Govt. Simplifies Requirements for the Securing of Freight-Forwarding Licenses

The Ministry of Transportation (“Ministry”) has issued Regulation No. PM 130 of 2016 (“Fourth Amendment”), which amends Regulation No. PM 74 of 2015 on the Organization and Management of Freight-Forwarding Service Businesses (“Regulation 74/2015”).[1]
 
This Fourth Amendment is aiming to offer greater certainty for freight-forwarding service businesses[2] and in order to do this, simplifies the requirements which have to be met by businesses which are seeking to secure freight-forwarding service business licenses. 
 
Prior to the issuance of the Fourth Amendment, Regulation 74/2015 was previously amended by the following regulations (in chronological order):
 

1.	Ministry Regulation No. PM 78 of 2015;
2.	Ministry Regulation No. PM 146 of 2015 (“Second Amendment”);[3] and
3.	Ministry Regulation No. PM 12 of 2016 (“Third Amendment”).[4]

 
Freight-Forwarding Service Business Licenses
 
In general, any entity which is aiming to become engaged in the freight-forwarding service business is required to be established solely for the provision of such services and is then required to secure a freight-forwarding service business license (“License”). This License can be issued by the following authorities:[5]
 

1.	Governor of the province in which the freight-forwarding service company (“Company”) is located: for domestic Companies; or
2.	Investment Coordinating Board (Badan Koordinasi Penanaman Modal – “BKPM”): for joint-venture or foreign Companies.

 
Licensing Requirements: Domestic Companies
 
In order to secure a License, domestic Companies are required to satisfy the following administrative and technical requirements:[6]
 

Administrative Requirements

1. Must be in possession of the following documents: a. Deed of incorporation; b. Taxpayer identification number  (NPWP); c. Domicile certificate (SKDP); d. Person in charge; 2. Must be in possession of an authorized-capital level amounting to IDR 2 billion (minimum), at least 25% of which has already been fully paid-up, as proven by valid deposit receipts or financial statements which have already been audited by a public accountant; 3. Must employ expert Indonesia staff members who should be in possession of the following qualifications at the least: a. Diploma III degree (DIII) in the field of shipping/aviation/transportation/IAT Diploma/FIATA; and b. Certificate guaranteeing their expertise in the field of customs/seaport/logistics.

Technical Requirements

Must be in possession of the following: 1. An office building; and 2. Relevant software, hardware and an information and communications system which has been integrated into a land/sea/air transportation-information system.

 
Previously, a Company was required to be in possession of at least IDR 25 billion in authorized capital and also to possess two additional administrative documents, namely:[7]
 

1.	Recommendations from: (a) a local seaport organizer; and (b) a freight-forwarding and logistics-services association; and
2.	A statement or approval approved by the association mentioned in point (1) if the Company’s authorized capital level amounted to less than IDR 25 billion.

 
Licensing Requirements: Joint-Venture and Foreign Companies
 
Joint-venture Companies or entirely foreign Companies are also required to satisfy the relevant administrative and technical requirements when securing freight-forwarding business licenses, as follows:[8]
 

Administrative Requirements

1. Must be in possession of the following documents: a. Deed of incorporation, as validated by the Ministry of Law and Human Rights; b. Receipt for the deposit of the Company’s capital; c. NPWP and registration certificate issued by the Directorate General of Tax; d. SKDP; e. Principle license issued by the BKPM and covering an investment value of at least USD 4 million, at least 25% of which has already been fully paid-up, as proven by a receipt or financial statement which has already been audited by a public accountant; f. Company-registration certificate issued by the Ministry of Trade; g. Limited-stay permits for the Company’s shareholders issued by the Ministry of Law and Human Rights; h. Permit to employ foreigners issued by the Ministry of Employment; 2. Must employ expert Indonesian staff members who are in possession of the following qualifications at the least: a. Diploma III degree (DIII) in the field of shipping/aviation/transportation/IAT Diploma/FIATA; and b. Certificate guaranteeing their expertise in the field of customs/seaport/logistics.

Technical Requirements

Must be in possession of the following: 1. Office building; and 2. Relevant software, hardware and an information and communications system which has been integrated into a land/sea/air transportation-information system.

 
Previously, joint-venture or foreign Companies were required to engage in a minimum investment value of USD 10 million and also to be in possession of a recommendation or written opinion from:[9]
 

1.	A local-seaport organizer; and
2.	A transportation and logistics-service business association which had been registered with the Indonesian Chamber of Trade and Industry (KADIN).

 
Note that the Fourth Amendment no longer limits the business activities of joint-venture or foreign Companies which have already secured Licenses to the following areas:[10]
 

1.	Airports: Kuala-Namu, Soekarno-Hatta, Djuanda, Hasanuddin, I Gusti Ngurah Rai;
2.	Seaports: Belawan, Tanjung Priok, Tanjung Perak, Makassar.

 
The Fourth Amendment has been in force since 18 October 2016._Ap2