LICENSING REQUIREMENTS FOR THE GARMENT MANUFACTURING INDUSTRY IN INDONESIA UNDER GOVERNMENT REGULATION NO. 28 OF 2025

Introduction

A garment manufacturing business is classified as an industrial activity. Under Law No. 3 of 2014 on Industry, industry generally refers to all forms of economic activities that process raw materials and/or utilize industrial resources to produce goods with higher added value or greater utility, including industrial services.

In the context of garment manufacturing, activities involving the processing of fabric through cutting, sewing, and other production processes to produce ready-to-wear garments constitute industrial activities, as such processes increase the value of the raw materials used.

As an industrial activity, a garment manufacturing business must determine the appropriate Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia – “KBLI”) and comply with the applicable Risk-Based Business Licensing (Perizinan Berusaha Berbasis Risiko – “PBBR”) requirements through the Online Single Submission (“OSS”) System.

KBLI Classification for Garment Manufacturing Businesses

Under the applicable business activity classifications, there are two principal KBLI codes relevant to the garment manufacturing industry:

1. KBLI 14111 – Manufacture of Ready-Made Garments (Garment Manufacturing) from Textiles

KBLI 14111 covers the manufacture of ready-made garments from textiles or fabrics, including woven, knitted, or non-woven fabrics, through cutting and sewing processes to produce ready-to-wear products.

Products falling within this classification include, among others:

• shirts;
• trousers;
• kebaya;
• blouses;
• skirts;
• baby clothing;
• dance costumes;
• nightgowns;
• pajamas;
• sportswear;
• disposable garments made from textiles;
• certain components of bras, such as straps and bra cups;
• garments made from embroidered fabrics; and
• garments made from fabric scraps.

This classification does not cover the manufacture of clothing for animals.

2. KBLI 14112 – Manufacture of Ready-Made Garments (Garment Manufacturing) from Leather and Imitation Leather

KBLI 14112 covers the manufacture of ready-made garments from leather or imitation/synthetic leather through cutting and sewing processes to produce ready-to-wear products.

Products falling within this classification include, among others:

• jackets;
• coats;
• vests;
• trousers;
• skirts;
• sportswear; and
• leather clothing accessories, including leather aprons for welders.

Accordingly, the appropriate KBLI classification for a garment manufacturing business must be determined based on the principal raw materials used and the types of products manufactured.

Business Licensing for the Garment Manufacturing Industry

Every industrial business activity, whether conducted on a micro, small, medium, or large scale, is generally required to comply with the applicable business licensing requirements.

Indonesia currently applies a Risk-Based Business Licensing (PBBR) regime as regulated under Government Regulation No. 28 of 2025 on the Implementation of Risk-Based Business Licensing (“GR 28/2025”).

PBBR is a licensing framework under which the applicable requirements and types of business licenses are determined based on an assessment of the level of risk associated with each business activity.

Pursuant to Article 4 paragraph (1) of GR 28/2025, every business actor is required to obtain a Business License (Perizinan Berusaha – “PB”) in order to commence and conduct its business activities.

Basic Requirements for Business Licensing

Prior to obtaining a Business License, a business actor is generally required to satisfy the applicable basic requirements as stipulated under GR 28/2025.

Pursuant to Article 12 paragraph (1) of GR 28/2025, such basic requirements consist of:

1. Conformity of Spatial Utilization Activities (Kesesuaian Kegiatan Pemanfaatan Ruang – “KKPR”);
2. Environmental Approval (Persetujuan Lingkungan – “PL”); and
3. Building Approval (Persetujuan Bangunan Gedung – “PBG”) and Certificate of Proper Function (Sertifikat Laik Fungsi – “SLF”).

Compliance with these requirements is subject to the characteristics of the relevant business activity, its location and premises, as well as the applicable laws and regulations.

In addition to the primary Business License, where a business activity requires a Business License to Support Business Activities (Perizinan Berusaha untuk Menunjang Kegiatan Usaha – “PB UMKU”), the business actor must also obtain the relevant PB UMKU.

The basic requirements, PB, and PB UMKU are processed electronically through the OSS System, which is electronically integrated with the systems maintained by the relevant ministries and government agencies.

Types of Business Licenses Based on Risk Level

Pursuant to Article 124 paragraph (1) of GR 28/2025, the applicable Business License is determined based on the designated risk level and business scale classification of the relevant business activity.

In general, business activities are classified into four risk categories.

