Client Newsflash

BKPM Issued New Regulation on Guidelines on the Provision of Business Licensing Services through OSS System

To improve the implementation of the licensing services provided through Online Single Submission (“OSS System”), on April 1, 2020, the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued the BKPM Regulation No. 1 of 2020 on Guidelines for the Implementation of Integrated Electronic Business Licensing Services (“Regulation 1/2020”).

This Regulation 1/2020 was also issued to implement Article 94 (1) of Government Regulation No. 24 of 2018 dated June 21, 2018 on Electronic Integrated Business Licensing Services (“GR 24/2018”) and Presidential Instruction No. 7 of 2019 dated November 22, 2019 on Acceleration of the Ease of Doing Business as well as to set out the norms, standards, procedures, and criteria of the issuance of the licenses in OSS system 1.1, for the already existing BKPM regulations regarding OSS.

As this Regulation 1/2020 covers broad and technical aspects of the OSS System 1.1, we set out below the key points under Regulation 1/2020.

  • Investment Value

Article 6 of Regulation 1/2020 now requires a foreign investment company (Penanaman Modal Asing or PMA”) to fulfil the amount of total investment value of more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings. The foregoing applies for each business activity (5-digit KBLI), per relevant project. Furthermore, the amount of issued capital must be equivalent to the relevant paid-up capital and should amount to at least Rp2,500,000,000 (two billion five hundred million Rupiah).

In addition to the above, Regulation 1/2020 provides detailed total amount of investment value for certain PMA companies that engage in the following business sectors:

  1. For wholesale business activities, the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah) excluding land and buildings, for each 2-initial digits of the KBLI;
  2. For food and beverage services business activities (subject to Negative Investment List), the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings, within one regency/municipality; and
  3. For construction business activities (subject to Negative Investment List), the total investment value shall be more than Rp10,000,000,000 (ten billion Rupiah), excluding land and buildings, for each construction activity.

Although the Regulation 1/2020 is silent on when the realization of such investment should be made by PMA companies, as prescribed under Article 6(5) of BKPM Regulation No. 6 of 2018  dated July 20, 2018 on Guidelines and Procedures of Investment Licensing and Facility as lastly amended by BKPM Regulation No. 5 of 2019 dated July 29, 2019 on Amendment of BKPM Regulation No. 6 of 2018  dated July 20, 2018 on Guidelines and Procedures of Investment Licensing and Facility, such realization shall be performed within one year as of the issuance of the business license.

  • Main and Supporting Project

Article 15 of Regulation 1/2020 now provides that business actors may have a supporting project, provided that (i) such supporting project is outside the business classification stated in its business license, (ii) such project serves as a supporting activities to the main project, and (iii) such project does not generate profit.

The supporting project shall be required to obtain Business Licenses and/or Commercial and Operational License as applicable.

  • New Function of Business Identification Number

With the issuance of Regulation 1/2020, the Business Identification Number (Nomor Induk Berusaha or “NIB”) now also functions as evidence of initial submission of Mandatory Manpower Report (Wajib Lapor Ketenagakerjaan or “WLTK”) for the company that has not submitted its WLTK and has not previously obtained NIB.

  • Category of Business License and Commercial and Operational License

Regulation 1/2020 has categorized types of Business and Commercial and Operational License into several classification as follow.

Type Business Licenses Description
1 Business License or Commercial and Operational Licenses without Commitment requirement Licenses that are effective immediately after the issuance by OSS System
2 Business License or Commercial and Operational Licenses with technical requirement Licenses that are issued priorly by the OSS System, but are not effective until the applicable requirements are fulfilled
3 Business License or Commercial and Operational Licenses with fee requirements
4 Business License or Commercial and Operational Licenses with technical and fee requirements

 

  • Representative Office Registration through OSS System

Under Regulation 1/2020, the OSS System also accommodates the application for the registration of Foreign Trade Company Representative Office (Kantor Perwakilan Perdagangan Asing), Foreign Construction Services Companies (Badan Usaha Jasa Konstruksi Asingi), Franchise Business, Futures Trade, and Administrative Branch Office.

  • Merger of Companies

In the event of merger, the surviving company may now request to merge the business licenses of the ceased company into the surviving company. A merger should be implemented in accordance with a deed of merger which has obtained a prior approval from the Minister of Law and Human Rights. Once the relevant deed of merger data has been submitted, the OSS system will then issue a business license for the merger.

Further, the surviving company shall comply and satisfy any commitment set forth in business license and/or commercial and operational License of the merging company, in accordance with the prevailing laws and regulations.

  • Submission During OSS Force Majeure Situation

In the event where OSS System is unable to function due to force majeure, the submission and/or administrative services for investment may be done manually, rather than through the system. The force majeure situation shall be determined by the Head of BKPM. Any data and information that are processed during the force majeure situation shall be uploaded into the OSS System by the Business Actor after the end of the force majeure situation.

  • Transitional Provision

By the effective date of Regulation 1/2020:

  1. The provisions set forth within the existing principle license, investment registration, investment licenses, business license commercial or operational license remain valid as long as there is no conflict or not regulated specifically by Regulation 1/2020;
  2. Investment Value shall not be applicable to PMA Company that obtained a valid investment licenses prior to the enactment of GR 24/2018, as long as there is no change of business activities;
  3. Business actors shall obtain NIB, regardless of the still-valid TDP, API, and Customs access; and
  4. Any application relating to NIB, new business license, or commercial or operational license shall be carried out through OSS System.

 

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May 13, 2020

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