On 21st June, President Jokowi issued Government Regulation No. 24 of 2018 on Electronic Integrated Business Licensing Services ("Regulation 24"), which became effective on the same day. As a consequence, on 29 June, Thomas Lembong, the Chairman of the Capital Investment Coordinating Board ("BKPM") issued a press release stating that BKPM was temporarily suspending the processing and issuing of licenses as a transition to a nationwide business licenses process through an Online Single Submission ("OSS") system.

Regulation 24

Regulation 24 is issued to accelerate and improve capital investment and businesses. With this regulation, an electronic integrated business licensing services system is established, called an OSS system, which will be used nationwide. The OSS system will be run by the OSS agency. However, at the moment the OSS system will be run by the Coordinating Ministry for Economic Affairs ("CMEA") and will later be transitioned to BKPM.

Regulation 24 attaches a comprehensive list of licenses that will be processed through the OSS system. The licenses are business licenses, or commercial or operational licenses, of various sectors, including electricity, healthcare, drugs and food, financial services, trade and employment.

BKPM Press Release

The BKPM press release states the following:

1. On 29th June, BKPM temporarily stopped processing and issuing licenses. The licenses will shortly be processed and issued by the CMEA through the OSS system after the system is formally launched. The CMEA expects that the system will be launched within days.
2. The Coordinating Minister of Economic Affairs directed BKPM to only gather all applications submitted to it, and then once the OSS system is launched, transfer the applications to the OSS system to be processed and issued.
3. BKPM was informed that some applications will still be processed at BKPM even when Regulation 24 is effective. BKPM is still verifying which licenses are still under its authority.
4. BKPM's One Stop Integrated Services (PTSP-BKPM) is still open as usual to take questions and gather applications.
5. PTSP-BKPM is also preparing itself to take over the OSS system from the CMEA, expected to be five months from now.

The CMEA also issued a press release on the same day announcing the OSS system that will soon be launched. It is said that once the OSS system is launched, investors or business owners can process their licenses by coming to the OSS lounge or PTSP, or they can do it through www.oss.go.id.

Implementation - Status

Until this client alert is issued, the OSS system has not yet been launched. As such, it remains to be seen how it will be implemented. The OSS system will be a significant change for the licensing regime in Indonesia. However, we may expect some delays and intricacies for the first one or two weeks when the OSS system is first launched, and when the OSS system is transitioned from the CMEA to BKPM.

In its press release, BKPM indicated that any further developments will be announced. We are monitoring this closely, and we will issue updates if there are any further developments.

Hadiputranto, Hadinoto & Partners, Member of Baker & McKenzie International - 31st July 2018

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)

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Useful Documents

Government Regulation No. 24 of 2018 (Indonesian)