licence is issued or activated within the OSS system. The procedure does not end there: most licences come with conditions to maintain, reporting obligations, or renewal requirements that must be tracked over time.
Deliverables provided to the client
- KBLI mapping report identifying the code(s) applicable to the declared activity
- Risk classification summary with the resulting list of licences and certifications required
- Checklist of documents to gather, tailored to the specific project
- Prepared administrative file ready for submission through OSS or to the relevant authority
- Coordination and follow-up of the application until issuance or until the agreed milestone
- Summary report at the end of the engagement, including any post-licence obligations identified
Fee structure
Fees for this service are structured according to the scope of the licensing project, the number of KBLI codes involved, the risk category of the activity and the complexity of the sector concerned. The applicable fee is displayed on the corresponding service page and confirmed before the engagement begins. Government fees, certification costs and any third-party charges are billed separately and are never included in VillaTax's professional fee.
Official fees and third-party costs
Depending on the activity, the project may involve government processing fees, sectoral certification costs, or fees charged by specialised technical partners (for example for environmental or safety certifications). These costs are determined by the relevant authorities or partners and are communicated to the client as soon as they are identified during the diagnostic phase.
Common mistakes and post-licence obligations
The most frequent mistakes observed include selecting an inaccurate or overly generic KBLI code, underestimating the risk category of an activity, submitting incomplete supporting documents, overlooking sector-specific certifications that apply in addition to the standard business licence, and assuming that a licence obtained for one activity automatically covers a related but distinct activity. Foreign investors also frequently underestimate the link between the licence, the underlying corporate structure, and the foreign ownership ceiling applicable to the declared KBLI code.
Holding a licence is not a one-time achievement. Most licences require periodic reporting, such as the LKPM investment activity report, continued compliance with the conditions attached to the licence, and renewal or update procedures whenever the activity, the address, the ownership structure or the scale of operations changes materially. Authorities can suspend or revoke a licence when these obligations are not respected, independently of how the licence was originally obtained.
Why VillaTax
VillaTax acts as an advisory, coordination and administrative support partner throughout the licensing project. Our role covers the analysis of the declared activity, the identification of the applicable KBLI code or combination of codes, the determination of the resulting risk category and licensing requirements, the preparation of the administrative file, the coordination with the OSS system and, where relevant, with specialised partners for sector-specific certifications, and the follow-up of the file until the licence is issued or the relevant milestone is reached.
VillaTax does not replace the competent Indonesian authorities and does not issue licences itself. Our objective is to reduce the risk of errors, delays or non-compliance by structuring the project correctly from the outset and by maintaining a clear line of communication with the relevant administrations throughout the process. Licensing projects in Indonesia sit at the intersection of corporate structuring, sectoral regulation and ongoing fiscal compliance. VillaTax approaches each licensing engagement with this full picture in mind, drawing on its experience in PT PMA incorporation, NIB and NPWP registration, and Indonesian fiscal obligations applicable to foreign investors and operators. This integrated perspective helps identify licensing requirements that might otherwise be missed, and connects the licensing project to the broader compliance position of the business.