Risk Based

Business Licensing
Dr. Mailinda Eka Yuniza, S.H., LL.M.

2023
PUBLIC SERVICES THEORY

(i) Essential utility or infrastructural services, such as water,

sanitation, electricity, etc.

(ii) Social services, such as healthcare, schooling, public housing,

etc.

(iii) Regulatory services, such as issuance of licenses and permits,

etc.
FUNDAMENT
AL
Public services are activities or series of
Law No. 25/2009 on Public
activities in the context of meeting the need
Services
for services in accordance with the law for
each citizen and resident for goods, services,
and/or administrative services that are
provided by public service providers

• Scope of public services (Art. 5 Law No. 25/2009) : public goods, services, public service, administrative service.
• Article 7 Government Regulation No. 96/2012 : administrative measure → service to grant licensing and non-licensing
documents.
• Licensing and non-licensing documents are parts of state administrative decision.
PUBLIC SERVICE INNOVATION IN
INDONESIA
There is a change in
Centralized
government’s
governance →
paradigm towards
decentralized
public service
governance
delivery

Reform in
procedural matters,
either regulatory Development in
reform or licensing services
bureaucracy reform, models
including in the
scope of licensing
LICENSING SERVICE MODELS

One Roof Integrated Service

(PTSA)

One Stop Integrated Service

(PTSP)
Indonesia National
Single Window (INSW)
Online Licensing Service
Online Single Submission
(OSS)
 ONE ROOF INTEGRATED SERVICE

Presidential Decree No. 29/2004 Concerning

First Generation Investment Implementation in the Framework of
Foreign and Domestic Investment Through One
Roof Service System (Keppres PTSA)

Keppres PTSA
• Indonesian government gives an authorization for the Investment
Coordinating Board (BKPM) to deliver an investment license service
which is needed by investors put their investments towards Indonesian
business.
• BKPM Is responsible for the horizontal and vertical coordination
regarding investment licensing services.
 ONE ROOF INTEGRATED
SERVICES Keppres PTSA

• All services are centered in an office

• All license application documents should be served and done in
a centered office.
• Authorization for license approval is still on the hand of the head
of the Department or the Regional Works Unit (Satuan Kerja
Perangkat Daerah/ SKPD) or the other related technical Local
Government Organization (Organisasi Pemerintah Daerah/ OPD).
ONE ROOF
• Pilot Project : the Government of Yogyakarta (Pemkot Yogyakarta) → One
INTEGRAT Roof Integrated Service Unit (Unit Pelayanan Terpadu Satu Atap/ UPTSA)
• By the evaluation from the pilot project, the Government of Yogyakarta
ED established The Yogyakarta City Government Regional Regulation (Perda Kota
Yogyakarta) No. 17/2015, which regulate:
1. Institutional strengthening of the UPTSA became Dinas UPTSA which is
SERVICE authorized to process any requests for license and non-license
2. Improvement of human resources and budgeting
(PTSA) 3. Improvement of system, mechanism, and procedures of investment
licensing service.
• Characteristic of license: parallel
All of the documents regarding the request of investment license has been
completed with administrative requirements in package
ONE STOP INTEGRATED SERVICES (PTSP)

Legal Basis : the Law No. 25/2007 on Investment and its derivative
regulations.

• Article 1 (10) Law No. 25/2009: “Pelayanan terpadu satu pintu adalah kegiatan
penyelenggaraan suatu perizinan dan nonperizinan yang mendapat pendelegasian atau
pelimpahan wewenang dari lembaga atau instansi yang memiliki kewenangan perizinan dan
nonperizinan yang proses pengelolaannya dimulai dari tahap permohonan sampai dengan
tahap terbitnya dokumen yang dilakukan dalam satu tempat.”
• Objective of PTSP: to accomplish all license and non-license services to be done in an
integrated institution.
ONE STOP INTEGRATED SERVICES (PTSP)

• Presidential Instruction (INPRES) No. 3/2006 on the Investment Climate Improvement Policy Package → give
mandate to the central and regional governments to establish policy, program, and measure to support the
investment climate, such as granting Ease of Doing Business (EoDB).
• Regulation of the Minister of Home Affairs No. 24/2006 on the Guidelines of One Stop Integrated Service:
 By PTSP, the local governments are mandated to simplify the licensing services, accelerate the
completion of licensing procedures, set a fixed cost, give a clear service procedure, lessen requirement
documents for licensing, give a free service for small business, and give an accessible information
regarding the services.
 Art. 7 → principle of PTSP: coordination, integration, synchronization, file security.
ONE STOP SERVICES IN INVESTMENT

