Setting up a PT PMA (foreign-owned company) in Indonesia is a major milestone for investors, but one of the earliest and most important decisions is selecting the correct KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) code. While it may look like a minor bureaucratic formality, the KBLI you choose defines what your company is legally allowed to do, how much capital you must commit, what licenses you need, and even whether foreign investors can participate in that sector.
This article will walk you through why the KBLI matters so much, the criteria to consider when choosing the right code, and the common mistakes that often cost companies time and money.
Why KBLI Is Crucial for a PT PMA
The KBLI is Indonesia’s official business classification system, structured into five-digit codes that describe each line of business. When you register your PT PMA through the OSS (Online Single Submission) system, you must declare one or more KBLI codes. Here’s why this decision is pivotal:
- Defines your business scope
The KBLI determines which activities your company is legally authorized to perform. If you want to operate outside that scope, you’ll need to amend your registration. - Determines licensing requirements
Under the OSS Risk-Based Approach (OSS-RBA), each KBLI has a risk level (low, medium, or high). Low-risk businesses often only need a Business Identification Number (NIB), while higher-risk activities may require additional standard certificates or sectoral permits. - Impacts foreign ownership eligibility
Some sectors are fully open, partially restricted, or closed to foreign investment under the Positive Investment List (Perpres 10/2021). The KBLI you choose must align with these rules. - Affects your investment commitment
Foreign-owned companies are treated as large enterprises, and most KBLIs require a minimum investment plan of more than IDR 10 billion per line of business per project location, excluding land and buildings. If you add multiple KBLI codes with different first two digits, each may trigger this requirement. - Influences incentives and compliance
Certain KBLIs qualify for fiscal or non-fiscal incentives, while mismatched or inconsistent KBLIs can lead to rejection, license revocation, or delays in processing.
Guide to Choosing the Right KBLI
1. Define Your Core Business Activities
Start by clearly listing what your company will actually do in Indonesia. For example, are you developing software, importing goods, managing logistics, or providing consulting services? The more specific your description, the easier it will be to match with the right KBLI.
Tip: Avoid vague wording. Saying “technology business” is too broad; instead, specify whether you’re doing “web-based software development,” “data hosting,” or “e-commerce.”
2. Map Activities to the KBLI Directory
Once you have your list, check the official KBLI 2020 directory (available on the OSS portal) and find the closest 5-digit code. Sometimes more than one code may seem relevant, in which case you’ll need to decide which is your main KBLI and which can serve as supporting activities.
Example:
- KBLI 63122 – Web portals and digital platforms.
- KBLI 62010 – Software development.
A company operating an e-commerce marketplace may need both, but “web portals” could be the main KBLI while “software development” is a supporting one.
3. Check Foreign Investment Eligibility
Indonesia regulates foreign shareholding based on sector. Under the Positive Investment List:
- Some KBLIs are fully open to foreign investors.
- Others allow partial foreign ownership (e.g., max 67%).
- A few sectors remain closed, reserved for local players or cooperatives.
Always check whether your chosen KBLI is compatible with a PT PMA structure. Registering under a restricted code could force you into local partnerships you didn’t plan for.
4. Understand Risk and Licensing Requirements
Every KBLI is tied to a risk category under OSS-RBA:
- Low risk: only NIB is required.
- Medium risk: requires NIB + Standard Certificate.
- High risk: requires NIB + sectoral license(s).
For example, wholesale trading often falls under medium risk, while construction and health-related services are generally high risk.
Knowing this early helps you plan your licensing roadmap and avoid compliance headaches.
5. Align with Investment Commitments
The minimum IDR 10 billion investment plan per KBLI line is one of the biggest hurdles for PT PMAs. Importantly:
- This amount excludes land and buildings.
- If you register multiple KBLIs from very different categories, each may require a separate investment commitment.
- Supporting activities tied to the main KBLI often don’t trigger an extra threshold, but separate main business lines usually do.
Example:
If your company registers both “software development” and “wholesale trading,” you may need to budget IDR 20 billion in total investment.
6. Consider Spatial and Zoning Rules
Indonesia requires that your office or facility location matches the activity in your KBLI. A construction company (KBLI 41012) cannot operate out of a residential zone, while a trading company may need warehouse permits. Always cross-check your KBLI with local zoning and building regulations.
7. Ensure Consistency Across Documents
Your KBLI must be consistent in all legal documents:
- Deed of Establishment
- OSS registration
- Business Plan
- Licenses and permits
- NPWP
Inconsistencies can trigger rejection or require lengthy corrections. It’s one of the most common mistakes new investors make.
8. Anticipate Future Growth
It’s wise to think ahead. If you expect your company to expand into related services later, consider adding supporting KBLIs now. This flexibility can save you the trouble of amending your deed and licenses in the future.
However, avoid adding overly broad or irrelevant KBLIs just to “cover all bases.” Authorities may scrutinize unnecessary codes and question your investment plan.
Real-World Examples of KBLI Choices
- Outsourcing services: Many foreign outsourcing firms use KBLI 78101 (domestic workforce placement). Choosing the wrong KBLI could push them into the restricted manpower supply sector.
- Construction firms: A company building office complexes would use KBLI 41012, but this requires environmental and safety compliance, plus zoning approvals.
- E-commerce platforms: An online marketplace often combines KBLI 63122 (web portals) with KBLI 47911 (retail trading via internet). Failing to register both could prevent the company from legally running its operations.
These examples show how KBLI selection directly affects operational feasibility.
Common Pitfalls to Avoid
- Mismatched documents – Different KBLI codes across your deed and OSS filing can cause rejection.
- Overly broad KBLIs – Picking a code just to keep options open may attract regulatory attention.
- Ignoring foreign ownership restrictions – Some KBLIs remain partially closed; don’t risk a structure that violates the law.
- Underestimating capital thresholds – Remember, it’s not startup capital; it’s a declared investment plan of more than IDR 10 billion per main KBLI.
- Skipping zoning checks – Even with a valid KBLI, your location must comply with local spatial plans.
- Delaying updates – If your business pivots into a new activity, update your KBLI immediately to stay compliant.
Best Practices for Choosing Your KBLI
- Work with an experienced consultant or legal advisor familiar with OSS and BKPM requirements.
- Pre-screen multiple KBLIs and compare their ownership rules, licensing obligations, and investment thresholds.
- Start with your core activity as the main KBLI, then add only essential supporting codes.
- Double-check your KBLI against the Positive Investment List to ensure eligibility.
- Future-proof your structure by anticipating realistic growth, without overloading your company deed with irrelevant codes.
Conclusion
Choosing the right KBLI for your PT PMA is more than just ticking a box in the OSS system. It defines the legal foundation of your business, impacts your investment commitments, and shapes your ability to operate smoothly in Indonesia.
By carefully mapping your business activities, checking foreign investment rules, understanding risk levels, and aligning with your capital plan, you can avoid costly mistakes and set up a PT PMA that is compliant, flexible, and ready to grow.
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