Coordinating Minister for Economic Affairs Airlangga Hartarto. (ID Photo/Emral Firdiansyah)

Omnibus Law to Nix Licensing, Partner, Capital Requirements for Limited Liability Companies


DECEMBER 13, 2019

Jakarta. The government plans to drop a complicated licensing process and an expensive capital requirement for small businesses, making it easier for them to open up shops. 

The Coordinating Minister for Economic Affairs Airlangga Hartarto said late on Thursday that the government would include the plan in the all-encompassing omnibus bill on job creation. 


The government expects to submit the omnibus bill to the House of Representatives by the end of this year.

"Having too many regulations has been a challenge for investment and competitiveness. The government wants to see this fixed," Airlangga said in an awarding event by Investor Magazine, the Jakarta Globe's sister publication. 

This was the first time a minister had laid out the details of the job creation omnibus law. President Joko "Jokowi" Widodo announced the plan for the new law in August, but had never fleshed out the details.

Airlangga said the bill will have 11 main "clusters." 

"The first is simplifying the licensing process. Small and medium enterprises will only have to register their business using OSS [online single submission], and that's it," Airlangga said. 

Businesses will no longer have to find partners to establish a limited liability corporation and there will be no minimum capital requirement to do so, Airlangga said.

Currently, the law requires a minimum authorized capital of Rp 50 million to open a limited liability company.

"Any amount of capital will do, what's important is that they have it and are eager to do business," the minister said. 

The second cluster is simplifying investment requirements, Airlangga said. Earlier, the Agriculture and Land Planning Minister Sofyan Djalil had aired a plan to drop a requirement for businesses to apply for a building license (IMB) and an environmental impact analysis (Amdal). 

The third cluster is employment. The fourth is the empowerment and protection of micro-, small- and medium-sized enterprises. The fifth is ease of doing business and sixth is support for research and innovation.

"The seventh cluster is government administration. The president, through a presidential regulation, should be able to revoke local regulations or even ministerial regulations," Airlangga said.

Eighth is changes in legal arrangements, especially ones related to economic activities.

"The basis will be administrative law, not criminal law," Airlangga said. Fines and sanctions will be imposed on violations, instead of jail time, he said. 

The ninth cluster is the procurement of land for national projects. The government will provide helpful facilities, including ease of licensing, for investors so they can concentrate on managing their investment without having to deal with land disputes.

The tenth is investment and government projects, and the last is the management of special economic zones, including industrial ones.

"Based on discussions with 31 ministries and institutions, we have identified 82 laws and 1,194 articles that [need to be] harmonized with the Omnibus Law on Job Creation," Airlangga said.

"Most of the substantial clauses have already been completed. We just need to do a little more harmonizing. It should be completed in a week from now," he said.