IUMK is no longer valid, business license only needs NIB?

As a sector full of potential, Micro and Small Enterprises (MSEs) are able to create new jobs, encourage innovation, and make a valuable contribution to the country’s economy. Unfortunately, MSEs often face obstacles in obtaining business legality. This is because obtaining a Micro and Small Business License (IUMK) is considered a convoluted and time-consuming process. So, to facilitate and simplify the process, the government through Law No. 11 of 2020 concerning Job Creation has presented a policy that provides convenience in managing the legality of MSEs. However, it should be noted that currently Law 11/2020 has been replaced by Law No. 6 of 2023 on the Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation into Law. One of the important changes introduced is the replacement of IUMK with a single licensing system called the Business Identification Number (NIB). So, do you know what are the differences between IUMK and NIB? How is the NIB management mechanism that replaces the IUMK? To find out more, keep reading this article!

Overview of MSEs

The rules of the game for MSEs are now regulated in Government Regulation No. 7 of 2021 concerning Ease of Protection, and Empowerment of Cooperatives and Micro, Small and Medium Enterprises. In this case, there are two criteria that define micro businesses, including:

1. Business capital of at most IDR1 billion, excluding land and building for business (Article 35 paragraph (3) of GR 7/2021); or
2. Annual sales proceeds up to a maximum of IDR 2 billion (Article 35 paragraph (5) of GR 7/2021).

Meanwhile, small businesses have the following criteria:

1. Business capital of more than Rp1 billion to a maximum of Rp5 billion, excluding land and buildings for business premises (Article 35 paragraph (3) of GR 7/2021); or
2. Annual sales revenue of more than IDR2 billion up to a maximum of IDR15 billion (Article 35 paragraph (5) of GR 7/2021).

IUMK: MSE Business Licensing Before the Job Creation Regime

Previously, in order for an MSE to obtain legality for its business activities, a licensing document called IUMK was required. This is regulated in Presidential Regulation No 98/2014 on Licensing for Micro and Small Enterprises. IUMK is given to MSEs in accordance with the requirements determined by the district/city government. In practice, the process of obtaining IUMK is often considered complicated and time-consuming. IUMK often requires businesses to go through various stages and complex administrative requirements, including submission of documents, payment of fees, and inspection. All these stages clearly take significant time and effort. This is what causes MSEs to be constrained, especially if they have limited resources and capacity. Therefore, the government is now easing the bureaucracy of business licensing for MSEs by cutting unnecessary stages.

IUMK Officially Replaced NIB

After the implementation of the work copyright regime through Perppu 6/2023, MSEs now only need to take care of the Business Identification Number (NIB) as a sign of their business legality. NIB serves as proof of registration or registration of business actors to carry out business activities and serves as an identity in carrying out these activities. In this context, NIB can act as the only license required for business activities, especially if MSEs fall into the low-risk category. This is explained in Government Regulation No. 5 of 2021 concerning the Implementation of Risk-Based Business Licensing. In other words, if the MSEs are classified as low-risk businesses, then they do not need to apply for additional business licenses to run their business activities. However, exceptions apply if there are specific requirements that must be met to obtain a Business License to Support Business Activities (PB UMKU). To determine the level of risk associated with different types of business activities, business actors can refer to the information contained in the Indonesian Standard Industrial Classification (KBLI) of their respective businesses. This can be further viewed by business actors on the Online Single Submission (OSS) website.

What are the other functions of NIB besides being a substitute for IUMK?

Apart from being a license, NIB actually has functions for the running of the business. Some of them are mentioned in PP 5/2021 and BKPM Regulation No. 4/2021 concerning Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities. The functions of the NIB in question include:

1. Valid as Import Identification Number (API) and customs access rights
2. Business registration for BPJS Health and BPJS Employment
3. Get assistance to make halal certificates
4. Recording or storing business data
5. Obtaining financing facilities from banks
6. Opportunities for training
7. Opportunity to procure (tender) government goods/services
8. Obtaining incentives and various other business licensing facilities from the government
9. Obtaining facilities for partnerships with medium and large enterprises
10. Potential to expand its business
11. Guaranteed protection from the government

What is the procedure for making NIB for MSEs?

Business actors need to prepare a number of data that will later serve as administrative documents for obtaining NIB. As based on BKPM Regulation 4/2021, the following data needs to be prepared for individual applicants:

1. Name and VIN
2. Resident address
3. Line of business
4. Investment location
5. Size of investment plan
6. Labor use plan
7. Business contact number
8. NPWP of individual business actors
9. Plan for requesting fiscal, customs, and/or other facilities

Meanwhile, if you are a non-individual business actor (business entity), you will be asked to provide the following data:

1. Name of business entity
2. Type of business entity
3. Investment status
4. Establishment deed number or registration number and its authorization
5. Correspondence address
6. Size of investment plan
7. Management and shareholder data
8. Country of origin of investment, if there is foreign investment (PMA)
9. Purpose and objectives of the business entity
10. Phone number of the business entity
11. Business entity email address
12. NPWP of the business entity

If the data has been completed, then business actors must carry out several further stages, including:

1. Opening the OSS page
2. Click the “Register” button at the top right corner to register and fill in some data.
3. Activate your account via email, click the “Activation” button to activate your OSS account.
4. Login to the OSS system page to enter the business dashboard page
5. Select “New Submission” on the far left side.
6. Fill in all personal and company data
7. Click the “Save Data” button
8. Next, process and download the NIB
9. NIB issued

KH Contact

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ALSO READ: 10 Million MSMEs targeted to have NIB in 2023, what is the importance?

We provide NIB creation services only with document requirements in the form of NPWP and KTP of business actors. Guaranteed to be easy and fast, and after the NIB and business license have been obtained, then business activities will become easier and smoother! Come on, make it easy to make NIB for the smooth running of your business with Kontrak Hukum. For ordering information, please visit the KH Services – NIB page. If you have questions about other business legality needs, don’t hesitate to consult with us at Ask KH or send a direct message (DM) to Instagram @kontrakhukum.