What Are the Legal Risks for Foreign-Owned Companies That Operate in Violation of the KBLI?

The Indonesian Standard Business Classification (KBLI) serves as the basis for determining the business activities permitted under a business license. In practice, however, it is not uncommon for foreign investment companies (PMA) to conduct activities that differ from, or are broader than, the KBLI listed in their Business Identification Number (NIB) and licenses. The question, then, is whether a PMA may carry out business activities that do not correspond to its registered KBLI, and what legal consequences arise if it does so.

Under Government Regulation Number 5 of 2021 on the Implementation of Risk-Based Business Licensing, as amended by Government Regulation Number 28 of 2025, business licenses are issued based on the KBLI registered by the business actor. Accordingly, the business activities actually carried out must, in principle, correspond to the scope of the KBLI that has received government approval. If a PMA carries out activities outside its registered KBLI, the consequences are not limited to administrative sanctions such as written warnings, administrative fines, temporary suspension of business activities, freezing, or revocation of the business license, but may also give rise to compliance risks capable of affecting the investment process, business partnerships, and even corporate transactions.

Accordingly, adjusting the KBLI before commencing a new line of business is not merely a matter of administrative compliance, but also an important part of mitigating legal risk in investment activities in Indonesia.