Guide For Obtaining Restaurant License in Indonesia

Guide For Obtaining Restaurant License in Indonesia: 2024 Update

  • InCorp Editorial Team
  • 11 September 2024
  • 7 minutes reading time

Although it might not be as easy as it looks, millions dream of opening their restaurant. However, obtaining a restaurant license in Indonesia poses some challenges. Furthermore, opening and turning a new restaurant into a success requires more than hard work and dedication.

As with any business, obtaining restaurant permits and licenses requires a lot of paperwork. Failing to get proper licenses and permits will result in closure from the local government.

The retail sector, including hotels and restaurants, is changing rapidly as personal income and consumer spending increase. According to McKinsey Global Institute, 90 million new Indonesians will likely join the consuming class, making it as big as about 135 million by 2030. 

A sizeable middle-class population will be an essential part of this story. This group will look for a new house and car, filling shopping malls and restaurants. 

The Outlook for the Restaurant Industry in Indonesia

The Food market is projected to generate a significant revenue of US$250.20 billion in 2024, with a CAGR of 6.02% from 2024 to 2029.

This indicates a robust expansion trend in the food sector. Within the broader food and beverage industry, the Alcoholic Drinks market, specifically out-of-home consumption in venues like restaurants and bars, is anticipated to generate US$890.4 million in revenue in 2024.

Similarly, the Non-Alcoholic Drinks market, also driven by out-of-home consumption, is expected to reach US$9.73 billion in revenue during the same year.

Additionally, the Hot Drinks market in Indonesia, particularly out-of-home sales in cafes and similar establishments, is projected to contribute US$12.23 billion to the industry in 2024.

These figures reflect the overall growth and evolving trends within the food and beverage sectors, emphasizing the importance of both in-home and out-of-home consumption as key revenue drivers.

Can Foreigners Open Restaurants in Indonesia?

Local and foreign investors can open a restaurant business in Indonesia, and the process is similar to setting up any other type of company.

Investors must establish a Direct Investment Company, which in Indonesia is known as a limited liability company (LLC), called Perseroan Terbatas (PT). The equivalent for foreign investors is a foreign-owned LLC, Penanaman Modal Asing (PT PMA).

In recent years, Indonesia has relaxed its foreign ownership restrictions in the restaurant industry. There are no longer fixed percentage limits for foreign ownership in restaurants, bars, and cafes. Foreign investors can now fully own these businesses, subject to certain conditions and requirements.

Key Regulations for Obtaining a Restaurant Business License

Indonesia has implemented a comprehensive regulatory framework to guarantee the safety and quality of food products its population consumes. These regulations protect public health and maintain consumer confidence in the country’s food supply.

  • Law No. 18/2012 on Food: Provides food safety, quality, and nutrition framework.
  • Government Regulation No. 28/2004 on Food Safety, Quality, and Nutrition: Establishes specific standards for food safety, quality, and nutritional labeling.
  • Ministerial Regulation No. 7/2013 on Good Manufacturing Practices for Food: Outlines guidelines for food manufacturers to ensure safe and hygienic production practices.
  • Ministerial Regulation No. 23/2019 on Food Safety Surveillance: Establishes the framework for food safety surveillance and monitoring.
  • Additional Regulations: Cover specific aspects such as labeling requirements, food additives, and hygiene practices.
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How to Obtain A Restaurant License

Obtaining a restaurant license in Indonesia involves a series of steps and documentation. The process can differ depending on the specific location and type of restaurant.

However, by understanding the key requirements and following the outlined procedures, you can successfully navigate the licensing process and establish your restaurant business.

Determine the Type of Permits Needed for Restaurants

  • Restaurant Business License: Required for all restaurants, including those serving food and drinks.
  • Other Licenses: Depending on the nature of your business, you might need additional licenses, such as health permits, environmental permits, or liquor licenses.

