Indonesia’s Omnibus Law Looks to Support the Aviation Industry

Indonesia’s Government Regulation 32 of 2021 (GR 32/2021), an implementing regulation of the Omnibus Law, aims to support the recent liberalization of Indonesia’s aviation industry.

In the country’s new positive investment list, domestic air transport is open to a maximum of 49 percent foreign ownership whereas airports and airport supporting services are now open to 100 percent foreign investment.

GR 32/2021 provides a simplified process to obtain aircraft licensing and registration in Indonesia, as well as reduces the minimum number of aircrafts an operator must own and operate/possess.

Moreover, the Minister of Transport Regulation 81 of 2021, an implementing regulation to GR 32/2021, further describes the required steps and criteria for foreign businesses to obtain licenses in the airport services and airport-related services industries.

Aircraft licensing and registration in Indonesia

The criteria for aircraft licensing and registration in Indonesia under GR 32/2021 are still in line with the 2009 Aviation Law. The aircraft registration must be submitted by the owner or authorized person with the following requirements:

1. Having proof of aircraft ownership or control;
2. Having proof of aircraft insurance;
3. Showing proof of not being registered in other countries;
4. The aircraft has met the limit age set by the Minister of Transportation; and
5. Showing proof of fulfilling the requirements for the procurement of aircraft.

There are some additional technical and/or administrative requirements that have been introduced under GR 32/2021 required to obtain technical certificates.

Aircraft manufacturer certificate

Entities carrying out production or assembly activities of aircraft must also develop a safety management system guideline, which was not previously required.

Air operator certificate

Entities must now have a validated air transportation security program to obtain an air operator certificate.

Minimum aircraft ownership requirement in Indonesia

The government has loosened the minimum ownership limit from five self-owned and five operated (leased) aircraft to one self-owned and two leased aircraft for a scheduled commercial operator. This makes it easier for foreign businesses to begin operating in Indonesia.

The minimum ownership limit for an air cargo operator, a non-scheduled commercial operator, and a scheduled commercial operator can be seen from the following table.

Minimum Aircraft Ownership Requirement in Indonesia
	Owned	Operates (leased)
Air cargo operator	1	1
Non-schedule commercial operator	1	1
scheduled commercial operator	1	2

Business licensing for the airport and airport-related services

MoT 81/2021 divides the business activities for airports into two services:

• Airport services; and
• Airport-related services.

Both sectors are now open to 100 percent foreign investors who must first establish a legal Indonesian entity in order to engage. In doing so, businesses must obtain a business identification number, which is now assessed based on the risk level of the business (risk-based business licensing).

Airport services in Indonesia

Airport services relate to the providing and/or developing of:

1. Terminal facilities for passengers, postal, and cargo transportation services;
2. Facilities for aircraft landing, parking, maneuvering, and storage;
3. Waste disposal activities, electronics, water, and electricity; and
4. Buildings and land-related to air transportation activities.

The above-mentioned services can only be undertaken by an airport business entity that is legally allowed to commercially operate airports or an airport unit operator that was established by the central or regional government.

The airport business entity refers to an Indonesian legal entity or a state-owned enterprise. Each business type will go through a different procedure to become a commercial airport operator.

For the Indonesian legal entity, they must go through a tender process, where they must adhere to one of the following cooperation schemes for the project:

• Cooperate with the central government and other business entities; or
• Cooperate with a state-owned enterprise.

Obtaining the airport business entity standard certificate

After winning the tender process, the Indonesian legal entity must next obtain the ‘airport business entity standard certificate’ (sertifikat Badan Usaha Bandar Udara), through the Online Single Submission System (OSS).

To acquire the certificate, the legal entity must meet the following requirements:

• Showcase the company’s financial capability to build and operate an airport.
• A business plan that contains the company profile, the services to be provided, market analysis, airport management organization, and financial plan.
• The company must have a minimum authorized capital of 30 percent of total capital expenditure during the concession period, plus the amount to cover 12 months of operational costs.
• The composition of capital ownership is in line with the prevailing laws and regulations in Indonesia; and
• The airport personnel and organization are in accordance with the civil aviation safety standards.

Airport related services in Indonesia

Airport-related services are open to Indonesian legal entities engaging in baggage handling, cargo handling, and ground handling activities.

Businesses will need to obtain additional licenses (the standard certificate of technical service for handling aircraft on the ground) for those services, which is done through the OSS.

Further Reading

• Indonesia’s Omnibus Law: Risk Based Business Licensing
• How to Set Up a Limited Liability Company in Indonesia
• Indonesia’s Omnibus Law: The Positive Investment List and the Liberalization of Business Sectors

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