Government Pursues UMKM Legality Targets Through NIB Issuance
The acceleration of legality for micro, small, and medium enterprises (UMKM) through the Business Identification Number (NIB) continues to face significant challenges. Although the number of registrants has increased, many business actors feel that possessing the permit is limited to fulfilling formal administrative requirements.
Based on data cited from the Economy portal on the official website of the Ministry of UMKM, the NIB serves as the official identity for business entities or individuals in Indonesia. This document forms the primary basis of legality for every individual conducting business activities officially.
The Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) records that 15.8 million business entities have obtained NIBs from 2021 to April 2026. This growth is driven by the implementation of new regulations on risk-based licensing.
Minister of Investment and Downstreaming/Head of BKPM Rosan Perkasa Roeslani revealed a significant increase in a short period. Technical regulations effective from the end of 2025 have become the main catalyst for business actors to register their businesses.
“From October 2025 to 8 April 2026, over five months, there was a surge to 1.8 million NIBs in just five months,” said Rosan during a meeting with Commission XII of the DPR at the Senayan Parliamentary Complex, Jakarta, on Monday (13/4/2026).
However, General Secretary of the Indonesian UMKM Association (Akumindo) Edy Misero stated that the figure is still far from ideal. This is because the national UMKM population is estimated to exceed 60 million business units.
“One document that every business actor must have is the Business Identification Number, NIB. Looking at the conditions of business actors in Indonesia, UMKM number over 60 million, but only 15.8 million business entities [have NIB]. So it’s only one in three or one in four,” said Edy on Thursday (7/5/2026).
Perceptual and Tax Fear Constraints
The government is deemed not yet optimal in communicating the long-term benefits of NIB possession. Edy Misero highlighted that most business actors use NIB only for urgent needs such as opening bank accounts or applying for working capital loans.
On the other hand, Executive Director of the Center of Reform on Economics (Core) Mohammad Faisal sees concerns from the financial burden side. Many micro and ultra-micro business actors fear entering the formal sector due to the shadow of increased operational costs.
“The problem is, why many UMKM have not yet formed business entities, especially the micro ones. That’s because there are constraints and also concerns related to, for example, production costs or business costs increasing due to taxes or other things,” said Faisal.
According to Faisal, the government must provide certainty regarding tax incentives for small business groups. Without clear benefit schemes such as training assistance and marketing support, legality is considered not to automatically elevate UMKM.
Digitalisation and Regional Implementation Challenges
Another issue that arises is sectoral ego and policy differences at the regional level. Researcher at the Center for Digital Economy and UMKM at Indef, Izzudin Al Farras Adha, assesses that the one-stop system has not yet run smoothly in practice on the ground.
“The acceleration of UMKM legality still has several challenges in its implementation because not all processes are actually done in one door,” said Izzudin.
He added that business actors in the regions are often burdened by transportation costs and long processing times. Lack of digital literacy as well as uneven infrastructure in various regions become the main obstacles to the national formalisation process of UMKM.