On June 21, 2018, the Indonesian government has enacted the Government Regulation number 24 of 2018 on the Electronically Integrated Business Licensing Service (Regulation 24/2018), in an effort to accelerate and improve Indonesian capital investment and business. The Online Singe Submission System (OSS) is aimed to take over the activities of the investment body (BKPM) for a limited period of time in order to provide BKPM time to upgrade their service levels. At the time of writing, the OSS is not yet active, however unfortunately BKPM has decided to suspend its activities immediately as of June 29, 2018. Therefore there is currently no issuing body for corporate licenses which were previously arranged by BKPM. It is expected that the OSS will come operational within 1 to 2 weeks.
The OSS system is an integrated licensing system for arrangement of all licenses that previously were managed by BKPM and certain licenses of Ministries, and other Government Institutions. It functions to process the following:
In this article we will focus on the first three functions.
Regulation 24/2018 explains that the OSS system will issue an NIB after a business registers itself in the system. The NIB is a 13-digits number with e-signature of the business owner, which remains valid until the business stops operation.The NIB is one of the requirements to obtain a Business License and Commercial or Operational License.
More importantly, the NIB will replace the Company Registration Certificate (TDP) and for trading companies the Import Identification Number (API). This is a significant improvement and will streamline the process of company establishment and maintenance of corporate documents. The NIB will also automatically grant customs access and will automatically subscribe companies for participation in the Social Security (BPJS Health and BPJS Manpower), which will reduce the administrative burden of companies.
Under Regulation 24/2018, every business must apply for a Business License after having obtained the NIB. A Business license will be valid for as long as the business runs its operation, unless it is stated otherwise in the relevant laws and regulations. After the issuance of the business license, most companies can start their operation. However certain companies will require an additional commercial or operational license before starting their operation. These companies can however already start limited establishment activities and activities focused on the preparation of the operation of the company. These activities include procurement of land, hiring human resources, preparation of facilities and infrastructure, construction and operation of buildings, and other similar activities.
The OSS will issue for certain companies commercial or operational licenses, depending on the type of business the company is active in. The commercial or operational license can consist out of the following types:
Following the OSS under the Regulation 24/2018, we expect that the Indonesian Government will issue more implementing regulations. These regulations will further determine the operation of the OSS. The OSS seems a serious effort of the Indonesian Government to finally streamline the process of investments in Indonesia, which may be good news for foreign investors.