To further solidify the regulations on alcoholic beverage industry, in terms of production, import, or distribution of alcoholic beverages in Indonesia, the Minister of Industry has recently issued Regulation 17/2019: Control and Supervision of Alcoholic Beverage Industry. Regulation 17/2019 replaced the earlier regulations: Regulation of Minister No. 63/M-IND/PER/7/2014 and the amended version Regulation No. 62/M-IND/PER/8/2015 on the Oversight and Control of Alcoholic Beverage Industry. Regulation 17/2019 addresses matters that include classes of alcoholic beverage, business requirements, such as business license, for alcoholic beverage companies and restrictions for this business in Indonesia.
Classes of Alcoholic Beverage in Indonesia
According to Regulation 17/2019, alcoholic beverage in Indonesia can be categorised into three classes:
- Class A: ≤ 5% ethyl-alcohol or ethanol
- Class B: 5% – 20% ethyl-alcohol or ethanol
- Class C: 20% – 55% ethyl-alcohol or ethanol
Business License for Alcoholic Beverage Companies in Indonesia
Industrial Business License
There are two major requirements that business owners now need to fulfill in order to operate their alcoholic beverage businesses.
- Alcoholic beverage companies should apply for Industrial Business License (Izin Usaha Industri – IUI) through the Online Single Submission (OSS) system
- Alcoholic beverage companies must comply with the quality standards of alcoholic beverages.
The Minister is responsible to issue the IUI by considering the following key aspects:
- The Negative Investment List (NIL) under the Regulation 44/2016: The
List of Business Fields Which Are Closed and Conditionally Open to Investment
- Issuance of IUI is done through OSS system according to Regulation 24/2018: Electronically Integrated Business Licensing Services
IUI amendments can be done through submitting the amendment applications. Issues with regard to IUI that can be submitted for amendments include the following, along with their criteria:
Ownership, name of company, person-in-charge
- Including information in the Deed of Establishment
Address of factory
- Including address change when the factory location has not changed
Class of alcoholic beverage
- Current class downgrade
- Increase of production capacity is not allowed
- New class’ processing methods must use distillation or fermentation technologies
Change of location
- Establishment of new factories
- No increase in production capacity
Companies merging into one location
- New location comprises the single-factory location
- Built-in capacity is not allowed
- Compliance with merged built-in capacity
Increase of production capacity
- Companies have known the production capacities under their existing IUI
- The Minister appoints the surveyors to perform the production capability audits
- Must settle the relevant previous excise
Procedure Prior to IUI Amendments
Before submitting any IUI amendment applications, companies that run the alcoholic beverage businesses must get the recommendation issued by the Directorate General of Agro Industry.
The procedure for obtaining the recommendation is shown below:
- Submitting application online via SIINas (Industrial National Information System) with NIB, IUI, and NPPBKC
- Going through administrative review by the Ministry of Industry. The recommendation application will be passed to the Directorate General once the review is successful.
- Continuing with substantive review by the Directorate General in five business days. Once approved, the Directorate General will issue the recommendation.
Companies will lose their IUI if the following acts are committed:
- Volumes produced are greater than the built-in production capacities stated on IUI
- Classes of alcoholic beverages produced are not covered on IUI
- No production activities for three consecutive years
Have you heard? Requirements for IUI application have been simplified and it is now easier to apply for an IUI. Read the update.
Quality Standards of Alcoholic Beverages
It is compulsory for alcoholic beverage businesses to meet the quality standards of their products:
- Compliance with classes stated on IUI
- Only food-grade alcohol with methanol content of less than 0.01% is allowed
- Implementation of Good Processed Food Production Practices (CPPOB)
- Compliance with technical provisions such as product type and class
- Implementation of Indonesian National Standards (SNI) for certain types of alcoholic beverages
Methods of processing
- Utilisation of fermentation processes for all classes
- Utilisation of distillation processes for Class C only
Companies involved in alcoholic beverage businesses are forbidden to:
- Combine products with non-food-grade alcohol or other harmful substances
- Manufacture products with more than 55% ethanol or ethyl-alcohol
- Produce products with packaging volume of less than 180ml
- Use and store non-food-grade alcohol
- Repackage products
Business License Application in Indonesia with Cekindo
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