On 24 September 2020, Statistics Indonesia (Badan Pusat Statistik / “BPS”) issued Regulation No. 2 of 2020[1] to update its “Indonesian Standard Business Classifications” (Klasifikasi Baku Lapangan Usaha Indonesia / KBLI”). The previous KBLI was issued in 2017.

The KBLI consists of a long list of business sectors and sub-sectors that is formulated based on the “International Standard Industrial Classification of All Economic Activities” (published by the UN) and the “ASEAN Common Industrial Classifications” (published by ASEAN), among other sources.

The new KBLI (“KBLI 2020”) was prepared by the BPS in collaboration with relevant ministries and government agencies so as to accommodate various types of emerging business activities that were not covered by KBLI 2017. It introduces a total of 216 new sectors and sub-sectors, including a number of new entries to take account of fintech’s exponential growth since 2017. These new entries include the following:

Does Anything Need to be Done?

There have been concerns that the introduction of KBLI 2020 may mean that companies will need to adjust their objects and purposes (as stated in their constitutional documents) so as to conform with the new business classifications. This is because companies were required to do so when KBLI 2017 was introduced. However, during an event to mark the launch of KBLI 2020 on Sept. 29, a representative of the Coordinating Ministry of Economic Affairs (“CMEA”) gave an assurance that this would not be the case this time around. He said that CMEA would work closely with BPS, the Ministry of Law and Human Rights (“MOLHR”), the Investment Coordinating Board (“BKPM”), and other ministries/government agencies to ensure that the MOLHR’s Online Legal Administration System and the BKPM’s Online Single Submission System (“OSS”) would be able to automatically convert business lines from KBLI 2017 to KBLI 2020, provided the company’s stated business activities remain unchanged. However, we understand that such automatic conversion is as yet not possible.

ABNR Commentary

The KBLI is a crucial document in the foreign direct investment (FDI) context as it forms the basis for the classifications contained in the Negative List (Daftar Investasi Negatif / “DNI”), i.e., a list of business sectors that are closed or only partially open to foreign direct investment (FDI). While the current DNI is expected to receive a major shakeup in the near future after the Omnibus Bill that was recently passed by the National Assembly becomes law, KBLI 2020 will nevertheless likely continue to play a role in defining whatever restrictions the Government plans to impose on FDI going ahead. It will also likely have a role to play in the Government’s new risk-based approach to business supervision, whereby licenses will, in theory at least, only be required for particularly high risk and high impact activities, as opposed to the current blanket licensing approach, where they are required for just about everything.

One closing thought: At 804 pages long and with no table of contents, KBLI 2020 is every bit as difficult to navigate as its predecessors. Precisely why drafters at our state ministries and agencies almost never include tables of contents in their legal products is difficult to fathom in this day and age, when one would expect user friendliness to be a paramount consideration.