Industrial Area - Lekslawyer


In implementing the Government Regulation Number 24 of 2009 on Industrial Area (“GR No. 24/2009”), the Minister of Industry enacted Minister of Industry Regulation No. 05-M-IND/PER/2/2014 on Procedures for Granting a Business License for Industrial Area an Expansion License for Industrial Area (“Minister Regulation No 05/2014”). Article 1 paragraph (1) of Minister Regulation No 05/2014 specifies that an industrial area is an area where industrial activities are concentrated, equipped with supporting infrastructures and facilities developed and managed by an industrial area company. An industrial area company is a company who undertakes the development and management of industrial area.

Business License for Industrial Area

A business license for industrial area (“Business License”) and expansion license for industrial area are granted by:

  1. Regent/mayor, for industrial area located in regency/municipality;
  2. Governor, for industrial area located in more than one regencies/municipalities; or
  3. Minister of Industry, for industries located in more than one provinces and industrial area that is a foreign investment and foreign investor that uses a foreign capital from other countries, under an agreement between Indonesian government and other countries government. For this matter, the Minister of Industry delegates his authority to the Head of the Investment Coordinating Board (“BKPM”).

Any business activity of industrial area must obtain the Business License. The Business License is issued to industrial area company in the form of legal entity established under Indonesian law and domiciled in Indonesia, such as state-owned company (BUMN) or regional government-owned company (BUMD), cooperative, or private business entity.

In addition, the industrial area company shall provide a minimum of 2 % (two percent) of the overall industrial plots for micro, small and medium businesses. If within 2 (two) years, the micro, small and medium businesses do not fully utilize the provided industrial plots, then other industrial companies may use those plots of land as far as the land for the other industrial companies are no longer available. To obtain the business license for industrial area, the applicant shall acquire a principle approval.

Sources  The Legal Status of Parking Space Under Condominium Law

The application for principle license shall be filed using form model PMK-I (Annex II of Minister Regulation No 05/2014), and enclosing the following documents:

  1. photocopy of deed of incorporation validated by the Minister of Law and Human Rights or by the minister conducting government affairs in the field of cooperatives for applicants with status as cooperatives, and specifically for foreign investment the applications shall be complete with requirements set by the head of BKPM;
  2. photocopy of taxpayer registration number (“NPWP”), except foreign investment;
  3. sketch of location plan (village, district, regency/city, province); and
  4. written statement states that the planned location is located in the zone of industrial allotment according to zoning plan.

The competent authorities as described above will issue the principle approval at the latest 5 (five) days since the application for principle approval is received completely. Subsequently, no later than 2 (two) years, the industrial area company that has obtained a principle approval shall (“Further Requirements”):

  1. Have a nuance permit;
  2. Have a location permit;
  3. Implement the provision/control of land according to the law and regulation;
  4. Obtain an environmental permit;
  5. Make a land site plan;
  6. Development of land;
  7. Realize the planning and construction of supporting infrastructures and facilities and fit installations/equipment needed by industrial area;
  8. Have rule of industrial area; and
  9. Provide land for micro, small and medium businesses.

Business License is issued to industrial area companies that have complied with:

  1. Filling out the form of PMK-III regarding industrial estate permit application and attach the latest progress report on the construction of industrial area using the form of PMK-II;
  2. Requirements as set forth in the Further Requirements;
  3. Comply with the technical guidelines of industrial area;
  4. Part of industrial area is ready for operation at least having supporting infrastructures and facilities covering entrance road to industrial area, road networks and rain waterworks in industrial area and waste water treatment installation for industrial area, management office; and
  5. The evaluating team of KI has made a minute of evaluation (“BAP”) stating that the relevant company can be given the Business License.
Sources  Summary of Government Regulation Number 39 of 1973 on Judicial Procedure of Indemnity Determination by the High Court Related to the Revocation of the Right of Land and the Objects Over a Land.

Expansion License of Industrial Area

Any industrial area company that has a Business License, has already been operational and will expand the industrial area shall obtain expansion license of industrial area (“Expansion License”). Nevertheless, the expansion of industrial area located in one regency/municipality does not require principle approval.

Expansion License is issued if the industrial area company has secured an industrial area permit with the following requirements (“Requirements for Industrial Area”):

  1. Holding an environmental license for the expanded industrial area;
  2. Holding an expanded location permit;
  3. The land designed as expanded area has been controlled by the applicant, as evidenced by a letter of relinquishments of right (“SPH”); and
  4. The land is located in zone of industrial allotment.

The application for Expansion License shall be filed using form model PMK-V (Annex II of Minister Regulation No 05/2014). The application is submitted to the competent authorities by enclosing the location license. The application is copied to the Minister of Industry and governor/regent/mayor. The evaluating team of KI will evaluate the industrial area to make sure that the industrial area has complied with the Requirements for Industrial Area. The result of evaluation shall be made in the BAP. The competent authorities will issue the Expansion License if the result of evaluation approves to give the Expansion License.


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Steffie Meijer