On 1 April 2020 the Investment Coordinating Board (BKPM) promulgated BKPM Regulation No. 1 of 2020 concerning Guidelines for the Implementation of Electronic Integrated Business Licensing Services (“Perka BKPM No. 1/2020“) as a follow up to Government Regulation No. 24 of 2018 concerning Electronic Integrated Business Licensing Services. This regulation is prepared as a guideline for the implementation of Business Licensing issuance in the Online Single Submission (OSS) system.
Business Licensing is a registration given to business actors to start and run a business and/or activity and is issued through OSS for and on behalf of ministers, institutional leaders, governors, or regents/mayors to business actors. Services in OSS include:
- OSS system access rights;
- Issuance of NIB;
- Business License;
- Commercial or Operational Permit;
- Licensing related to Infrastructure;
- Representative Office;
- Other services related to business licensing.
Perka BKPM No. 1/2020 regulates new provisions related to investment and capital values for Foreign Investment (“PMA“) businesses, namely:
- The total investment value is greater than Rp 10,000,000,000, excluding land and buildings, for per business sector with 5 digit standard business field classification (“KBLI“) and per project location, unless otherwise stipulated by law. Specifically for trading business activities, it is greater than Rp 10,000,000,000 excluding land and buildings for each 2 digit KBLI. Specifically for food and beverage service business activities, it is greater than Rp 10,000,000,000 excluding land and buildings in one district/city. Specifically for construction business activities, it is greater than Rp 10,000,000,000 excluding land and buildings in one activity.
- The value of issued capital is the same as paid up capital of Rp 2,500,000,000.
- The percentage of share ownership is calculated based on the nominal value of the shares.
- Business actors are prohibited from making agreements and/or statement which stated that the ownership of shares in the limited liability company is for and on behalf of other person.
The above investment and capital values do not apply to PMA business actors who have obtained an Investment License that is still valid before this regulation is enacted to the extend there is no change in their business activities.
To obtain OSS access rights for individual business actors, it is required to register citizenship identity number (NIK) whereas for non-individual business actors it is required to register the certificate of incorporation or the registration number of a legal entity or NIK, or passport number if a foreigner, one of the business managers. If the application of OSS registration and business licensing registration for non-individual business actors cannot be done by the authorized person of the company then the application can be delegated to the attorney.
Company Registry Number (NIB)
NIB is the identity of the business actor issued by the Government and must be owned by every business actor. NIB is used to obtain Business Licenses and Commercial or Operational Licenses, including fulfilling commitments and tax facilities. NIB also applies as i) company registry number, ii) Importers Number, iii) Customs Access Right (can choose import and / or export activities), and iv) mandatory initial reporting of employment reports at the company.
OSS has been integrated with the system of the Directorate General of Taxes so that individual business actors can i) submit a Taxpayer Identity Number (NPWP) number if they do not have it and ii) verify the taxpayer status confirmation. NIB registration requirements:
- For individual businesses:
- Business data; and
- KBLI data.
- For non-individual businesses:
- Company legality data that includes company name, place and domicile, purposes and objectives, shareholders, and management of the company and NPWP. All company legality data is integrated with the Ministry of Law and Human Rights system and can be done manually if it is not yet available;
- Business data; and
- KBLI data.
Main Project and Support Projects
Business actors must determine the type of project to be carried out which are i) main project and ii) supporting project. Provisions for supporting projects are;
- Business actors must submit NIB;
- Includes KBLI not listed in NIB;
- Is the main project support activities;
- Cannot be used to earn income; and
- Implemented in accordance with statutory provisions.
Data that needs to be completed
- Main Project:
- Investment Plan;
- Project location status;
- Project person in charge;
- Details of business/project location;
- Location address;
- List of project locations.
- Supporting Projects:
- Investment plan;
- Details of business/project location;
- Location address;
- List of project locations.
Business actors who have not been registered as participants in health social security and labor social security are directly registered along with the issuance of NIB. NIB is also proof of the fulfillment of the first compulsory report on employment reports for business actors who have not made compulsory employment reports. For business actors who have made compulsory manpower report, they must fill in the mandatory manpower report number at the time of NIB registration and make periodic reporting every 1 year in December through http://wajiblapor.kemenaker.go.id.
