Risk-Based Licensing Framework under GR 28/2025 – A Continuous Improvement

No.

Topic

GR 5/2021

GR 28/2025

Key Impact

1.

Business sectors

Governed the risk-based business licensing process for 17 sectors.

Expanded to 22 sectors governed, adding legal metrology, creative economy, geospatial information, cooperatives and investment.

(Article 5)

Businesses classified under these added sectors are required to review and adjust their Business Licensing to Support Business Activities (Perizinan Berusaha Untuk Menunjang Kegiatan Usaha or “PB-UMKU”) obligations (if any) ensuring compliance with the regulation.

2.

Applications for environmental approval

Environmental Impact Assessment (Analisis Mengenai Dampak Lingkungan or “AMDAL”) and Efforts for Environmental Management and Monitoring (Upaya Pengelolaan Lingkungan – Upaya Pemantauan Lingkungan or “UKL-UPL”) applications were submitted through AMDALNET (operated by the Ministry of Environment).

On the other hand, Statement of Environmental Management and Monitoring Capability (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan or “SPPL”) applications were submitted by filling out a form directly through the OSS System.

All environmental approval applications (including AMDAL, UKL-UPL or SPPL) can now be submitted directly through the OSS System.

(Article 78 paragraph 4)

All environmental approvals applications are now processed through a single gateway i.e. the OSS System that improves efficiency.

3.

Delegation of authority for environmental approval and technical approval

Approval granted by the central or regional government as regulated under GR 22/2021.

The Minister/Head of the Environmental Agency may delegate the granting of environmental approvals and technical approvals to governors, regents/mayors, head of Special Economic Zone (Kawasan Ekonomi Khusus or “KEK”) Administrators and head of Free Trade and Port Zone (Kawasan Perdagangan Bebas dan Pelabuhan Bebas or “KPBPB”) Management Agencies.

While the authority is delegated, the submission and issuance process continues to be conducted through the OSS system.

(Article 104)

This delegation is expected to speed up processes, especially for business activities located in regions or special zones, eliminating bureaucracy process that may be encountered in process via central government.

4.

Deadlines for issuing technical approval (persetujuan teknis)

No fixed timelines for issuance of technical approval were provided.

Deadlines for issuance of technical approvals as the administrative requirement for environmental licenses (AMDAL or UKL-UPL) are: (i) a maximum of 30 business days for technical review of wastewater quality standards and emission quality standards, (ii) a maximum of 16 business days for technical review of hazardous and toxic waste management, and (iii) a maximum of 23 business days for traffic impact analysis.

(Article 83)

If the deadline is exceeded and the application for technical approval has been deemed complete, the businesses can proceed with its application for an environmental approval by attaching proof of the technical approval application.

5.

Submission of Technical Approval

Technical approval must be obtained as a prerequisite to submitting an environmental approval application.

Businesses may submit an application for the issuance of technical approval together with environmental approval, provided that: (i) there has been an assessment of the environmental carrying capacity and assimilative capacity (daya dukung dan daya tampung lingkungan hidup) at the proposed business location, carried out by the Minister, governor, or regent/mayor (depending on the territorial scope), showing that the environment is still able to support the business activity, and (ii) the management of wastewater and hazardous and toxic waste is carried out from the business’s own activities.

(Article 84)

Eliminating separate application processes can be expected to speed up the licensing process.

6.

Administrative Sanctions in the Industrial Sector

A business in the industrial sector holding a Business License (perizinan berusaha or “PB”) without performing industrial business for 3 consecutive years will be subject to administrative sanctions in the form of a maximum of 2 written warnings, each giving the business a period of 1 year to resume activities. If industrial activities are not resumed, the PB will be revoked.

A business in the industrial sector holding a PB without performing industrial business for 3 consecutive years will be subject to administrative sanctions in the form of a maximum of 3 written warnings, each giving the business a period of  30 business days to resume activities. If industrial activities are not resumed, the PB and PB-UMKU will be revoked.

(Article 415)

Providing assurance to businesses to take early mitigation to keep permits active and avoid revocation, with significantly shorter sanction timeline.

7.

Business activity implementation stages

The business activity implementation stages consist of: (i) Preparation, and (ii) Operational and/or Commercial.

The business activity implementation stages now consist of:

1. Starting a business – includes sub-stages for fulfilling business legality, basic requirements such as Spatial Utilization Suitability (Kesesuaian Kegiatan Pemanfaatan Ruang or “KKPR”), Environmental Approval (Persetujuan Lingkungan or “PL”), Building Approval (Persetujuan Bangunan Gedung or “PBG”), Functionality Certificate (Sertifikat Laik Fungsi or “SLF”) and obtaining a business licenses according to the business scale.

2. Running a business, comprising: (i) Preparation (land acquisition, procurement, construction, facilities, human resources, business standards, Business Licensing requirements), and (ii) Operational/Commercial (production, logistics, marketing, other operational/commercial activities).

(Articles 7 – 10)

Providing clearer sequence in respect of business activity implementation stages from legal formalities to physical preparation and operations, ultimately reducing the risk of overlooked steps.

8.

Fictitious positive (fiktif positif) Mechanism

Approvals required explicit issuance by government authority.

Introduces fictitious positive mechanism where a failure by the authority in responding to a request within a stipulated timeframe is considered a “granted” or “positive” decision.

Few contexts are: (i) if technical approval is not issued within 30 business days (wastewater/emission) or 16 business (hazardous waste), businesses may still proceed with Environmental Approval (Article 83), and (ii) if technical consideration (pertimbangan teknis) is not issued within 20 business days, KKPR approval will still be issued (Article 22).

Ensuring certainty and prevents delays, as approvals are deemed granted if authorities miss deadlines.

9.

OSS System Structure

Contained 3 core sub-systems (Information Service, Business Licensing, Supervision).

Expanded to 6 subsystems by adding: (i) Fundamental Requirements – provides information and application for KKPR, PL, PBG, and SLF (previously was found in Information Service sub-system), (ii) Investment Facilities – facilitates applications for investments incentives such as: import duty exemptions, income tax reductions, etc. (previously was found in Information Service sub-system), and (iii) Partnership – enables monitoring and fulfilment of mandatory partnership obligations (e.g. Small Business Enterprise with large company partnerships) including their implementation (new sub-system).

(Article 188 paragraph 3)

Expanded OSS structure provides clearer categorization of licensing components by adding three subsystems (two restructured from existing functions and one newly introduced), which may improve easy navigation for OSS users.