Prepare Required Documents

  • Application Form: Complete the application form provided by the licensing authority.
  • Company Registration Documents: If you’re establishing a new company, you must provide company registration documents.
  • ID/Passport: Copies of the business owners’ identification documents.
  • Taxpayer Registration Number (NPWP): The company’s NPWP.
  • Building Permit (IMB): Permits for constructing or modifying the restaurant building.
  • Disturbance Law/Hinder Ordonnantie (HO): Permits for operating a business in the location.
  • Environmental Impact Assessment (AMDAL): If required, an assessment of the environmental impact of your restaurant.
  • Health Certificate: A certificate from the local health department confirming the restaurant’s compliance with sanitary standards.
  • Fire Safety Certificate: A certificate from the fire department confirming the restaurant’s compliance with fire safety regulations.

Submit Application to Local Government

  • Tourism and Culture Agency: Typically, the application is submitted to the tourism and culture agency in the local government where your restaurant is located.
  • Online or In-Person: Some areas offer online application options, while others require in-person submission.

Verification and Inspection

  • Document Verification: The licensing authority will review your application and supporting documents.
  • Site Inspection: Officials may inspect your restaurant premises to ensure compliance with regulations.

Approval and License Issuance

  • Approval: If your application is approved, you’ll receive a notification.
  • License Issuance: The licensing authority will issue the restaurant business license and other required permits.

In addition to the required documents above, the restaurant requires an additional license for the service offered. For example, if the restaurant plans to provide alcoholic beverages, it is vital to get an Alcoholic Beverage Trading License (SIUP-MB). 

Furthermore, restaurants featuring live or pre-recorded music must obtain licenses from a record label or competent foundation that facilitates using such material. Failure to do so could trigger expensive penalties.

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The Cons of Not Having a License for Restaurant Business

A restaurant business license is crucial for operating a restaurant in Indonesia. It provides legal recognition, enhances credibility with customers and partners, and facilitates access to funding and government incentives.

Failure to comply with licensing regulations can have severe consequences. Some potential penalties for non-compliance include fines, operational closure, and legal action. Adhering to all licensing requirements and maintaining updated licenses for restaurants are essential to safeguarding the continuity and success of your business.

It’s worth noting that certain businesses may qualify for exemptions or special licenses based on their unique circumstances. Consulting with InCorp Indonesia can help you identify any available exemptions or exceptional cases that may apply to your business.

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Obtain Your Restaurant License with InCorp

InCorp Indonesia offers a comprehensive range of legal services tailored to obtaining a restaurant license in Indonesia. By partnering with us, you can benefit from the following:

  • Deep Understanding of Indonesian Law: We understand Indonesian regulations, ensuring your business remains compliant.
  • Personalized Legal Solutions: We deliver customized legal advice that addresses your business needs and objectives.
  • Efficient and Timely Services: We are dedicated to delivering efficient and timely legal services that minimize disruptions to your business operations.
  • Cost-Effective Solutions: We offer competitive pricing and adjustable billing options to suit your budget.
  • Strong Network of Local Partners: Our extensive network of local partners allows us to provide complete legal support across various regions in Indonesia.
  • Global Reach: As part of the InCorp Group, we offer global legal services to support your business expansion into other markets.

Fill out the form below to successfully establish a restaurant in Indonesia.

Verified by

Ales Cina

Consulting Manager at InCorp Indonesia

Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights.

Frequently Asked Questions

    You can transfer the license if your local distributor agrees to change the product license holder.

    Yes, in a foreign-owned (PT PMA) company, a foreigner can be a director or a commissioner

    In a PMA Company in Indonesia, shareholders typically have limited liability, meaning they’re not personally liable for agreements or losses beyond their shareholding, except in certain circumstances. Liability may extend if the company isn’t properly established or if shareholders exploit the company in bad faith, engage in unlawful acts, or deplete company assets to the detriment of creditors.

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.

      • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

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Disclaimer

The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. 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. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

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