In its latest effort to cut the red tape in licensing procedures, the Indonesian Investment Coordinating Board (Badan Koordinasi Penanaman Modal – BKPM), after several delays since June 2021, finally puts the risk-based assessment licensing into practical effect through the ‘new’ online single submission (OSS) system (“OSS RBA”). Please click here to see our analysis on the risk-based assessment licensing.
The OSS RBA integrates various government institutions’ systems and automatically shows various policies and requirements set out under the numerous KBLIs, including the maximum foreign ownership of relevant business, the required procedures, as well as the estimated timeline for the license application process. The new OSS RBA is expected to not only provide a seamless experience for companies to register their businesses but also give them a clearer understanding on the legal and administrative requirements to obtain the required license, thus eventually leading to improved transparency.
Below are some key takeaways on the features of the OSS RBA from our general observation:
- Compared to the previous OSS system, the OSS RBA offers clearer guidelines and therefore creates a more user-friendly experience in understanding the documents and information required to be submitted by companies when applying for a business license.
- As of the date of this newsletter, the OSS RBA is still unable to process multiple licenses for a KBLI that falls under more than 1 risk classification, for instance, KBLI 62024 (Consultation and Planning of Internet of Things), which is classified as a medium-to-low risk business by the Ministry of Communication but at the same time as a medium-to-high risk business by the Ministry of Industry. It seems the BKPM needs to immediately fix this glitch in the OSS RBA.
- The OSS RBA automatically filters foreign ownership limitations according to the specific business types, and it does not only literally accommodate the foreign ownership limitations set out under Presidential Regulation 10 of 2021 as amended by Presidential Regulation 49 of 2021(“PR 10/2021”). Going beyond PR 10/2021, the OSS RBA also accommodates the real and practical limitations set by the sectoral ministries. For instance, under PR 10/2021, a construction business involving high technology is not listed as a line of business limited for foreign investment and accordingly, in a general observation should be open to 100% foreign investment (please see our description of construction businesses with high technology here). However, in contrast to PR 10/2021, the Ministry of Public Works and Public Housing’s current policy is to limit foreign investment to 67% for investors from non-ASEAN countries or 70% for those from ASEAN countries, as also contemplated in the recently enacted Government Regulation 5 of 2021. The latter is reflected in the OSS RBA.
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