• Art. 13 The Regulation of the Head of the Investment Coordinating Board (BKPM) No. 6/2011:
Scope of PTSP:
1.Service in investment licensing
2.Service in non-licensing in a form of recommendation
3.Service in public’s complaint regarding the services delivery
4.Service in giving the ease of investment

Provincial Regional Municipal Apparatus in

•BKPM is a PTSP executor Apparatus in Investment Investment (PDKPPM) is an
at a central level of (PDPPM) is an executor of executor of PTSP in
investment. PTSP in investment at the investment at the
provincial level city/regency level
INDONESIAN INVESTMENT COORDINATING BOARD
(BKPM)

• BKPM was very first established in 1973 to replace the function of the Investment Technical
Committee. It then restored to ministry level status in 2009 and directly reporting to the
President of the Republic of Indonesia.
• By the Presidential Instruction that was issued in 2014, Joko Widodo as a president of Indonesia
launched an Integrated One-Stop Services (PTSP) at BKPM.
• As one-stop service center, investor can simply go to BPKM to obtain necessary permits. They
don’t have to visit various government agencies or ministries for it because it is centered and
simplified in BPKM.
ONLINE BASED LICENSING SERVICES IN
INDONESIA
Indonesia National Single Window (INSW)

Online Single Submission (OSS)

 INSW
• Basis of establishment: ASEAN Single Window (ASW) → where ASEAN
countries’ data are integrated in one licensing services to accelerate the process
in customs clearance
• Aim of INSW system is basically based on ASW Agreement, ASW Protocol, ASW
Technical Guide, and the other blueprint of online-based licensing integrated
system in Indonesia
• Based on the Art. 1 (b) Protocol to Establish and Implement the ASEAN Single
Window, by INSW, it is possible to:
1. Have a single access on data and information
2. Process data and information synchronously
3. Make a single decision for customs clearance and cargo clarity.
 Objectives

 Accelerate export and import process by the improvement of

effectivity and efficiency in integrated services system
 Minimalize time and cost in handling export and import traffic of goods
 Accomplish data and information accuracy and validity regarding export
and import
 Increase competitiveness of national economics and to encourage FDI
in Indonesia

INS
W
ONE SINGLE SUBMISSION (OSS)

Legal Basis:
1. Presidential Regulation No. 91/2017 on the Acceleration
of the Implementation of Business.
2. Government Regulation No. 24/2018 on Electronic
Integrated Business Licensing Services
OSS

• Established in 2018 to simplify the business licensing process

• OSS is basically a business licensing system which is integrated online with all
of ministries and institutions, from regional level to central level. By OSS,
business licenses are established for and on behalf on the name of the
minister, head of institution, governor, or regent/mayor.
• Business license consisting of business license and commercial or operational
license.
 OSS – The Objectives

• By the establishment of the Government Regulation 24/2018

on Electronic Intregrated Business Licensing Services. The
Government of Indonesia introduced PTSP/ OSS to support
EoDB and accelerate the investment in Indonesia.
• OSS aim to ease and simplify the procedures of licensing in
Indonesia to achieve EoDB
 OSS

• Automatic approval → to achieve uniformity of requirements, simplify the procedures so there

is no process for document review. License and permit can be easliy granted as long as they
meet all of the requirements.
• By OSS, applicants can first get the license and followed by the fulfillment of documents
requirements.
• Scope of business licenses established by the OSS (Art. 85 GR 24/2018): business licenses in the
sector of electricity, agriculture, environment and forestry, public works and housing, marine
and fishery, health, medicine and food, industrial, commercial, transportation, communication
and information, financial, tourism, education and culture, higher education, religion and
religious, employment, police, cooperatives and MSME, nuclear power.
THANK YOU
LICENSING AFTER THE LAW OF JOB
CREATION

To accelerate business conduct in Indonesia, the Government of Indonesia established the

Presidential Regulation No. 91 of 2017 concerning the Acceleration of Business Conduct. One of
derivative regulations to implement the regulation and achieve the acceleration was initiating Online
Single Submission (OSS) through the establishment of the Government Regulation No. 24 of 2018
concerning Electronic Integrated Business Licensing Services.

OSS has several issues after its implementation and the licensing process was still facing
problems, such as lengthy and uncertain licensing process.

