Important Update on Licensing Procedures for Location Permit

Important Update on Licensing Procedures for Location Permit

  • InCorp Editorial Team
  • 13 December 2023
  • 5 minute reading time

The Minister of Agrarian Affairs and Spatial Planning/Head of the National Land Agency of Indonesia has recently made effective Regulation 17/2019 on Location Permit on September 20, 2019, replacing the previous Regulation 14/2018. This new regulation was enacted to clarify the location permit issuance framework under the Online Single Submission system (OSS).

Regulation 17/2019 made changes to the licensing procedures to obtain the location permit and it covers the following major provisions:

  • Location permit’s subjects and objects
  • Licensing procedures and the period of validity
  • Permit holder’s rights and obligations

Location Permit’s Subjects and Objects

Location permit’s subjects consist of businesses that need land to run their business but they have not owned the land yet. These subjects include the following:

  • Limited liability companies
  • Public companies
  • Legally capable individuals
  • Regional public companies
  • Non-individual businesses
  • Public service entities
  • State-owned legal entities
  • Broadcasting agencies
  • Limited partnerships
  • Civil partnerships
  • Enterprises established by foundations
  • Firma partnerships
  • Cooperatives

Licensing Procedures and Period of Validity

Regulation 17/2019 puts location permit into two categories based on commitment requirements:

  • Location permit issued with commitments
  • Location permit issued without commitments

Location Permit Issued with Commitments

The main issuance procedure of location permit in Indonesia is listed in the following steps:

1. Register through the OSS system

2. Submit application of location permit along with the below documents:

  • Commitments fulfillment statements and application
  • Business identification number or NIB
  • Sketch or map including the location’s coordinates
  • Business activity plan proposal
  • Possessed land area affidavit

3. Issue location permit and relevant location map

4. Fulfill commitments

In accordance with Regulation 17/2019, applicants no longer need to submit valid service fee’s payment receipt together with the location permit applications.

Location Permit Issued without Commitments

However, the submission of payment receipt is still in fulfillment of commitments:

1. Submit requirements

  • Submit prerequisite documents within 10 working days of the OSS releasing the location permit
  • Location permit will be canceled if failing to fulfill the said condition

2. Conduct technical land considerations

  • The Land Office conducts the technical land considerations and releases results within 10 working days of the commitment submission alongside the valid proof of service fee payment
  • If the result is not issued, the application is considered as approved automatically
  • Approved technical considerations result must be sent to relevant regional governments

3. Issue approval

  • Regional government will approve or reject the location permit commitment fulfillment application within two working days upon the receipt of the technical considerations result
  • If the regional government doesn’t issue the rejection or approval within the time period, the application is considered approved automatically
  • The OSS agency must inform the Ministry of Agrarian Affairs and Spatial Planning through the OSS system regarding the approval

The location permit in Indonesia is valid for three years from its effective date with the right legalization of documents in Indonesia. Businesses may be allowed to extend the location permit for another one year if the land acquisition has reached at least half of the target of initial acquisition for their business permits in Indonesia.

Permit Holder’s Rights and Obligations

Regulation 17/2019 permits businesses to obtain land titles relating to other overlapping land titles via the below legal steps:

  • Indemnification
  • Sale and purchase
  • Land consolidation
  • Other legal acts

How to Submit Location Permits for Individual and Non-individual Business Entity

Whether you’re a sole proprietor or a corporate entity, initiating the application process through OSS is your initial and essential step. Here’s how you can submit the permits:

  1. Register on OSS: Create an account using your NIK or passport number.
  2. Fill in NIB Application: Enter business details, shareholder information, and chosen business activities.
  3. Commit to Location Permit Requirements: Fulfill specific commitments prompted by OSS, which may include environmental impact assessments, land use approvals, and building permits.
  4. Submit Supporting Documents: Upload digital copies of all required documents according to your entity type.
  5. Review and Confirmation: Thoroughly review your application and confirm submission.

However, before starting to apply, you must first understand the requirements.

Requirements for Individuals:

  1. Single Identity Number (NIK): This unique personal identifier is crucial within the OSS framework.
  2. Business Activity Plan: Clearly outline your intended business operations.
  3. Land Ownership Proof: If you own the proposed location, submit land certificates or lease agreements.

Requirements for Non-Individual Business Entities:

  1. NIB (Single Business Number): Obtain this unique business identifier through OSS.
  2. Company Legal Documents: Provide company registration certificates and shareholder information based on your entity type (e.g., PT, CV).
  3. Business Activity Plan: Similar to individual requirements.
  4. Land Ownership Proof: Follow the same guidelines as individuals.

Let InCorp Make It Easier for You

InCorp is your trusted business consultant in Indonesia that helps your company to obtain all sorts of business permits and related licenses. We are widely recognised as a one-stop business consulting center for foreign companies and individuals who wish to set up or expand their businesses in Indonesia.

We help companies and organizations avoid risks, make the right decisions and accelerate growth. Meet our team now and learn more about InCorp’s advisory services. Start by filling in the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

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Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.