Low-Risk Business Activities

For low-risk business activities, the required Business License consists of a:

Business Identification Number (Nomor Induk Berusaha – “NIB”).

The NIB serves as both the identity of the business actor and the legal authorization to conduct the relevant business activity.

Medium-Low-Risk Business Activities

For medium-low-risk business activities, the required Business License consists of:

NIB and Standard Certificate (Sertifikat Standar).

The Standard Certificate constitutes the legal basis for conducting the relevant business activity based on the business actor’s declaration that it will comply with the prescribed business standards.

Medium-High-Risk Business Activities

For medium-high-risk business activities, the required Business License consists of:

NIB and Standard Certificate.

Unlike medium-low-risk business activities, the Standard Certificate for medium-high-risk activities requires verification of compliance with the applicable business activity standards by the competent authority in accordance with the prevailing laws and regulations.

High-Risk Business Activities

For high-risk business activities, the required Business License consists of:

NIB and a Business Permit (Izin).

The Business Permit constitutes an approval issued by the relevant government authority and must be obtained before the business actor may carry out the relevant business activity, in accordance with the applicable regulatory requirements.

Risk Classification of Garment Manufacturing Businesses

For garment manufacturing activities, the applicable risk level may vary depending on the scale of the business.

With reference to Appendix I.F of GR 28/2025 concerning Business Licensing in the Industrial Sector, the general classification is as follows:

Business Scale	Risk Level	Business Licensing Requirement
Micro Enterprise	Low	NIB
Small Enterprise	Low	NIB
Medium Enterprise	Medium	NIB + Standard Certificate
Large Enterprise	Medium	NIB + Standard Certificate

Accordingly, the licensing requirements applicable to a garment manufacturing business are determined not only by its KBLI classification, but also by its business scale and the risk level assigned to the relevant business activity, as stipulated under GR 28/2025 and implemented through the OSS System.

Business Licensing Facilitation for Micro and Small Enterprises

The Government provides certain licensing facilities for Micro and Small Enterprises (“MSEs”) in obtaining business legality.

The Central Government and Regional Governments, within their respective authorities, are required to provide guidance and facilitate the registration of MSEs based on the norms, standards, procedures, and criteria established by the Central Government.

Registration may be conducted electronically through the OSS System. Upon completion of the registration process and fulfillment of the applicable requirements, the MSE will be issued an NIB.

Within the framework of licensing facilitation for MSEs, the NIB may function as a single business license, subject to the applicable laws and regulations.

Conclusion

A garment manufacturing business is classified as an industrial activity because it processes raw materials, particularly textiles, leather, or similar materials, into finished garments with higher added value.

For the manufacture of garments made from textiles, the generally applicable classification is KBLI 14111 – Manufacture of Ready-Made Garments (Garment Manufacturing) from Textiles. Meanwhile, the manufacture of garments made from leather or synthetic leather falls under KBLI 14112 – Manufacture of Ready-Made Garments (Garment Manufacturing) from Leather and Imitation Leather.

Business actors are required to obtain the applicable Business License through the OSS System pursuant to GR 28/2025. The type of Business License required is determined based on the risk level and scale of the relevant business activity.

For micro and small-scale garment manufacturing businesses classified as low-risk activities, the NIB generally constitutes the principal Business License. Meanwhile, medium and large-scale garment manufacturing businesses classified as medium-risk activities are generally required to obtain an NIB and a Standard Certificate, subject to the specific risk classification determined through the OSS System.

In addition to the relevant Business License, business actors must also ensure compliance with the applicable basic requirements, particularly KKPR, Environmental Approval, PBG, and SLF, taking into account the circumstances of the relevant business activities and facilities.

Therefore, prior to establishing or operating a garment manufacturing business, a business actor should first ensure the appropriate KBLI classification, business scale, risk level, conformity of the business location with applicable spatial planning requirements, environmental compliance, building compliance, as well as the applicable Business License and any PB UMKU that may be required.

Legal Basis

1. Law No. 3 of 2014 on Industry;
2. Law No. 7 of 2014 on Trade;
3. Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation, as enacted into law pursuant to Law No. 6 of 2023;
4. Law No. 6 of 2023 on the Enactment of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation into Law;
5. Government Regulation No. 28 of 2025 on the Implementation of Risk-Based Business Licensing; and
6. Regulation of the Central Statistics Agency No. 7 of 2025 on the Indonesian Standard Industrial Classification.