As part of its commitment to making it easier to run businesses in Indonesia, on 21 June 2018 the Indonesian Government issued the long-awaited Government Regulation No. 24 of 2018 on Electronically Integrated Licensing Services (“GR 24/2018”). GR 24/2018 cuts the red tape and simplifies the previously complex licensing procedures by introducing a new system called ‘Online Single Submission’ (“OSS”), allowing different kinds of business licenses to be sought electronically through the integrated OSS system, prior to which business license applications had to be made through various government institutions. The new OSS system is accessible to both individual businesses and non-individual businesses (e.g. limited liability company) (“Business Entity”).
For investment licenses and their related operating permits, GR 24/2018 mandates BKPM to implement the OSS system. However, to allow BKPM to prepare for its infrastructure and human resources, the OSS system is temporarily administered by the Coordinating Ministry for Economic Affairs during the transition period.
Immediate Effect under GR 24/2018
GR 24/2018 specifies the licenses that can be immediately processed through the OSS system, including among others, investment licenses, location permits, environmental licenses, building construction permits, taxpayer identification number, social security certificates, importer identification number. While the previous regime required that the application for foreign employment utilization plan (Rencana Penggunaan Tenaga Kerja Asing – RPTKA) be submitted separately, a Business Entity may now apply for the RPTKA through the OSS system.
Upon the issuance of GR 24/2018, almost all kinds of licenses that were previously administered by BKPM must now be processed through the OSS system, except for some licenses related to (i) energy and mineral resources sector (ii) public works (iii) tax holiday, tax allowance, or import of machinery in the electricity sector, and (iv) general representative office and permanent/temporary stay permits, all of which should still be obtained from BKPM through the previous system applicable at BKPM (please also see, BKPM press release No. 2/PENGUMUMAN/A.8/2018, dated 10 July 2018).
Under GR 24/2018, two new crucial concepts are introduced, as described below:
Under GR 24/2018
|Previous Regulation||GR 24/2018||Effect|
|Business Identification Number or Nomor Induk Berusaha (NIB).
NIB is a 13-digit integrated Business Identification Number, serving as an identity of a Business Entity and required for the application of all kinds of licenses, whether Business Licenses or Operating Licenses, via the OSS system.
A Business Entity is required to separately apply for their administrative, operating, and business licenses.
|The NIB will be issued once the relevant Business Entity completes its online registration on the OSS web page.
The NIB obtained by the applicant also serves as (i) the applicant’s Company Registration Certificate (Tanda Daftar Perusahaan, TDP), Importer’s Identification Number (Angka Pengenal Importir, API), and customs registration, and (ii) evidence of its automatic registration for the Health and Manpower Social Security Programs (BPJS Kesehatan dan BPJK Ketenagakerjaan).
|Greater efficiency in the application procedures.|
|Commitment||N/A||A Business Entity is permitted, based on a commitment, to commence its commercial activities prior to the issuance of the commercial business license.||Greater efficiency: minimizing the gap between the commercial activities and transition period of issuance of the business license.|
- All existing applications of licensed, which according to GR 24/2018 subject to the OSS, will be processed through the OSS System.
- GR 24/2018 does not specifically address the procedure for changing the shareholders or capitalization of a PMA Company. According to the guidelines on the OSS System, no change in the shareholders or capital structure of a PMA Company requires application through the OSS System. Instead, such a change only needs to be approved by or notified to the Minister of Law and Human Rights (MOLHR) through the administrative system at the Ministry of Law and Human Rights, which is supposedly now connected to the OSS system. Therefore, any such change should automatically be linked to the PMA Company’s NIB.
- Article 89 of GR 24/2018 stipulates that GR 24/2018 overrides all regional regulations in conflict with GR 24/2018. There are still on-going theoretical debates on this subject and there is some doubt as to whether all regional governments would have the required supporting infrastructures to immediately implement the OSS system.
- It is unclear whether or not any existing Business Entity must also register itself through the OSS system. Nonetheless, there is no doubt that the registration is required if it wishes to (i) expand its business, and/or (ii) (re)apply for the kinds of licenses or permits that must now be sought through the OSS System under the new regulation.
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