Indonesia Industrial Standard Classification KBLI 2020: a New Licensing Regime

In order to align with the development, diversity and detailed economic activities in Indonesia, the Chief of the Statistical Bureau has issued Regulation No. 2 Year 2020 concerning the Indonesian Industrial Standard Classifications (Klasifikasi Baku Lapangan Usaha Indonesia/KBLI) 2020. This regulation was issued on 24 September 2020 as a refinement to the previous KBLI 2017.

In KBLI 2020, there are 216 new business classifications and the removal of six business classifications that were present in KBLI 2017. The additional business classifications mainly concern six business sectors as follows:

1. Financial services,
2. Leases and manpower,
3. Manufacturing/industry,
4. Education,
5. Professional services and
6. Trading. 

The business classifications that have been removed from the list concern mining and tourism/accommodation.

Along with the additions and removals, KBLI 2020 also features amendments and reclassifications of the existing business classifications and their descriptions.

Together with the enactment of Job Creation Law No. 11 Year 2020, the issuance of KBLI 2020 is an important step towards the adoption of a RiskBased Approach that will be implemented by the Government to replace the Licensing Approach to granting licences for businesses.

Under the Risk-Based Approach, the Government will determine whether a business classification, as described by its five-digit KBLI Code, should be considered low, medium, or high risk. This rating will help to determine whether a company must only register for and obtain a standard certification or whether it must also obtain business licences to engage in such business classifications.

The KBLI Code described in KBLI 2020 is also being used as a reference for other important matters such as the eligibility basis for fiscal facilities (e.g. tax holidays, tax allowances, import duties) and tax exemptions.

Companies must monitor whether the issuance of KBLI 2020 has resulted in any change to the KBLI Code of their existing business as this may require them to adjust their current business licences. Companies should also assess whether there is any potential to expand their business given the additional business classifications introduced in KBLI 2020.