Foreign manufacturers in Indonesia face added licensing hurdles
Requirements will vary across product, the manufacturing process, and the facility.
Foreign manufacturers setting up in Indonesia are being warned that company registration alone will not be enough to start production, with additional licences often required depending on what is actually being made.
According to guidance published this week by ASEAN Briefing, the requirements facing manufacturers now hinge on the Indonesian Standard Industrial Classification (KBLI) 2025 and the risk rating assigned to each activity under the government's Online Single Submission (OSS) portal. Two factories operating similar premises can end up facing entirely different licensing burdens depending on the nature of what rolls off their production line.
The product, the manufacturing process itself, and the facility from which a company operates can all trigger separate requirements. Environmental approvals and technical or product standards may be demanded before certain goods can be manufactured, imported, distributed or sold at all. Medical equipment manufacturing was cited as a case in point, carrying distribution approvals and manufacturing standards that would not apply to a more conventional production line.
Beyond the licences tied to the activity itself, manufacturers may also need to obtain supporting business licences, known as PB-UMKU, alongside certificates, registrations and product approvals from the relevant ministry.
The classification system does not just affect paperwork — it can materially alter how much capital a foreign-invested manufacturer needs to get off the ground. A PT PMA, the standard vehicle for foreign direct investment in Indonesia, generally requires at least IDR 2.5b (roughly £70,000) in issued and paid-up capital, while planned investment must typically exceed IDR 10b (around £280,000) for each five-digit KBLI activity, per project location, excluding land and buildings.
Manufacturers producing more than one product on a single production line are subject to their own specific formula for calculating that threshold, distinct from the rules applied to other sectors such as wholesale trade or construction.
Businesses looking to expand into new manufacturing activities after they have already established a PT PMA face similar complications. A new activity can bring a different risk classification, its own set of approvals, facility or technical-personnel requirements, and potentially higher capital commitments — along with a need to update corporate and OSS records accordingly.