By the enactment of the Law No. 11 of 2020 concerning Job Creation introduced licensing with
Risk-Based Approach that was specified on the Government Regulation No. 5 of 2021 concerning
Risk-Based Business Licensing and the Government Regulation No. 6 of 2021 concerning
Implementation of Business Licensing in the Region.
PROBLEMS OF OSS

The OSS system has not been fully integrated between the relevant ministries and institution and
there are still some regions that implement their own online-based licensing mechanism.

Not all Ministries / Institutions / Regional Governments / Other Institutions have made the
relevant norms, standards, procedures, and criteria in implementing OSS.

The absence of synchronization between the Spatial Plan and Regional Spatial Plan (RTRW) and
Spatial Detail Plan (RDTR) results in many establishments of business locations that are not
following regional planning as specified in the RTRW document in its practice.

Issues related to the differentiation between business licenses and operating licenses.
LICENSING REFORM THROUGH THE JOB
CREATION BILL

The Job Creation Bill amended the Law No. 26 of 2007 concerning Spatial Planning to synchronize the area and spatial layout by giving
the authority for the central government to directly coordinate and synergize spatial planning

The Job Creation Bill amended the Law No. 32 of 2008 concerning Environmental Protection and Management, such as the
provision regarding AMDAL and the authority to supervise compliance with business conducts

The Job Creation Bill amended the Law No. 30 of 2009 concerning Special Economic Zones by providing provisions related to
application for business licenses that are required to be carried out using an electronically integrated licensing system managed by
the central government

The Job Creation Bill amended the Law No. 23 of 2014 concerning Regional Governance by gibing authority to the central government to
manage the electronic licensing system that is a requirement of business licensing.
RISK-BASED BUSINESS LICENSING
 LEGAL BASIS P
Law of the Republic of Indonesia
Law No. 11 of 2020 concerning Job Creation
(Job Creation Bill)

Government Regulation Presidential Regulation

1. GR No. 5/2021 concerning Implementation Presidential Regulation No. 10 of 2021
of Risk-Based Licensing concerning the Investment Business Sector
2. GR No. 16/2021 concerning Building
Construction Regulation of the Head of Capital Investment
3. GR No. 21/2021 concerning Organization of Coordinating Board (BPKM Regulation)
Spatial Planning 1. BPKM Regulation No. 3/2021 concerning the
4. GR No. 22/2021 concerning Environmental Electronically Integrated Risk-Based Business
Protection, Organisation and Management Licensing System.
5. GR No. 6/2021 concerning Implementation 2. BPKM Regulation No. 4/2021 concerning
of Business Licensing in the Region Guidelines and Procedures for Risk-Based
Business Licensing Services and Investment
Facilities.
3. BPKM Regulation No. 5/2021 concerning
Regulation of the Minister who is related to Risk- Guidelines and Procedures for Supervision
Based Licensing of Risk-Based Business Licensing.
Sectors of Industry (GR 5/2021)

 Marine and Fisheries

 Agriculture
 Environmental and Forestry
 Energy and Mineral Resources
 Nuclear Power
 Industry
 Commerce
 Public works and housing
 Transportation
 Health, medicine, and food
 Education and culture
 Tourism
 Religious
 Post, Telecommunication, Broadcasting & System, and Electronic Transactions
 Defense and Security
 Employment
RISK CRITERIA

2 3
SAFETY ENVIRONMENT

1 4
HEALTH LACKOF RESOURCES

5
OTHER RISKS ASPECTS
CLASSIFICATION OF BUSINESS ACTIVITIES IN
RISK-BASED BUSINESS LICENSE

Low Risk Level Business Activities.

Medium-Low Risk Level Business Activities

Medium-High Risk Level Business Activities

High Level Risk Business Activities

 RISK-BASED BUSINESS LICENSING

First stage → Obtain Business Registration Number

(Nomor Induk Berusaha/ NIB)

WHY is NIB important?

1. As an identity of business actors and as a registration evidence to conduct business activities.
2. As an Import Identification Number (Angka Pengenal Importir/API).
3. Rights of access to Customs and Duties.
4. To register Social Health Insurance (PBJS) and Manpower Insurance.
5. Mandatory employment report for the first period of business actor.

* Every business actor is only permitted to have one NIB.

 RISK-BASED BUSINESS LICENSING PROCESS

Source: “Risk Based Business Licensing: the New Approach by the Government of Indonesia to Attract More Investment”
by Makarim & Taira Consellors at Law
THANK YOU