In an effort to accelerate investments and ease business administrations, the Indonesian government established the Online Single Submission (OSS) system platform. This is seen as a large leap to expedite business establishment. Currently, new business registration and a majority of licensing applications between ministries and other government bodies are now integrated into the OSS System.
Governing laws and regulation
- Presidential Regulation (Perpres) No. 82/2020 concerning the Committee for Handling Coronavirus Disease 2019 (COVID-19) and National Economic Recovery as amended by Presidential Regulation (Perpres) No. 108/2020
- Government Regulation (PP) No. 5/2021 concerning Implementation of Risk-Based Business Licensing
- Investment Coordinating Board (BKPM) Regulation No. 4/2021 regarding Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities (PerkaBKPM No. 4/2021)
Overview
The enactment of PP No. 5/2021 which is the implementing regulation of Law No. 11/2020 concerning Job Creation brings changes to business licensing arrangements. Previously, business licenses were applied for through an electronic-based business licensing system, namely online single submission (OSS) version 1.1. However, since July 2, 2021, applications for electronically integrated business licenses have been made through the OSS-RBA system in accordance with the Letter of the Minister of Investment/Head of BKPM No. 1342/A.1/2021.
Electronically Integrated Business Licensing or Online Single Submission Risk-Based Approach (OSS-RBA) are business licenses issued by the OSS Agency for and on behalf of the ministers, head of agencies, governors, or regents/mayors to the businesses through a one portal, integrated electronic system.
OSS is a fully online system where business actors, including foreign investors, are required to apply for their general and sectoral licenses to. Failure to apply through the system may put business actors at the risk of being found non-compliant by BKPM and/or the relevant ministries when the business begins operation.
Coverage
The OSS-RBA service can be used for business licensing issuance services and Investment facility services. The services provided by OSS-RBA in terms of issuing business licenses include business actor data and business data, issuance of risk-based business licenses, issuance of business licensing to support business activities, issuance of risk-based business licenses for Micro and Small enterprises (UMK), changes in business data, business development, and mergers, consolidations, and liquidations of business.
In terms of investment facilities, OSS-RBA provides fiscal and non-fiscal facilities. This fiscal facility includes services in the form of exemption of import duties for machinery/goods/materials, tax holiday, tax allowance, fiscal facilities in special economic zones (SEZ), fiscal facilities for conducting research activities, fiscal facilities for the implementation of work practices/internships, and investment allowances. The non-fiscal facilities provided in the OSS-RBA are recommendations for changing the status of a visit stay permit to a limited stay permit and recommendations to change the status of a limited stay permit to a permanent residence permit.
The business sectors included in the OSS-RBA services include:
- Marine and fisheries
- Agriculture
- Environment and forestry
- Energy and mineral resources Nuclear energy
- Industry
- Trading
- Public works and public housing
- Transportation
- health, medicine and food
- Education and culture
- Tourist
- Religious
- Post
- Telecommunications
- Broadcasting, as well as electronic systems and transaction
- Defense and security
- Employment
- Finance. For the financial sector in the form of banking and banking obtains permission from the Financial Services Authority (OJK) or Bank Indonesia without going through the OSS-RBA system.
Licensing system
OSS-RBA system will examine and classify and business activities based on the level of business risk as follows:
- Low Risk. Only requires Business Identification Number (NIB)
- Medium-Low Risk. Requires NIB and Business/Product Standard Certificate
- Medium-High Risk. Requires NIB and Business/Product Standard Certificate
- High Risk. Requires NIB, Business Permit, and Business/Product Standard Certificate
Relevant Licenses
- NIB
NIB is a mandatory registration number issued by the OSS Agency after registration. The NIB marks the identity of businesses and the sector it operates in, and is a prerequisite before application of any business licenses. Aside from functioning as a business’ registration identity, NIBs are also used as the business’ importer number, proof of customs rights, and medium for periodical employment reporting.
In OSS-RBA businesses can take care of several commercial and operational licenses in one place in the form of NIB. NIB can also acts as their Import license (previously API-U), Customs Identification Number (previously NIK), Business registry number (previously TDP), and Automatically registers your company with the government’s Health and Social Security System (BPJS Kesehatan and BPJS Ketenagakerjaan).
- Business License and Commercial/Operational License
Business licenses encompass licenses for a majority of sectors that are issued by the OSS Agency needed by business actors in order to operate. Aside from main business licenses, a business may be required to obtain a commercial/operational license that is further required for operation. The OSS System will provide a framework of licensing that is required by a business actor in its relevant sector, so a business actor would only need to follow such a framework in registering for the licenses it needs.
After registering for a business license, The OSS Agency will hand over an ineffective business license, in which business actors must fulfill several requirements (known as “Commitments”) in order to make their business licenses effective for use.
The fulfillment of Commitments requirements includes technical and/or financial requirements. Commitments include, but are not limited to, obtaining location permits, environmental permits, and meeting investment values.
A business actor must prove that it has fulfilled its Commitments by obtaining a statement from the relevant agency/ministry that regulates the specific Commitments. In certain cases, and sectors, the OSS Agency may automatically issue effective business licenses that don’t require fulfillment of Commitments.
Business License Applicant
Parties who can apply for a business license to the OSS-RBA include:
- Individuals, who are capable of acting and carrying out legal actions in terms of domestic investment activities (PMDN).
- Business Entities, legal entities or non-legal entities established in Indonesia and conducting business activities in certain fields.
- Representative office which includes individual Indonesian citizens, individual foreigners, or business entities representing business actors from abroad. It can be a KPPA, KP3A, BUJKA representative office.
- Foreign business entity, Foreign business entity established outside the territory of Indonesia and conducting business activities in certain fields conducting business in Indonesia as overseas franchisor, foreign futures traders, foreign private sector PSE, permanent form of business including representative offices established to conduct business activities in the oil and gas sector.
Procedure to obtain business licensing
In order to obtain business licensing, business actors are required to register the access right first. One of parties who can obtain access rights is business actors which can be individuals, directors/in charge of business actors, or management (for cooperatives and foundations). In this case, business actors have access rights to:
- Submit applications for permits, changes and revocation of business;
- Submit investment activity reports;
- Submit a complaint; and/or
- Submit an application for business facilities.
For an individual applicant, it is a must to provide the following data:
- ID card number for Indonesian citizen
- Passport numbers for foreigners
For an business entity, the application must contain the following information:
- The type of business entity Company name
- Company’s Tax Number (NPWP)
- Business Legalization decree number from the Ministry of Law and Human Rights
- ID Card/Passport number of a company director/manager
After that the business entity must give the corporate data consist of:
- Company profile 5-digits of Business Field Classification Number (Klasifikasi Baku Lapangan Usaha Indonesia, KBLI)
- Capital structure
- Proposed Business location
- Type of Custom Identification Number (Angka Pengenal Usaha or API)
- Number of employees
- Product or services
The next step is to enter the line of business and investment value. After all data is completed, the system will issue NIB. Notification will be given to each government agency authorized to issue business licenses. If verification is required, the competent government agency will verify business suitability.
The OSS-RBB system will then verify the application with the status approved, incomplete, or rejected. The system will also send a request to complete the required requirements if the status is incomplete. Supervision is conducted by the relevant government bodies on the fulfillment of Business License Commitment, Commercial or Operational License Commitment, and its implementation by the Business Actor.
