The Changes of Licensing System Pursuant to Government Regulation No. 24 of 2018

Article

The Changes of Licensing System Pursuant to Government Regulation No. 24 of 2018

Author: Clara Angela A. Sipangkar, S.H., M.H & Seruni Firdaus, S.H.

In order to hasten and enhancement of capital investment and business, currently Indonesia Government has applied electronically integrated business licensing services. To support that matter, Indonesian Government has issued Government Regulation Number 24 of 2018 concerning Electronically Integrated Business (“GR 24/2018”). Since the issuance of GR 24/2018, there are several changes on licensing system which among other are the changes of the authorized institution and the form of licensing that must be obtained by the business entity/company. Therefore, in this article will be discussed about the changes of the licensing system which occurred in Indonesia.

Before GR 24/2018, the authorized institution which authorized to issue the license in Indonesia Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal – “BKPM”). However, currently the authorization to issue the license has been transferred to Online Single Submission (“OSS”). OSS authorized to issue all licenses which stipulated in the appendix of GR 24/2018. The authority of the OSS in issuing the licenses regulated in Article 19 paragraph (1) and (2) GR 24/2018 which stated:

“The authority to issue Business Licensing as referred to in Article 18 including the issuance of other documents relating to business licensing must be carried out through OSS Institutions”.

OSS Institutions are based on the provisions in this Government Regulation for and on behalf of ministers, heads of institutions, governors, or regents / mayors issuing Business Licensing as referred to in paragraph (1)”. 
The changes of authority to issue the license aims to facilitate business entity to obtain and managing license as required. With the establishment of OSS institution, business entity does not required to come to several institution to manage the license as required. 

This is due to the licensing system issued by the OSS Institution has been integrated with ministries, governors, regents / mayors, and other institutions authorized to issue permits.
Not only the authority to issue the license that changes, since the issuance of GR 24/2018, there are some changes regarding the form of license which obligate to be obtained by business entity/company. The changes of licenses which issued by BKPM and OSS Institution are as follows:

BKPM

OSS

Principle License / Investment Registration

Business Identity Number (Nomor Induk Berusaha – “NIB”)

Notes:

Based on Article 26 GR 24/2018, NIB may apply as:

  • Company Registration;
  • Import Identification Number as regulate in trading regulation;
  • Custom access as referred in customs regulations.

Business License (issue based on sectoral ministries)

Notes:

Based on the information from OSS, Business License which already issued by BKPM still considered valid until expiration date.

Business License

Notes:

Business licenses consist of business licenses that do not require infrastructure and business licenses that require infrastructure such as location permits, water location permits, environmental permits, and / or building permits.

 

Commercial License / Operational License

Notes:

In the event that a business which run requires a Commercial License, then the business men is obliged to obtain a Commercial License to be able to run their business.

Referring to the explanation above, it can be conclude there are changes of the types of license in Indonesia. With these changes, the businessmen are obliged to have every licenses issued by OSS in an integrated manner. To be able to obtain the license as mentioned above, businessman oblige to submit the application to access OSS system, as mentioned in Article 21 paragraph (1) GR 24/2018.

In addition to the ease of managing license, businessmen also do not need to extend NIB and Business Permits, because the NIB and Business License is remain valid as long as the businessmen running its business, as mentioned in Article 25 paragraph (2) GR 24/2018 and Article 79 paragraph (1) GR 24/2018. However, businessmen are obliged to extend Commercial Licenses based on the period of commercial license.

With the integrated license, then businessman do not need to manage some license to different national institution. Other than that the business itself will not be hampered because the Business License does not require to be extended.    

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