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

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.

Other Legal Updates

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.