Indonesia has significantly reformed its business licensing framework to streamline investment and improve the ease of doing business. At the center of this reform is the risk-based business licensing system, introduced through the Online Single Submission – Risk-Based Approach (OSS-RBA) platform.
Foreign investors looking to establish operations in Indonesia must understand how this system works. Licensing is no longer issued solely based on sector classifications — it now considers the potential risk a business poses to public health, safety, the environment, and the economy.
How Indonesia’s Risk-Based Licensing System Works
The risk-based system is regulated under Government Regulation No. 5 of 2021, issued as part of Indonesia’s broader Omnibus Law reforms. It classifies all business activities into four categories based on their level of risk: Low, Medium-Low, Medium-High, and High.
Each classification determines the type of documentation and approvals needed for the business to operate legally. All submissions and verifications are conducted through the OSS-RBA portal, which serves as Indonesia’s central licensing platform.
Low-Risk Business Activities
Businesses engaged in low-risk activities only need to obtain a Business Identification Number (NIB) to operate. No further licenses or technical verifications are required. These activities typically include general trading, consulting, and certain types of retail services.
Medium-Low Risk Business Activities
Medium-low risk businesses require both an NIB and a Standard Certificate. This certificate is submitted as a self-declared statement of compliance, uploaded through the OSS-RBA system without the need for prior validation. Activities in this group may include non-hazardous manufacturing, warehousing, or limited-scope services.
Medium-High Risk Business Activities
Businesses categorized as medium-high risk must obtain an NIB and a Verified Standard Certificate. Unlike the medium-low classification, this certificate must be reviewed and approved by the relevant government authority. This category includes operations such as food processing, hospitality, and transportation services, where regulatory oversight is stricter.
High-Risk Business Activities
High-risk business activities require the most stringent compliance. Companies must apply for an NIB and a formal Business License or Operational Permit from the appropriate ministry or regulatory body. High-risk sectors include mining, oil and gas, financial services, pharmaceuticals, waste management, and any business with a significant public or environmental impact.
Navigating OSS-RBA Licensing as a Foreign Investor
Indonesia’s risk-based licensing system offers clear advantages to foreign investors, particularly those engaging in low-risk activities. The OSS-RBA platform simplifies and accelerates registration by automating much of the bureaucracy and reducing in-person administrative procedures. For many service or trading businesses, the process can be completed quickly with minimal friction.
However, investors operating in regulated or high-risk sectors may still face challenges. Inconsistencies in how local governments apply OSS rules can lead to unexpected requirements, such as physical site inspections, additional permits, or offline documentation. These issues can delay the licensing process and complicate compliance efforts.
To avoid setbacks, foreign investors must take a proactive and informed approach. Start by accurately identifying the business activity’s KBLI code, as this determines the required licenses and supporting documents.
Get Expert Help with Business Licensing in Indonesia
At MAP Resources Indonesia, we help foreign investors secure the business licenses they need quickly and compliantly. Avoid costly delays by working with our experienced consultants from the start. Contact us today at info@mapresourcesindonesia.com.
