How To Establish F & B Company in Indonesia

“Food and Beverages (F & B) business is a business that provides food and beverages, be it self-service or not, dine-in, take away or delivered to the consumer. The forms of business that fall into this category are restaurant, cafeteria, fast food restaurants, pizza delivery service, and several others.”

F & B business is indeed one of the most promising business prospects, especially in Indonesia. According to the Indonesian Economic Census in 2016, F & B business is ranked 2nd in the business category, second only to trade and retail business. Noting that Indonesia is a massive country territorial-wise with an abundance of the population which makes it a humongous market, it’s safe to assume that for F & B business, the only way this business headed is forward. But before establishing an F & B business, several things should be noted beforehand, things such as the scope of F & B itself, limitations related to foreign investment, and also the procedure of establishment. In this article, we will provide you with the information needed before you run in an F & B business.

The Scope of F & B Business in Indonesia

Before we went into the requirements needed to establish an F & B business, it is important to understand the scope and definition of F & B business in Indonesia. It is because, in Indonesia, there is a categorization/classification of the business field that is commonly known as Standard Classification of Indonesian Business Fields or Klasifikasi Baku Lapangan Usaha Indonesia (KBLI). This list provided the information and explanation needed for business classification so that the prospective business owners or investors have at least the slightest idea about what category of their business fell into.

The list also provided the scope of F & B businesses, the list explained that F & B business is a business that provides food and beverages, be it self-service or not, dine-in, take away or delivered to the consumer. The forms of business that fall into this category are restaurant, cafeteria, fast food restaurant, pizza delivery service, and several others.

One of the most common forms of F & B services is a restaurant. The list defined restaurant as an F & B service that provides foods or drinks for the public in their business venue that is located in the whole or half of a permanent establishment, whether they have the equipment to process and store the ingredients. Even though other forms of F & B services such as cafeteria also fall into the same category as an F & B service, several criteria differ from one another, so it is a very important thing to be scrutinized.

Capital Limitations in F & B Company in Indonesia

It is important to note the limitations imposed on certain business fields, especially when foreign investment is involved. There is a prevailing regulation in Indonesia that regulates the type of business that is available, closed, or available under certain conditions for foreign investment. It is regulated by President Regulation No. 44 of 2016 where the government provided the list of business fields that are closed and available under certain conditions in the annex of the regulation. The annex is called the Negative Investment List or Daftar Negatif Investasi (DNI).

For the fields that are not listed in DNI, are regarded as an open business field, which means there are no requirements in the event of investment such as minimum local shares ownership that needs to be fulfilled. As for F & B businesses, the DNI did not put any limitations under the F & B category which implies that F & B businesses are open for investment, be it from local or foreign investors.

General Process in F & B Establishment

There are several processes that you need to go through before establishing your very own F & B business. First thing first, the prospective business owner/investor need to register their business to Online Single Submission (OSS) to acquire Business Identification Number or Nomor Induk Berusaha (NIB). To acquire NIB, there are several documents need to be submitted in the case of the business registered is not an individual business, such as:

1.Name and/or establishment deed number or registration number;
2.Field of business;
3.Type of investment;
4.The origin country of investment, in the case of foreign investment;
5.Investment location;
6.Prospective amount of the investment;
7.Workforce utilization plan;
8.Business entity’s contact number;
9.Tax, customs and/or other facilities request plan;
10.Non-individual business Taxpayer Identification Number (NPWP);
11.The ID number of the guarantor of the business/activities.

Right after acquiring NIB, the owner/investor should apply for a business license in the form of a Tourism Business Registration License or Tanda Daftar Usaha Perusahaan (TDUP). TDUP is issued based on the commitment made by the owner/investor, so if the owner/investor wishes to acquire TDUP, they need to fulfill the commitment as follows:

1.Location license;
2.Environmental license;
3.Building Permit or Izin Mendirikan Bangunan (IMB) or lease agreement, in the case of the owner/investor rented an office for their business;
4.Water Location Permit and Water Management Permit regulated by the minister in charge of government affairs in the marine field, it is required for tourism businesses that intend to use the sea area permanently.

After acquiring TDUP, they are required to acquire Tourism Business Certificate or Sertifikat Usaha Pariwisata in a specified amount of time, based on the size of their business. The tourism businesses need to comply with the standards set by the government to acquire the certificate. In terms of F & B services, the standards are regulated through Minister of Tourism Regulation No. 28 of 2015 concerning Food Sales Business Standard, which stipulated several criteria that need to be fulfilled by the business actors in the F & B field.

There are three main aspects of the standards that need to be fulfilled, which are products, services, and management. In the annex of the regulation, we can find further criteria and explanations related to those 3 aspects. For example, in the production aspect for F & B businesses, it is required for them to have a kitchen equipped with a fire extinguisher and organized waste management. That being said, the prospective business actors need to pay attention to the standards set by the government and they can’t establish an F & B business in any place without complying to the standards, for example, even though the utilization of virtual office is a trend nowadays, an F & B businesses can’t establish their business in a virtual office since it will not satisfy the standards required for an F & B business.

All the aforementioned requirements and standards are required to be met if one wishes to establish an F & B business in compliance with the regulation. Nothing the fact that this field of business changes quickly due to the innovation that is being made by the actors, it is possible that we have to go through yet another change in the standards or regulations made by the government.

Having a question regarding establishing F & B Company in Indonesia? Let’s contact us on the following alternatives:

Hotline          : (+62) 812 1111 8608 / (+62) 21 5080 6537
Email             : info@ylpconsulting.com

Our experienced Consultant will happy to help you.

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