Business actors intend to employ foreign workers will obtain licenses to employ foreign workers after ratifying the Plan of Foreign Worker Utilization (RPTKA). The RPTKA to be submitted must contain data consist of:
- Reasons of using foreign workers;
- Position of foreign workers;
- The time period for the use of foreign workers;
- Appointment of Indonesian workers as a companion; and
- Number of foreign workers.
Business License and Commercial or Operational Permit
Business License is a license issued through OSS after a business actor has registered and to start a business until before commercial or operational implementation. Commercial or Operational Permit is a license issued through OSS after a business actor has obtained a Business License and to carry out commercial or operational activities.
Business License and Commercial or Operational Permits are issued based on sector i) electricity, ii) agriculture, iii) environment and forestry, iv) public works and public housing, v) marine and fisheries, vi) health, vii) medicine and food, viii ) industry, ix) trade, x) transportation, xii) communication and informatics, xiii) finance, xiv) tourism, xv) education and culture, xvi) university, xvii) religion, xviii) manpower, xix) police, xx) cooperatives and MSMEs, xx) nuclear. Outside the above sectors will be issued based on statutory provisions.
Business License Issuance
Business Licenses are divided into 2 categories, i) Business Licenses without fulfillment of Commitments and ii) Business Licenses with fulfillment of Commitments. Business License without fulfillment of Commitment is effective after being issued. Business Licenses with fulfillment of Commitments are effective after business actors meet i) technical requirements, ii) cost requirements or iii) technical and cost requirements. The time period required for the issuance of a Business License with technical requirements in the form of a technical evaluation is 5 days and 15 days for those requiring field reviews and/or laboratory examinations. If the authorized official does not submit the notification within the aforementioned time period after all the files have been submitted, the fulfillment of the Commitment is deemed approved.
Commercial or Operational Permit Issuance
Commercial or Operational Permits are divided into 2 categories, i) Commercial or Operational Permits without fulfillment of Commitments and ii) Commercial or Operational Permits with fulfillment of Commitments. Commercial or Operational Permits that fulfill the Commitment are effective after the business actor meets i) technical requirements, ii) cost requirements or iii) technical and costs requirements. The period of time required for the issuance of Commercial or Operational Permits that require technical requirements in the form of technical evaluations is 5 days and 15 days for those that require field reviews and/or laboratory examinations. If the authorized official does not submit the notification within the aforementioned period after the entire file has been submitted, the fulfillment of the Commitment is deemed approved.
Fulfillment of Commitment
Fulfillment of Business License Commitments consists of i) Infrastructure Commitments and/or ii) Technical Commitments. Technical commitments are carried out in accordance with the provisions set by each ministry/agency and for Infrastructure Commitments are in the form of:
1. Location Permit
Location Permits are issued through the OSS system and consist of Location Permits without Commitment and Location Permits with Commitment. Location Permit without Commitment is issued in the case of land of business location i) in accordance with Detail Plan of Spatial Use (RDTR) and/or Plan of Spatial Use (RTRW), ii) located in a special economic zone (KEK), Industrial Estate, as well as free trade area and free port (KPBPB), iii) possessed by other business actors that have obtained Location Permits, iv) grant by the authorities in accordance with the regional spatial plan, v) the location is bordering with the location of the business that has been running, vi) no more than 25 hectares for agricultural businesses, 5 hectares for low income community housing or 1 hectare for non-agricultural business, or vii) is used for national strategic projects.
2. Water Location Permit
This permit is granted for business activities carried out in some waters in coastal areas and/or small islands in accordance with statutory provisions, and consists of i) Water Location Permit without Commitment issued directly by OSS and ii) Water Location Permit with Commitment. Water Location Permit does not require Commitment in the case of business location i) located in KEK, Industrial Estate and KPBPB, ii) originating from the authority in accordance with the spatial plan of the development area, iii) used by Micro Business and small businesses, and iv) for national strategic projects. While for Water Location Permit with Commitment, the application is submitted to the minister in charge of maritime affairs and fisheries or governor through the provincial DPMPTSP. For Water Location Permits located in i) across provinces, ii) national strategic areas, iii) certain national strategic areas and vi) national conservation areas the application is submitted to the minister in the field of maritime affairs and fisheries.
3. Sea Location Permit
This permit is granted for business activities that utilize part of the sea space permanently covering sea level, water column, seabed surface to a certain extent in accordance with statutory regulations, and application for fulfillment of commitments are submitted to the minister in charge of marine affairs and fisheries.
