Take note: Business License Processing with NIB is Risk-Based

Did you know, after the issuance of Law No. 11 of 2020 on Job Creation, there is now a risk-based Business Identification Number (NIB).

Yes, as you know, NIB is an identity number given by the government to every business actor to carry out business activities legally. Now, the meaning of risk-based is to consider the potential for injury or loss and the harmful effects of future business activities. This is regulated more specifically in Government Regulation No. 5 of 2021 concerning the Implementation of Risk-Based Business Licensing. So, what kind of risk is meant? And what are the provisions and impacts of organizing risk-based NIB for business activities? For details, let’s take a look at the following article.

What is Risk-Based NIB?

In accordance with Article 1 of PP No. 5 of 2021, NIB or risk-based business licensing is the legality given to business actors to start and run their businesses and/or activities based on the level of potential for injury or loss from a hazard or a combination of possibilities and consequences of hazards. The implementation of risk-based business licensing is one of the government’s efforts to improve the investment ecosystem and business activities, which is carried out through:

Implementation of business licensing issuance more effectively and simply; and
Transparent, structured, and accountable supervision of business activities in accordance with the provisions of laws and regulations.

On this basis, now business actors who want to start and carry out business activities are required to meet the basic requirements of business licensing, which include the suitability of space utilization activities, environmental approval, building approval, and a certificate of function and/or risk-based business licensing (Article 4 jo. Article 5 paragraph (1) of Government Regulation No. 5 Year 2021).

The implementation of risk-based business licensing includes sectors:

Marine and fisheries;
Agriculture;
Environment and forestry;
Energy and mineral resources;
Nuclear;
Industry;
Trade;
Public works and public housing;
Transportation;
Health, medicine and food;
Education and culture;
Tourism;
Religion;
Post, telecommunications, broadcasting, and electronic systems and transactions;
Defense and security; and
Employment.

How is the Intended Risk Level Determined?

In accordance with Article 7 of Government Regulation No. 5 of 2021, the determination of the risk level is based on the results of an analysis that will assess the following points:

Identification of business activities;
Hazard level assessment;

Assessment of the level of hazard is carried out on aspects of health, safety, environment, and/or resource utilization and management by taking into account the type, criteria, and location of business activities as well as resource limitations, and/or volatility risks.

Assessment of potential hazard occurrence;

This assessment consists of:

1. It’s almost impossible;
2. This is unlikely to happen;
3. Likely to occur; or
4. Almost certainly happened.

Determination of risk level and business scale rating;

This determination is based on an assessment of the level of hazard and the potential for hazard occurrence.

Determination of types of business licenses.

Of course, the more dangerous it is, the higher the level of risk and the more detailed the legalities required.

Business Activities are Classified into 4 Risk Levels, What Are They?

As explained above, the determination of the risk level is based on the results of the hazard level assessment, the assessment of the potential for hazard occurrence, the risk level, and the business scale rating of the business activity. Based on this, business activities are then classified into four risk levels, namely:

Low Risk Level

Business activities that are classified as low risk level only require an NIB which applies as a business identity and business license (Article 12 of GR 5/2021). In addition, businesses with a low risk level and micro and small business scale, the NIB also applies as an Indonesian National Standard (SNI) and makes it easy to apply for a halal guarantee statement (Article 12 of PP 5/2021).

Medium Risk Level Low

Business activities with a medium-low risk level require an NIB and a Standard Certificate (Article 13 of GR 5/2021). The standard certificate in question is a legality to carry out business activities in the form of a business actor’s independent statement to meet business standards in the context of carrying out business activities (Article 13 of GR 5/2021).

Medium High Risk Level

Business activities with a medium-high risk level require NIB and Standard Certificate as business licenses (Article 14 of GR 5/2021). Unlike the low-medium risk level, the standard certificate for the medium-high risk level must be verified by the Ministry/Institution/Regional Government first (Article 14 of GR 5/2021).

High Risk Level

Business activities with a high level of risk require NIB and licenses as business licenses (Article 15 of GR 5/2021). The license in question is the approval of the Central Government or Regional Government for the implementation of business activities that must be fulfilled by Business Actors before carrying out their business activities (Article 15 of GR 5/2021). The classification of the four risk levels has been adjusted to the Indonesian Standard Business Field Classification (KBLI). So that to find out which level of risk the business activity is in, it is necessary to know the KBLI of the business activity first. For example, business activities for cafes with KBLI 56303-Drinking houses/cafes, their business activities are included in the low risk level. So that for the cafe business only requires NIB as a business license.

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This is the explanation of risk-based NIB. In summary, it is important to understand the risk level of your business activities so that you can identify additional requirements that need to be met and anticipate challenges that may arise in the NIB process. In addition, it will also help ensure smooth and successful NIB obtaining and running your business in accordance with the applicable regulations.

Still confused about risk-based NIB? Just consult with Kontrak Hukum. As a digital legal platform, we have been trusted by thousands of businesses and companies in Indonesia in fulfilling their business legality, including risk-based NIB management.

What are you waiting for? Please visit the KH – NIB Services page. If you still have questions, you can also consult for free at Tanya KH or send a direct message (DM) to Instagram @kontrakhukum.