indonesian oss system

The Indonesian Online Single Submission System and Its Effect on Company Registration Indonesia

  • InCorp Editorial Team
  • 24 August 2023
  • 3 minutes reading time

Recently, the Government adopted several business-friendly policies and introduced the Indonesian OSS system to make it simpler for foreign investors to jumpstart their businesses in the archipelago. The results are, however, questionable.

This article introduces a newly established system of company registration in Indonesia through the so-called Online Single Submission System and provides a general overview of the most important facts at the time of its release.

The Indonesian OSS System for Company Registration

Entrepreneurs willing to open or expand their business activities are now obliged to use the Online Single Submission (OSS) System. Even though the system started to operate in June 2018, it will be fully implemented during the upcoming months or years.

The potential of OSS for foreign entrepreneurs is enormous. Once adopted, investors would apply and receive most of their business licenses online without the need to visit several government offices as previously.

However, at the current state of its implementation, this sounds more like a far-fetched dream.

Nowadays, foreigners are not able to start their businesses without legal assistance.

Why?

Even though the system might make it easier to proceed with applications for licenses, foreigners must first understand what licenses they need to acquire and know the requirements. This is what the current system lacks.

Indonesian OSS System: Processes for Company Registration

Currently, the company registration for most sectors is conducted as follows:

  1. Company name approval
    Consists of three words with a limitation on vulgar or obscene words.
  2. Article of Association within Deed of Incorporation
    A notary should witness its establishment.
  3. Approval of Legal Entity
    Approved by the Ministry of Law and Human Rights.
  4. Tax Registration Number (NPWP)
  5. Domicile Licence
  6. Registration of a Legal Entity to OSS
    – Business Identification Number
    – Business Licence and Location Permit
    – Other commercial or operational licenses

Business Identification Number (NIB) through OSS Indonesia

NIB replaces Company Registration Certificate (TDP) and serves as several other licenses

  • Import Licence (API) – including API-U for importing goods for trading purposes and API-P for importing goods utilized for internal usage only
  • Customs Identification Number (NIK)

Furthermore, NIB serves as registration under Health and Social Security Systems, known as BPJS Kesehatan and BPJS Ketenagakerjaan.

Commercial and Operational Licences through OSS Indonesia

Businesses operating in sectors such as healthcare, medical devices production and distribution, and cosmetics are obliged to apply for additional licenses before starting their operations in Indonesia.

To begin the application process, businesses are required to comply with mandatory standards, licenses, certifications, and other registrations of their specific business field.

Organizational Structure of a Foreign-Owned Company

To start a foreign-owned company, at least two shareholders are required. They can be both individuals or corporations, foreigners or Indonesians, or a combination of both.

Noticeably, the minimum amount of shares is IDR 10 million per one shareholder.

Based on the latest update, the Indonesian government now requires at least one local individual to act as a Local Director or a Local Commissioner.

Further reading: Company Establishment in Indonesia: Mandatory Organisational Structure

Positive Investment List

Following the enactment of Indonesia’s Omnibus Bill, its Government has released an update of business sectors and lines (also commonly referred to as KBLI) that are now open to foreign investment in Indonesia. The revised Negative Investment List has been dubbed as the “Positive Investment List” to attract more foreign investors.

Contact us to get the latest information about company registration in Indonesia. Our teams of lawyers and legal consultants in Jakarta, Semarang, and Bali are ready to assist you and guide you throughout the whole process.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.