The Indonesian government has issued 51 implementing regulations as a follow-up action for Job Creation Law No. 11 of 2020 (Omnibus Law/UU CK) which was promulgated on February 2, 2021. The 51 implementing regulations consist of 47 Government Regulations (PP) and 4 Presidential Regulations (Perpres).
There are four implementing regulations directly related to licensing procedures. Included in these regulations are PP No. 5/2021 concerning the Implementation of Risk-Based
Business Licensing; PP No. 6/2021 concerning the Implementation of Business Licensing in the Regions; PP No. 7/2021 concerning Ease, Protection, and Empowerment of Cooperatives and Micro, Small and Medium Enterprises; and Perpres No. 10/2021 concerning Investment Business Field.
“PP No. 5 of 2021 is the essence of the Omnibus Law. PP No. 5 regulates the Norms, Standards, Procedures and Criteria (NSPK) of the licensing management system in Ministries/Institutions (K/L) based on the Online Single Submission (OSS) system. Especially for PP No.5, I would like to say that this NSPK is a single reference for the Central
Government, Regional Governments, and businesses. No other reference in managing business licensing,” said BKPM Chairman Bahlil Lahadalia.
PP No. 5 of 2021 also regulates the business licensing process carried out in the OSS system, which must be used by K/L, Regional Government, Special Economic Zone Administrators (KEK), Free Trade and Free Port Zone Governing Body (BP KPBPB), as well as businesses.
“This is the response for complaints from investors, who gave criticisms about slow licensing processing time, difficulties in meeting the state officials, and expensive
costs. So, we cut it. We prioritize transparency, speed, certainty and convenience. Once the requirements are complete, it will work. No need to meet A, B, and C anymore,” Bahlil explained.
Bahlil also said that according to the agreement with the Coordinating Minister for Economic Affairs Airlangga Hartarto, the risk-based OSS system / OSS Risk-based Approach (OSS-RBA) will be implemented in July 2021. However, BKPM will start the implementation of the trial and adjustment period in April-June 2021.
The risk-based business licensing process will categorize risk into four types (low, medium-low, medium-high and high) with specifically required licenses for each type.
The system also includes 18 K/L in 16 business licensing sectors that have delegated their licensing authorities to BKPM.
On the same occasion, Bahlil also explained about Perpres No. 10/2021 concerning Investment Business Field. Compared with the previous regulations (Perpres No. 44/2016 concerning List of Business Fields Closed and Opened with Requirements in Investment), this regulation is more oriented towards competitive investment arrangements.
Previously, there were 20 lists of closed business fields for investment, while in Perpres No. 10/2021, the list is reduced to only six business fields. The closed business fields are
cultivation/drug industry; all forms of gambling; catching of fish species listed in CITES Appendix I; taking/utilizing coral from nature; chemical weapons industry; and the ozone-depleting chemicals industry. Meanwhile, in Attachment II of Perpres No. 10/2021, there are 163 business fields in 89 groups of business fields to be allocated or partnerships with Cooperatives – MSMEs (Koperasi – UMKM), which previously only covered 145 business fields.
Bahlil also reminded the Heads of One-Stop Investment Services (DPMPTSP) in the Provincial/Regency/City Level as the foremost commander for serving investors, both large and small. UMKM has a major contribution to national economic growth and creates jobs.
“It is time for us to change our mindset. The challenges in attracting foreign and domestic investors are getting tougher. Lower our egos. Through this law, let us seek each other. Meet
at the midpoint. BKPM will be proactive in building good cooperation, and synergize for national economic growth,” said Bahlil.
The Omnibus Law which consists of 186 articles, was ratified and signed by President Joko Widodo on November 2, 2020. The Omnibus Law summarizes 77 laws which are divided into 11 clusters, including the ease of doing business and improving the investment ecosystem and business activities. (*)