Definition of Certificate of Business Entity (SBU)

The Certificate of Business Entity (Sertifikat Badan Usaha, hereinafter referred to as SBU) is an official document issued by a competent authority as evidence that a business entity meets specific requirements to operate legally in Indonesia. This certificate serves as legal recognition for business practitioners, indicating that the entity has been duly registered and recognized by the government. The SBU is essential for companies aiming to participate in public and private tenders, as well as for accessing various governmental facilities and supports.

Regulatory Framework Governing SBU

The issuance and regulation of the SBU are primarily governed by:

1. Government Regulation No. 5 of 2021 on the Organization of Risk-based Business Licensing which provides a framework for business licensing in Indonesia.
2. Law No. 2 of 2017 regarding Construction Services, which outlines the standards and requirements for construction service providers.

These regulations establish the legal basis for the issuance of the SBU and ensure compliance with the applicable standards and norms.

Functions and Objectives of SBU

1. Functions of SBU

• • Business Legitimacy: The SBU provides official recognition to a business entity, enhancing trust among clients and business partners.

• • Tender Eligibility: The SBU is a critical requirement for participation in tenders, both in the public and private sectors.

• • Facilitated Financing Access: Holding an SBU can facilitate a company’s access to financing from banks or other financial institutions.

1. • Reputation Enhancement: The SBU contributes to enhancing a company’s reputation among consumers and stakeholders.
2. Objectives of SBU

• • To ensure that operating business entities have met the applicable standards and regulations.

• • To protect consumers by guaranteeing that companies are officially registered.

• • To promote transparency and accountability in business practices across Indonesia.

Types of SBU Commonly Submitted

Various types of SBUs can be applied for by business entities, including:

1. SBU for Construction Services: Specifically designated for companies engaged in construction and infrastructure projects.
2. SBU for Consulting Services: Intended for firms providing consultancy services across various sectors.
3. SBU for Procurement Services: Designated for business entities participating in the procurement of goods and services.
4. SBU for Trade Services: Pertaining to businesses involved in trade and distribution activities.

Requirements for SBU Application

The application process for an SBU necessitates the involvement of several documents and information, including:

1. Company Identity: A copy of the company’s deed of establishment and other legal documentation.
2. Proof of Work Experience: References or documentation demonstrating the company’s experience in the relevant field.
3. Financial Documents: Recent financial statements reflecting the company’s performance.
4. Organizational Structure: A diagram or explanation of the company’s organizational structure.

Requirement for Registration with Certain Associations in SBU Application

A critical requirement for SBU application is the registration with specific associations relevant to the type of business being conducted. For example, companies in the construction sector are required to register with the national construction association, as stipulated in Law No. 2 of 2017. This registration not only demonstrates the company’s commitment to industry standards but also enhances its opportunities to secure larger projects.

Financial Statements Required

In the application process, the financial statements that must be submitted typically include:

1. Balance Sheet: To illustrate the company’s financial position.
2. Income Statement: To detail the company’s operational performance over a specified period.
3. Cash Flow Statement: To provide insights into the cash inflows and outflows.

It is imperative that these financial statements are audited by a certified public accountant to enhance their credibility.

Issuing Authorities of SBU

The SBU is issued by relevant government authorities, typically under the Ministry of Public Works and Housing (Kementerian Pekerjaan Umum dan Perumahan Rakyat) or associated agencies. This issuance process involves the examination of documents and verification of the data provided by the applicant entity, as mandated by Government Regulation No. 5 of 2021.

Validity Period of SBU Upon Issuance

Upon issuance, the SBU typically remains valid for a period of five years. After this period, the business entity is required to initiate the renewal process by fulfilling the applicable requirements. It is crucial for companies to maintain an updated SBU to ensure their operational legality and continuity.

Conclusion

The Certificate of Business Entity (SBU) is an essential component for conducting business in Indonesia. By understanding the definition, functions, and application processes of the SBU, companies can enhance their prospects of securing contracts and strengthening their market reputation. It is vital to fulfill all requirements and procedures to ensure a smooth SBU application process.

For further information regarding the SBU application process or legal consultation related to your business, please contact ET Consultant. We are dedicated to assisting you in ensuring that your business operates in compliance with prevailing regulations.

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ET Consultant is a Business Consultant and Legal Consultant Expert that provides support for local and multinational clients to start and manage their business operations in Indonesia. ET Consultant specializes in Business Incorporation, Licensing & Legal, Accounting & Taxes, Immigration, and Advisory Services.

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