Indonesia Business Licencing Regime Moves From Commitment-based to Risk-based Criteria

After the delay in implementing the risk-based assessment OSS (“RBA OSS”) system, which was initially set to be ready on 2 July, Indonesia’s RBA OSS system was implemented on 9 August 2021. We highlight new features which can be accessed under the RBA OSS system and what existing businesses should do.

Implementation of Risk Based Assessment Licence

Law No. 11 of 2020 regarding Job Creation and its implementing regulation, namely the Government Regulation No. 5 of 2021 regarding Risk-Based Licencing, has shifted the business licencing regime in Indonesia from commitment-based to risk-based categories. In essence, under the risk-based regime, licencing for businesses will be determined based on the risk in carrying out their business activities.

The relevant licence requirements required to operate businesses under risk-based licencing regime are:

  • Nomor Induk Berusaha or “NIB” that apply for all companies. In order to simplify the licencing process, companies falling in low-risk categories will only need to obtain an NIB;
  • Additional requirements are mandatory for middle/low up to high-risk businesses in the form of the following:
  • self-assessment certificate standard for middle-low risk companies;
  • certificate standard determined by the relevant government authority for middle-high risk companies; and
  • certain permits (izin) to operate for high risk companies.

The RBA OSS system serves as the online business licencing platform to implement such risk-based licencing. Further information can be accessed in this link.

Is any adjustment for Existing Businesses required?

The RBA OSS system implements the new business identification code (Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”) enacted in 2020. To this end, companies with an existing business operating under the 2017 KBLI may need to amend its Articles of Association in accordance with the new KBLI. . As of now, there is no clear deadline to adjust the existing KBLI, whilst there is also no direct sanction applicable if the company does not adjust its existing KBLI.

Mandatory Obligation to obtain a New NIB

Companies with existing businesses may be logged in to the RBA OSS system using the username and password for the previous OSS system. Once logged in, the RBA OSS system will require companies to fill in the registered email address in order to obtain a new username and password.

The above process is required to obtain a new NIB issued under the RBA OSS system. In this case, such NIB will list all relevant KBLIs that are effective (i.e. has obtained an effective business licence under the previous OSS system). KBLI which is not listed in such NIB means that such KBLI has not yet obtained an effective business licence. Accordingly, the licencing process for such KBLI will be conducted using a risk-based approach under the RBA OSS system. Note that existing companies which have not yet registered in the RBA OSS system may not be able to undertake further changes to company data or business licencing process.

Features

The OSS System has been integrated with the relevant regulations with regard to a risk-based licencing regime. Hence, for a low risk business, an NIB will state that the company may start its commercial operation. While for a medium and high risk business, the NIB will not be effective for a company to start its operation and require the company to satisfy several requirements for each business. For example, computer programming falls under KBLI 62019 – which is categorised as medium-high risk, requires (i) opening an account in the Ministry of Industry (“MOI”) system called SIINas, (ii) industry data in SIINas, and (iii) being located in an industrial zone, or, if not , obtain a letter from the MOI for exemption to be located in an industrial zone. Note that the requirements for each business to obtain a licence (for high risk business) or standard certificate (for medium high risk business) may differ.

Next steps

The RBA OSS system also offers information which is useful for companies and investors such as information on foreign ownership limitation for all businesses under the current positive list of investment, list of specific regulations with respect to investment sectors, guidelines for companies and investors to operate the RBA OSS system, supervision mechanism from the government authority and spatial plan.

 

Authored by Mochamad Kasmali, Karina Antonio and Fakharsyah Sugiyartomo

 

 

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