Home Blog An Introduction to A Multi-Level Marketing License in Indonesia Business Licenses | Business Setup An Introduction to A Multi-Level Marketing License in Indonesia InCorp Editorial Team 7 November 2018 3 minutes reading time Table of Contents Definition of MLM Requirements and Conditions for Multi-Level Marketing Indonesia Differences between Provisional SIUPL and Permanent SIUPL Prohibited Activities under SIUPL Multi-level marketing in Indonesia has recorded positive growth recently and became a potential market to venture into. Definition of MLM 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. Requirements and Conditions for Multi-Level Marketing Indonesia 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). 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: Business partner compensation plan Code of Ethics and other company regulations. Differences between Provisional SIUPL and Permanent SIUPL 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. Prohibited Activities under SIUPL Businesses with SIUPL are prohibited from performing the following activities: Offer, promote, and, advertise goods and/or service different to the actual condition. Offer goods and/or services in manners that may cause physical and psychological interference against the consumer Offer goods and/or services by mentioning the standard clause in the agreement that is against the provisions of the legislation in regards to the protection of consumers. Sell goods and/or services without the registration mark As a business partner, gain benefits through registration or membership dues unfairly Receive membership registration as business partners by using the same name more than once Persuade a business partner to buy goods and/or services for own use or sale in huge quantities-exceeding his/her ability to sell Sell or market goods and/or services listed outside the MLM system specified by SIUPL. Trade business for public funding Establish prohibited marketing network Trade business out of SIUPL’s scope Sell and/or market goods and/or services that are outside of SIUPL Sell and/or market goods whose product label does not display the direct-selling company name 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! Read Full Bio Verified by Hotdo Nauli Senior Legal & Delivery Manager at InCorp Indonesia Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). Frequently Asked Questions What requirements are needed if my Indonesian company registers the product? Register the product with BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). The type of testing and document requirements depend on the type of product you want to register. Also, the time frame for registration could vary between 3 to 15 months. What is the minimum shareholder requirement to incorporate a PT? The minimum number of shareholders to incorporate a PT is two What is a CV? CV (Commanditaire Vennootschap) is a proprietary business entity that houses several individuals to run a business. What kind of license does a PMA company need to get? In Indonesia, the licensing system has been updated with the implementation of the Omnibus Law. Businesses are categorized into four risk levels based on the PMA company classification. Licensing requirements vary accordingly, with three main types: Business Identification Number (NIB) Low-risk businesses needing only an NIB Standard Certification Standard Certification is necessary for medium-low and medium-high-risk businesses Licenses/Permits High-risk businesses require licenses/permits Additionally, basic requirements, including business location, must be met. Many licensing processes are facilitated through the Online Single Submission (OSS) platform managed by the Investment Coordinating Board (BKPM). Get in touch with us. 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