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Regulation Update: OSS Guidelines

As of April 2020, BKPM has officiated the guidelines for licensing services through Online Single Submission (OSS) System by issuing BKPM Regulation No. 1 of 2020.

On 1 April 2020, the Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued BKPM Regulation No. 1 of 2020 concerning Guidelines for the Implementation of Electronically Integrated Business Licensing Services (“Regulation 1/2020”). Generally, Regulation 1/2020 elaborates the procedure of business licensing through the Online Single Submission (“OSS”) System.

Business License Applicants

Pursuant to Article 5 of Regulation 1/2020, subjects who are entitled to apply for business licenses through the OSS System (“Applicants”) are:

  1. Individual Applicants of Indonesian nationality; and
  2. Non-individual Applicants established under and in accordance with Indonesian law, including local companies (Perseroan Terbatas Penanaman Modal Dalam Negeri or “PT PMDN”) and foreign direct investment companies (Perseroan Terbatas Penanaman Modal Asing or “PT PMA”).

For Non-individual Applicants in the form of PT PMA, Regulation 1/2020 stipulates the general requirements in terms of investment and capital. These requirements are reiterated from the Regulation of the Head of BKPM No. 6 of 2018, which are:

  1. total investment value larger than IDR 10 billion, excluding land and buildings;
  2. the value of the issued capital equals the paid-up capital, at least IDR 2.5 billion; and
  3. the percentage of share ownership is calculated based on the par value of the shares.

Access Rights and Business Identification Number

Prior to every type of business licensing procedure, all Applicants must obtain Access Rights to the OSS System and Business Identification Number (Nomor Induk Berusaha or “NIB”). Both Access Rights and NIB are valid for an indefinite amount of time and do not necessitate a renewal or amendment. Applicants are required to submit the following requirements in order to obtain Access Rights to the OSS System:

  1. Single Identity Number (Nomor Induk Kependudukan or “NIK”) of the Individual Applicant or administrator of the Non-individual Applicant; or
  2. Approval of the deed of establishment or legal basis of incorporation for Non-individual Applicants.

After obtaining the Access Right to the OSS System, Applicants must apply for NIB, which serves as an identity of Applicants. Moreover, for Non-individual Applicants, NIB replaces and also serves as:

  1. Certificate of Company Registration (Tanda Daftar Perusahaan or TDP);
  2. Importer Identification Number (Angka Pengenal Impor or API);
  3. Customs Access Right (Hak Akses Kepabeanan); and
  4. initial report to mandatory manpower report of the company.

Business License and Commercial/Operational License

After obtaining NIB, Applicants shall be able to apply for Business Licenses and Commercial/Operational Licenses, if necessary. Unless stipulated otherwise, Business Licenses shall remain valid for as long as the Applicants carry out their business activities. However, Commercial/Operational Licenses shall remain valid only for the period of time stipulated by the relevant regulations.

The OSS System provides services for four types of Business License and Commercial/Operational Licenses respectively, which are as follow:

  1. Type 1 (without commitment fulfillment);
  2. Type 2 (with technical requirements);
  3. Type 3 (with fee requirements); and
  4. Type 4 (with technical and fee requirements).

For Type 1, such license shall be effective immediately after issuance through the OSS System. However, for Type 2, 3, and 4, such license shall only be made effective after the Applicants fulfill the requirements or commitment related to the specific line of business.

For Business Licenses and Commercial/Operational Licenses, there are two types of commitment, namely (i) Infrastructure Commitment and (ii) Commitment based on technical regulation. The OSS System provides issuance and licensing services of the Infrastructure Commitment, which may take form in one or more of the following:

  1. Location Permit (Izin Lokasi);
  2. Water Location Permit (Izin Lokasi Perairan);
  3. Sea Location Permit (Izin Lokasi di Laut);
  4. Environmental Permit (Izin Lingkungan);
  5. Building Construction Permit (Izin Mendirikan Bangunan or IMB); and/or
  6. Certificate of Building Proper Function (Sertifikat Laik Fungsi Bangunan Gedung or SLF).

Representative Office and Branch Office

Aside from independent business entities, Non-individual Applicants also include Representative Offices of Foreign Companies, Foreign Franchise Businesses, Foreign Futures Trading Companies, and Branch Offices of PT PMDN or PT PMA. These types of Non-individual Applicants are not subject to application for Business License and Commercial/Operational License, however they are subject to another license issued through the OSS System, namely:

  1. Representative Office Register (Pendaftaran Kantor Perwakilan Perusahaan Asing or Pendaftaran KPPA);
  2. Trade Representative Office License (Izin Kantor Perwakilan Perusahaan Perdagangan Asing or Izin KP3A);
  3. Construction Representative Office License (Izin Kantor Perwakilan Badan Usaha Jasa Konstruksi Asing or Izin Kantor Perwakilan BUJKA);
  4. Foreign Franchise Registration Certificate (Surat Tanda Pendaftaran Waralaba pemberi waralaba berasal dari luar negeri);
  5. Futures Trading Register (Pendaftaran Pedagang Berjangka); or
  6. Administrative Branch Office Register (Pendaftaran Kantor Cabang Administrasi).

For every type of licenses mentioned above, all Applicants must also obtain NIB prior to the application of each license.

Business Expansion and Restructuration

In the event business actors intend to manifest a business expansion of capacity, business field, and/or business location, such actors must update the data of their businesses recorded within the OSS System. The update procedure shall adhere to the application procedure for Business Licenses.

In the event business actors intend to endure a restructuration of their business, such restructuration must be done in accordance with the deed of restructuration which has been approved by the authority. Subsequently, the commitment for Business Licenses and/or Commercial/Operational Licenses must be continued by the surviving business.

Author: Yohana Veronica Tanjung

Gaffar & Co. is an Indonesian Boutique Law Firm that focused on Commercial Law Area includes capital market, finance and investment regulatory.

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