Financial Crime World

Risk-Based Approach to Business Licensing Requirements in Indonesia: A New Era for Investors

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Indonesia has long been known for its complex business licensing requirements, which have hindered investment and economic growth. However, with the introduction of the Job Creation Omnibus Law, the government is adopting a risk-based approach to simplify the process.

Simplifying Business Licensing Requirements

The new approach categorizes businesses into low, medium, or high-risk classifications based on factors such as health, safety, environment, and natural resource utilization. This means that companies will be required to obtain different types of licenses and permits depending on their level of risk.

Classification System

  • Low-risk businesses will only need to register their business and obtain a Business Identification Number (NIB).
  • Medium-risk businesses will also need to comply with certain business standards.
  • High-risk businesses will require additional permits.

Regular Inspections and Compliance

The government will perform regular inspections to ensure compliance with these standards. The frequency of these inspections will depend on the company’s level of risk classification.

Implications for Investors and Businesses

This shift towards a risk-based approach has significant implications for investors and businesses operating in Indonesia. Companies must now:

  • Identify their risk classifications
  • Assess whether any adjustments are needed to current licenses
  • Formulate plans to implement and monitor compliance with new business standards

Implementation Regulations

The detailed regulations covering the implementation of this approach will be issued in the form of a Government Regulation (PP). These regulations will cover areas such as:

  • Classification system
  • Business standards
  • Permits required for high-risk businesses
  • Supervisory procedures

PwC Support

PwC professionals are ready to help companies navigate this change and plan for the future. For more information, please contact:

Visit Our Website

Visit our website at www.pwc.com/id for more information on PwC Indonesia.

Disclaimer

This article is intended for general information purposes only and should not be used as a substitute for consultation with professional advisors.