2020 sees the second year since the Indonesian government has implemented an electronic licensing system known as the Online Single Submission (“OSS”) system mid-2018. Implementation of the OSS system as the new face of the licensing system in Indonesia is based on Government Regulation No. 24 of 2018 regarding Electronically Integrated Business Licensing Services as a response to Presidential Regulation No. 91 of 207 regarding Acceleration of Business Implementation. The OSS system was implemented in order to simplify and accelerate investment and licensing activities in Indonesia, where the government is trying to provide facilities for various types of licenses applications through an electronic system. This is expected to also shorten the complicated bureaucratic stages and speed up what used to be a long process. Of course, the implementation of the OSS system is a breath of fresh air for many business owners, where the previous licensing system was considered complex.

However, similar with all developments or revolutions in an industry, rapid and sudden changes in the licensing system have made various business owner struggling to adapt with this new licensing regime. This difficulty in adapting is not only experienced by prospective and/ or on-going business owners who have been in their respective businesses for a long time, difficulties are also experienced by various government officials who mainly carry out processing of a license and officials who have an important role in recording information and business details data within the system of General Legal Administrations i.e. Public Notaries. Although the licensing system has been centralized to the OSS system, officials from various ministries and regions still have an important role, especially in ensuring the fulfillment of business commitments for each issued permit.

It should be noted, when the OSS system was first implemented, supervision of the system’s sustainability was carried out under the Coordinating Ministry for the Economy of the Republic of Indonesia. Thereafter, approximately 6-8 months later the authorization of the OSS system was then given to the Investment Coordinating Board (“BKPM”), which was seen as the most appropriate party in-charge of supervising the OSS system. This due to the fact that the authority of BKPM and OSS are quite similar, as an initial entry point for investors, and as an Agency that has given mandates from various Ministries to be authorized to issue business licenses.

Difficulties in adapting to the implementation of the OSS regime is only one of the many challenges faced by business owners and officials from the ministry or region. Another challenge faced by many business owners is the impermanence of the OSS system. Impermanence in the context that both the information input system or company data and even the user display of the OSS system itself. One example related to the changes of the OSS input system is the company's data input system through the recording system and the General Law Administration System (“AHU”). When OSS was first implemented, business owners only were required to input company data through the OSS system manually, however by the end of 2018, the OSS system required company information or data to be sourced from the data retrieval from the AHU system. In practice, there are many companies that find it hard in obtaining NIB because there are still many AHU data that are not suitable or incomplete. This withdrawal system is a quite a sensitive system where if there was an error in just one number in the identity of the person in charge, the company data will not be read by the OSS system.

Such difficulties is also experienced by Notaries. Since in order to make changes to the above matters, a Notary will not automatically be able to make changes in the AHU System. The notary will then require the business owner to make changes and restatement in the form of a notarial deed only to gain access to the AHU system to be able to make adjustments on the details. Making the notarial deed becomes an additional problem for a lot of business owners, because there is an additional effort and costs that must be incurred.

By the end of 2019, OSS underwent a significant update on its system where OSS, previously known as OSS 1.0, updated to OSS 1.1. This is a new system which revamped it’s entire layout, plus there are many features that were not available in the OSS 1.0 system before - and are now implemented in the latest systems. Differences in systems and features has a lot of business owners required to perform migration of data from the OSS 1.0 system to the new OSS 1.1 system. This migration is a challenge in itself for business owners because the platform looks different from the previous system.

Only in 2020, BKPM has finally issued Head of BKPM Regulation No. 1 of 2020 regarding Guidelines for Implementation Integrated Business Licensing Services Electronically. For further information in relation to this matter (please refer to our previous article titled ‘OSS 1.1 – Unwritten Policies Have Finally Written’). Issuance of this regulation aided business owners in providing clear understanding on the implementation and technicality of the OSS system. Given that since it took effect in March 2020, Indonesia is currently in the midst of battling with the Covid-19 outbreak, which has resulted in the BKPM being unable to conduct sufficient socialization related to the development of this OSS system. This kind of socialization is very much important not only for business owners, however also fo0r various government officials to establish clear comprehension in the technicality and understanding of the implementation of the latest OSS system.

Furthermore, challenges for licensing also arose because when a company wants to streamline its business license, previously business owners in several industries were only required to complete commitments through the OSS system, this time business owners must also create an online account in the designated ministerial system to be able to streamline the permit his efforts. Currently, there are various kinds of electronic systems that are owned by ministries such as SIInas (Ministry of Industry), SiCantik (Ministry of Communication and Information), SIPT (Ministry of Trade) which basically become an “extension” of the OSS system. However, these systems will again delay and potentially further complicate the process of obtaining business permits that the government has previously trimmed and shortened, thus returning to the licensing process to move a step-back in time consuming and no longer ‘centralized’.

We see that with a system that is still constantly changing from time to time, business owners are required to be fully informed and up to date with the implementation or updates of the OSS system. However, we always believe that these changes will have a positive impact that can be realized to the ideals of form of the OSS system itself. In addition, we also believe in good professional assistance, so business owners are able to avoid various kinds of difficulties as we have discussed above. It may take several attempts for the government to perfect the OSS system and find the best procedures to ensure clear and transparent obtaining of business licenses. With the recent enactment of the Omnibus Law, it must be noted that specifications and use of the OSS System may be subjected to changes in the near future.

If there are any queries with regards to how this may affect your business, please contact us for further legal consultation.

This information does not, and is not intended to, constitute as legal advice; instead, all information, content, and materials are for general information only.