It has been almost three years since the OSS system was first introduced by the Indonesian Government in September 2017¹. Let us take a glance at its status and progress.
The OSS system is the Indonesian government’s web-based platform designed to simplify and expedite the business licensing process in Indonesia and attract more direct investment. The OSS system will become a solution to the licensing process, which was quite problematic due to lengthy bureaucratic procedures, lack of coordination among government agencies, and lack of transparency.
One of the key bottlenecks that undermines the realization of direct investment into Indonesia’s economy is the huge volume of paperwork that needs to be done before a prospective investor can obtain an investment license. Through the OSS platform, the process of obtaining a business license in Indonesia should be more efficient, more straightforward and less time consuming (taking only a few hours).
In the transition phase, operation of the OSS system was handled by the Coordinating Ministry of Economic Affairs. However, this function was fully transferred to the Indonesia Investment Coordinating Board (BKPM) as of January 2, 2019.
The OSS platform has since been available to business owners to apply for licenses. However, some improvements to fully support and operate the OSS platform are still required. To achieve this, the government has issued sets of new regulations – including the Indonesian Investment Coordinating Board Regulation No. 1 of 2020 on Guidelines for Implementation of Integrated Electronic Business Licensing Service (“BKPM Regulation No. 1/2020”)², as a guideline to business licensing services through the OSS system.
BKPM Regulation No. 1/2020 was issued on March 30, 2020 and came into force on April 1, 2020.
There have been several key changes:
- More detailed guidelines for business actors on how to process and obtain business licenses under the OSS system;
- More relaxed minimum investment requirements for certain business sectors, such as wholesale trading, food and beverages;
- Possibility for business owners to have separate supporting projects, subject to certain requirements;
- New classifications on types of business license and commercial/operational licenses to be issued by the OSS system; and
- New requirements regarding merger licenses issued by the OSS system.
It is very important for business owners to carefully examine the requirements under this regulation prior to commencing their business activities.
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¹ Presidential Regulation No.91 of 2017 on the Acceleration of Business Implementation and the Government Regulation No. 24/2018 on the Electronically Integrated Business Licensing Service.
² Mandated by Government Regulation No. 24 of 2018 on Electronic Integrated Business Licensing Services and Presidential Instruction No. 7 of 2020 on Acceleration of Ease of Doing Busines.
The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.