Multi-Level Marketing (MLM) is a marketing strategy or business model for which is characteristic that the income of distributors includes their personal sales and a percentage of the profits from the sales team they recruit. Multi-level marketing in Indonesia has become increasingly popular.
Many MLM brands such as Tupperware and Oriflame have already established their authority in Indonesia, with many others ready to enter the market.
In order to guarantee your business success in this flourishing sector without ending at the other side of the law in Indonesia, you need to get the correct multi-level marketing license.
In this article, we will tell you all about the requirements and conditions for compliance.
Before applying for an MLM license for sales and marketing activities, you need to register a company in Indonesia.
If you are a foreigner, you need to keep in mind that maximum foreign ownership of 95% is allowed for MLM entities, as described in the Negative Investment List (NIL).
Learn how to comply with limited foreign ownership of Indonesian companies, sign a Special Purpose Agreement.
Once you have incorporated your company, you can move on with applying for the so-called SIUPL (Surat Izin Usaha Penjualan Langsung). According to the Indonesia Investment Coordinating Board (BKPM), multi-level marketing or direct selling companies in Indonesia are required to obtain a SIUPL license for operation and business activities.
There are two types of SIUPL licenses – provisional SIUPL and permanent SIUPL.
In order to qualify for either of the SIUPL licenses, you need to follow the proper steps and get ready the right documents such as:
The validity of provisional SIUPL is one year. Once a company’s provisional SIUPL is approved, they can apply for a permanent SIUPL, which is granted for 5 years.
The process and requirements of applying both types of SIUPL are almost the same. The only difference is that while applying for a permanent SIUPL, you will have to present your company’s financial statement and provisional SIUPL.
Businesses with SIUPL are prohibited from performing the following activities:
Multi-level marketing is one of the most prosperous business types in Indonesia and should not be ignored by ambitious entrepreneurs. Read more about company registration before you decide to start one, and contact us!