Have you ever heard of an industrial business license? Yes, business owners in the industrial sector must have it as the legality of the business being carried out. By having an official industrial business permit, an industrial business will be legally recognized and it will be easier to develop to a larger industrial scale. The obligation to have an industrial business license is stated in Government Regulation No 107/2015 on Industrial Business License, which states that every industrial business activity is required to have an industrial license. So, what is meant by an industrial business license? What are the requirements and procedures that must be done to make it? Come on, see the full explanation in the following article.
What is an Industrial Business License?
Before discussing further about the definition of an industrial business license, KH pals need to first understand that industry means an economic activity that processes raw materials, raw materials, semi-finished goods, and or finished goods into high-value goods for use, including industrial design and engineering activities. This is in accordance with what is stated in PP No 107/2015, where industrial business activities are activities that process raw materials and / or utilize industrial resources for the following purposes:
- Produce goods that have added value or higher benefits; and/or
- Providing industrial services.
These industrial business activities are classified into small industries, medium industries, and large industries, whose provisions are regulated based on the number of workers and/or investment value. Thus, an industrial business license is an operational license granted to any person or entity to carry out business activities in the industrial sector that processes a raw material into a product with a new composition and specifications. This industrial business license must be owned by individuals or companies that carry out industrial business activities or processing of goods. However, there are still household-scale industrial businesses and/or industries that do not produce environmentally hazardous waste that do not have this permit.
Difference between Industrial Business License and SIUP
Trading Business License (SIUP) and industrial business license are two types of licenses that must be owned by business owners. Although both are licenses, their functions are different. SIUP is a license document used to conduct trading business or sell finished products. Meanwhile, an industrial business license is an operational permit given to business owners or business entities that carry out industrial activities, namely processing raw materials into finished products with certain compositions and specifications.
Legal Basis for Industrial Business License
Regarding business licenses in Indonesia, the Ministry of Industry has issued Minister of Industry Regulation 30/2019 which became effective on October 18, 2019. This regulation was issued as a revision of Regulation 15/2019, by simplifying the requirements of the process of issuing Industrial Business License and Expansion License under the Electronic Integrated Business Licensing Service Framework for businesses in Indonesia.
What are the types of businesses that must have an Industrial Business License?
Industrial business licenses can be applied for by all types of business entities engaged in the industrial sector, both individuals and legal entities such as PT, as well as those that are not legal entities such as CV and Firma. Included in this category of business in the industrial sector are companies engaged in raw materials, production products and machinery or equipment storage. Furthermore, regarding the classification of the scale of this industrial business, there are several important notes:
- Referring to Minister of Industry Regulation No. 64/2016, the classification of Small and Medium Industries (SMI) is based on investment value and number of workers, not based on assets and turnover as in the criteria for MSMEs referring to Law No. 20/2008.
- Based on Minister of Industry Regulation No. 64/2018, the classification of IKM is as follows:
- Small Industry: has an investment value below IDR 1 billion (excluding land and buildings) and a workforce of less than 20 people;
- Medium Industry: has an investment value of Rp1 billion to Rp15 billion (including land and buildings), or below Rp1 billion but a workforce of more than 20 people.
What are the Terms and Procedures for Making an Industrial Business License?
To apply for an industrial business license, KH Friend needs to first prepare the required documents, including:
- Deed from notary & SK Kemenkumham
- Business owner’s ID & TIN
- Company NPWP
- Building Permit (IMB)
- Environmental documents
- Industrial principle approval, if located outside the industrial estate
- List of machinery and equipment signed by the head of the company
- Proof of land ownership if privately owned (certificate)
- The list of auxiliary raw materials is signed by the head of the company
- List of contents of the expansion permit application in accordance with the SP-III model form
After all the required documents are completed, then KH Friend can directly visit the Integrated Licensing Service of Level II Regency or City. If the business owned belongs to a large business group, KH pals can go directly to the Integrated Licensing Service at the provincial level. Then if it reaches the national level, you can go directly to BKPM. The process of taking care of an industrial business license takes 3-12 working days. The validity period of this license is for one year, so business owners must re-register once a year.
What are the Benefits of Having an Industrial Business License?
To enlarge the scale of the production site, an industrial business license is a must in fulfilling the administrative requirements that are often required in various business cooperation, be it related to raising additional capital, raw material purchase contracts, product sales contracts, quality tests, and so on. In addition, an industrial business license is one of the requirements for obtaining a BPOM distribution permit, which is a distribution permit for food products, cosmetics, and medicines. In addition, there are several other benefits of an industrial business license for business owners and the government, including:
For Business Owners
- Protect the company from disruptions during operations
- Official statement that the company runs a business that complies with applicable regulations
- Can be used as a short company profile
- It is important to expand and look for business partners
For Local Government
- Regional income sources are clearly recorded
- Make it easier for the government to foster the small to medium industrial business world
- Creating an orderly business climate because the company’s legal status is complete
KH Contact
This is the explanation of the industrial business license. So, is your KH Friend ready to fulfill the legality of your business by making this permit? Or are you still confused about the required documents and procedures for making it?
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No need to worry, just consult with Kontrak Hukum! We provide solutions for KH Pals who want to scale up their business by consulting on the making of industrial business licenses, to the fulfillment of the required documents, such as NPWP, NIB, notarial deed of business establishment, and so on. So what are you waiting for? Let’s make it easier to make an industrial business license by visiting the KH – Licensing and Taxation service page. If you still have other questions about legality documents, don’t hesitate to consult with us for free at Ask KH or via Direct Message (DM) to Instagram @kontrakhukum.
