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What is a License?
A License gives you legal permission to do something that would otherwise be prohibited - like running a business, using someone's trademark, or operating specialized equipment. In Indonesia, licenses come from government authorities and follow specific regulations under Law No. 11 of 2020 (the Omnibus Law).
Businesses need different types of licenses depending on their activities. A restaurant might need a food safety license (BPOM), while a manufacturer needs industrial permits (IUI). The license document spells out what you can do, any conditions you must follow, and how long the permission lasts. Breaking these terms can lead to penalties or license revocation under Indonesian law.
When should you use a License?
You need a License before starting almost any business activity in Indonesia. For new businesses, securing basic permits like the NIB (Business Registration Number) is your first step. Specific industries require additional licenses - restaurants need health permits, manufacturers need environmental clearances, and tech companies need specialized IT certifications.
Get your licenses early in your business planning phase. Indonesian authorities regularly inspect businesses, and operating without proper licenses can result in immediate shutdown, heavy fines, or even criminal charges. Most licenses also take time to process - some commercial permits can take 2-3 months for approval through the OSS (Online Single Submission) system.
What are the different types of License?
- Basic Business License (NIB): Required for all businesses, issued through OSS system as your primary operating permit
- Commercial License (SIUP): For trading companies and retailers, with different classes based on investment value
- Industrial Business License (IUI): Specifically for manufacturing operations, with environmental compliance requirements
- Professional License (SIUJK): For specialized services like construction, consulting, or healthcare practices
- Special Industry License: For regulated sectors like banking, insurance, or mining - requiring additional oversight
Who should typically use a License?
- Business Owners: Must obtain and maintain appropriate licenses to operate legally in Indonesia, ensuring compliance with all conditions
- Government Agencies: Issue licenses through the OSS system, conduct inspections, and enforce regulations across different sectors
- Legal Consultants: Help businesses identify required licenses, prepare applications, and ensure ongoing compliance with license terms
- Industry Regulators: Set specific requirements for specialized licenses in sectors like banking, mining, or telecommunications
- Compliance Officers: Monitor and maintain license requirements within organizations, handling renewals and updates
How do you write a License?
- Business Details: Gather your company registration (NIB), tax number (NPWP), and complete legal entity information
- Industry Requirements: Research specific permits needed for your sector through the OSS portal
- Location Documents: Prepare building permits, land certificates, and local government approvals
- Technical Requirements: Collect necessary certifications, environmental impact studies, or professional qualifications
- Documentation Review: Our platform helps ensure all required elements are included, generating complete license applications that meet Indonesian regulatory standards
What should be included in a License?
- Business Identity: Full legal name, NIB number, business address, and authorized representatives
- License Scope: Detailed description of permitted activities, locations, and operational limitations
- Validity Period: Clear start and end dates, renewal terms, and extension procedures
- Compliance Requirements: Specific operational standards, reporting obligations, and safety protocols
- Terms and Conditions: Rights, responsibilities, prohibited activities, and grounds for revocation
- Official Signatures: Authorized government official's signature, stamp, and QR code for verification
What's the difference between a License and a License Agreement?
A License differs significantly from a License Agreement in Indonesian business practice. While a License is a government-issued permit allowing specific business activities, a License Agreement is a contract between private parties for sharing intellectual property or usage rights.
- Issuing Authority: Licenses come from government bodies through the OSS system, while License Agreements are negotiated between private entities
- Duration and Renewal: Government Licenses typically have fixed validity periods with standardized renewal processes, whereas License Agreements can have flexible terms set by the parties
- Scope of Control: Licenses regulate business operations under Indonesian law, while License Agreements control specific rights like software use or trademark usage
- Compliance Requirements: Licenses mandate regulatory compliance with government standards, but License Agreements focus on contractual obligations between parties
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