AHU Directorate General: Business Legality Must Not Hinder MSMEs
Jakarta (ANTARA) – The Directorate General of General Legal Administration (Ditjen AHU) at the Ministry of Law has stressed that business legality must not prevent micro, small and medium-sized enterprises (MSMEs) from developing their businesses and accessing funding.
Director General of General Legal Administration Widodo said in a statement in Jakarta on Thursday that legality was more than an administrative document.
The ministry, he said, was seeking to simplify legal-entity services so that legal requirements would not impede business growth, including that of social enterprises.
Clear legal status can boost a business’s credibility, build partners’ trust and create opportunities to work with financing institutions and investors, he said.
“Simplifying legal services must help businesses grow, not become an obstacle. We want MSMEs and social enterprises to have easier access to legal-entity services that suit their needs,” Widodo said.
Legal certainty is needed to ensure that business activities and social missions can be sustained.
Ditjen AHU estimates that around 340,000 social enterprises in Indonesia work in community, women’s and youth empowerment. However, more than 55 per cent of them face financial challenges, including limited access to funding.
The government introduced a mechanism for registering social enterprises in November 2024. The policy was strengthened through Presidential Regulation No. 38 of 2026 on National Entrepreneurship Development.
To widen access to legal status, Ditjen AHU offers several legal-entity options: individual companies for businesses that meet the criteria for micro and small enterprises, limited liability companies, foundations and associations.
The individual company is one of the government’s instruments for simplifying business establishment for micro and small enterprises.
Launched in October 2021, the service allows a company to be established by one person without a notarial deed, provided the applicable requirements are met.
However, Widodo said, making it easier to establish a business must be accompanied by the ability to sustain and grow it.
“Legal status is the first step towards building a credible business. But we also recognise the need for other forms of support, such as market access, financing, capacity-building and strategic partnerships. This will enable businesses to survive and grow, while ensuring that their economic benefits are felt by the community,” he said.