4. Environmental Permit
Environmental Permits are issued through OSS based on Commitments consisting of i) UKL-UPL or ii) Environmental Impact Assessments (Amdal). An Environmental Permit is not required for the issuance of a Business License in the case that the business location is in the KEK area, Industrial Estate or KPBPB or for Micro and Small Business activities, and businesses that do not require Amdal and/or UKL-UPL. Micro and small business activities and businesses that do not require Amdal and/or UKL-UPL will get SPPL automatically through the OSS system. If the business actor changes the business activities that have an impact on the environment, he is obliged to submit an application for a change in the Environmental Permit.
The stages for UKL-UPL and Amdal application are as follows:
5. Building Permit (IMB)
IMB is issued through OSS and business actors must fulfill the Commitment within 30 days from the issuance of IMB. IMB fulfillment is carried out by completing:
- Proof of ownership status of land rights or land use agreement;
- Building owner data; and
- A building plan that contains at least an architectural plan, a structural plan and a utility plan.
IMB is not required to fulfill the Commitment in the case of buildings located in KEK, Industrial Estate, KPBPB, area manager has established building guidelines and/or is a government project. Business actors who have completed the building in accordance with the IMB are required to submit an application for Feasibility Certificate (SLF).
Business actors can use the licenses referred to above that are already obtained which are still appropriate and valid.
Foreigner Business Activities
Representative Office of Foreign Companies
Representative Offices of Foreign Companies (KPPA) intends to carry out business activities in Indonesia are required to have NIB and register KPPA. KPPA’s activities are limited to:
- As supervisor, liaison, coordinator, and take care of the interests of the company or its affiliates;
- Preparing the establishment and development of PMA company business in Indonesia;
- Located in an office building in the provincial capital;
- Do not carry out activities to look for income originating from Indonesia or carry out sale and purchase transactions with companies or individuals in the country; and
- Not participate in the management of a company in Indonesia in any form.
- The head of the KPPA resides in Indonesia, does not carry out activities outside the KPPA activities and does not hold concurrent positions as head of the company and/or for more than 1 year; and
- If the head of the KPPA is a foreigner and/or employs foreign workers, KPPA is required to employ Indonesian workers in accordance with the composition stipulated by statutory regulations.
Foreign Trade Company Representative Office (KP3A)
KP3A can conduct business activities in the form of sales agents, factory agents and / or purchasing agents. KP3A requirements are:
- Not conducting trade activities and sales transactions both from the initial level up to completion;
- Must have a NIB and a Business License for a representative of a foreign trade company;
- If employing a foreigner as the head of KP3A, it must employ Indonesian workers with a composition in accordance with statutory regulations;
- The head of KP3A can employ foreign workers as the assistant head of KP3A or the assistant head of the KP3A branch office.
Representative Offices of Foreign Construction Services Business Entities intends to carry out construction service activities must have a NIB and a Construction Services Business License and issued by the OSS. Foreign franchisors must have NIB and Franchise Registration Certificate (STPW). Foreign futures traders must have NIB and futures trader registration.
OSS provides notification of tax facilities to business actors in the form of a reduction in corporate income tax or income tax for investment in certain business fields and/or certain regions. Business actors who get notifications can apply for tax facilities through OSS.
Business Development and Business Combination
Business Development is carried out by:
- Business actors adding capacity, business fields with 5 digit KBLI, and/or business locations;
- For the industrial sector, industrial expansion is adding production capacity for the same 5 digit KBLI and within the same location as stated in the Industrial Business License.
The process of issuing Business Licenses for business development is carried out in line with the business licensing process above.
Business actors may merge business on Business Licensing that is owned and carried out in accordance with the Business Merger Deed that has been approved by the Minister of Law and Human Rights. The OSS system will issue Business Licenses for the business merger. Fulfillment Commitments must still be fulfilled by the business entity receiving the merger.
Business actors may be subject to sanctions in the form of postponed of NIB up to revocation of Business License in the event that:
- Not carrying out fulfillment of Commitments;
- There is a discrepancy with i) business sector provisions, ii) KBLI, iii) investment and capital values, iv) other particular provisions;
- Did not make correction after being given a warning by BKPM.
Licenses issued before this regulation has been enacted remain valid as long as it is not contrary to the provisions or not specifically regulated in this regulation. Business actors who do not yet have an NIB but already have a Business License and/or Commercial or Operational Permit, company registration certificate, API, and customs access rights that are still valid or have expired or there are changes in data are required to register an NIB.