Classification of Micro, Small and Medium Enterprises (“MSMEs”)

First, let's understand the definition and/or classification of Micro, Small and Medium Enterprises ("MSMEs"). Based on Article 35 paragraphs (2), (3), (4), and (5) PP 7/2021 divides MSMEs based on the amount of capital and annual sales proceeds (turnover), namely:

1. Micro businesses have business capital of up to a maximum of IDR 1 billion, excluding land and buildings where the business is located, and have annual sales proceeds of a maximum of IDR 2 billion;
2. Small businesses have business capital of more than IDR 1 billion to a maximum of IDR 5 billion, excluding land and buildings where the business is located, and have annual sales proceeds of more than IDR 2 billion to a maximum of IDR 15 billion;
3. Medium businesses have business capital of more than IDR 5 billion to a maximum of IDR 10 billion, excluding land and buildings where the business is located, and have annual sales of more than IDR 15 billion to a maximum of IDR 50 billion.

Then, based on the provisions on risk-based business licensing, MSMEs are also further divided based on the level of risk and scale ranking of business activities, namely:

1. For business activities with a low level of risk, business actors only need to register in the OSS system to obtain a Business Identification Number ("NIB");
2. Business activities with a medium to low level of risk, the types of business permits are NIB and Standard Certificate;

The Standard Certificate at the low medium risk level is the legality for carrying out business activities in the form of a statement by the business actor to fulfill business standards in order to carry out business activities provided through the OSS system.

3. Business activities with a medium to high level of risk, the types of business permits are NIB and Standard Certificate;

Standard Certificates in the medium to high risk level are standard certificates for the implementation of business activities issued by the central government or regional governments in accordance with their respective authorities based on the results of verification of compliance with standards for the implementation of business activities by business actors.

4. Business activities with a high level of risk, the types of business permits are NIB and Permit.                                                                      Meanwhile, what is meant by permit is approval from the central government or regional government for the implementation of business activities which must be fulfilled by business actors before carrying out their business activities. Before obtaining a permit, business actors can use the NIB to prepare for business activities.

If you need further information and assistance about Micro, Small and Medium Enterprises (“MSMEs”) permit, please do not hesitate to contact Our Firm, Suria Nataadmadja & Associates Law Office.