AHRP IBLG Chapter IX

Licensing
in General

Business Licensing

Before the annulment of Law 11/2020 by GRLL 2/2022, Law 11/2020 had been the basis for reformation of the law and regulations on business licensing, along with rapid development of investments within Indonesia. Nevertheless, the reformed business licensing system under Law 11/2020 is carried forward by GRLL 2/2022. One of the implementing regulations, specifically concerning business licensing procedures, is GR 6/2021, which remains both applicable and valid.

As mandated by Law Number 6 of 2023 on Job Creation (“Law 6/2023”), to simplify business licensing through the implementation of Risk-Based Business Licensing, which was previously regulated in Government Regulation Number 5 of 2021 (“GR 5/2021”), it is necessary to carry out continuous policy reforms to facilitate the establishment and operation of businesses in order to support job creation and provide legal certainty to business actors. Therefore, the government has issued Government Regulation Number 28 of 2025 (“GR 28/2025”), which contains 550 articles and 14 chapters. With the enactment of GR 28/2025 on 5 June, 2025, GR 5/2021 is hereby revoked and no longer in effect.

GR 5/2021 regulates the stages of business activities as consisting only of preparation and/or commercialization. Currently, GR 28/2025 regulates and clarifies the stages of conducting business activities. In order to conduct business activities, business actors must obtain a Business License through the stages of (i) starting a business and (ii) running a business. Furthermore, the Business License is obtained after the Business Entity has first fulfilled the basic requirements such as (i) Kesesuaian Kegiatan Pemanfaatan Ruang/”KKPR”; (ii) Environmental Approval; and (iii) Building Approvals (Persetujuan Bangunan Gedung/”PBG”) and Certificate of Feasibility for Building Function (Sertifikat Laik Fungsi/”SLF”).

Based on GR 28/2025, the business process is categorized into two primary phases:

Stage of Starting a Business

The initiation of business activities is contingent upon the fulfillment of three primary sub-stages. First, the business actor must satisfy all Business Legality Requirements, ensuring the entity is incorporated and governed in accordance with the relevant provisions of corporate law. Second, the actor must secure Basic Requirements, which include the KKPR for land or sea locations and the appropriate Environmental Approval. Depending on the nature of the activity, this approval manifests as a Statement of Commitment to Environmental Management and Monitoring (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup or “SPPL”), an Environmental Impact Assessment (Analisis Mengenai Dampak Lingkungan Hidup or “AMDAL”), or Environmental Management and Monitoring Efforts (Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan Hidup or “UKL-UPL”). Only after these prerequisites are satisfied

may the business actor proceed to the third sub-stage: the formal Application for a Business License based on the specific classification of the business activity.

The State of Running a Business

After completing the stages of starting a business, business actors complete the stages of running a business, including (i) the preparation sub-stage; and (ii) the operational and/or commercial sub-stage.

The Preparation Sub-Stage encompasses the necessary infrastructure and organizational setup. This includes land procurement and site preparation, which the regulation permits to be carried out concurrently with environmental approvals and PBG. If the business actor intends to construct facilities, they must strictly adhere to PBG requirements and environmental standards. Furthermore, this stage involves the recruitment of human resources and the fulfillment of specific business standards and licensing requirements necessary to move toward full-scale operations.
The Operational and/or Commercial Sub-Stage involves the core functions of the business, such as the production, logistics, distribution, and marketing of goods and services. The commencement of these activities is strictly governed by the business's assigned risk level. Activities classified as Low or Lower-Medium Risk may proceed with operations immediately upon obtaining the Business License. Conversely, Medium-High or High-Risk activities may only commence operations following the formal issuance and verification of the Business License. It is imperative to note that if an activity requires a Business License to Support Business Activities (PB-UMKU), the actor is legally prohibited from commencing the relevant operational or commercial activities until said PB-UMKU is obtained.

Regarding the implementation of business licensing, GR 6/2021 specifically governs the administration of business licensing at the regional level. Furthermore, pursuant to GR 6/2023, Organization of Business at the Regional Level can be defined as business licensing activities conducted through an electronic management process, from the application stage until the issuance of the document, in an integrated manner via a one-stop service. Business licensing can be understood as the legal approval granted to business actors/individuals who intend to commence and operate a business. The DPMPTSP is the regional apparatus of the provincial, regency, or city regional governments tasked with carrying out government affairs in the investment sector. The functions of One-Stop Services and Investment Services are described in the graphic below:

Indonesia Legal Business Guidelines - Investment

Functions of One-Stop Services and Investment Services

Source: GR No. 6/2021.

Regarding business licensing, Article 6 GR No. 6/2021 states that the implementation of regional business licensing will improve the investment ecosystem and relevant business activities. The enhancement of investment ecosystem and business activities shall include:

risk-based business licensing;
general requirements for business licensing; and
sectoral business licensing and ease of investment requirements.

Risk-based business licensing can be defined as business licensing that is based on assessing the risk level of business activities. Licensing for this type of business can be done by determining its business activities' risk level and rating. In addition, the process of risk-based business licensing is described in the graphic as follows:

Process of Risk-Based Business Licensing

Source: GR No. 6/2021.

Risk-based Approach for Business Licensing in Indonesia

According to the World Bank’s Doing Business Annual Comparation Business Regulation, Indonesia is ranked 73rd (seventy-third) among 190 (one hundred and ninety) economies in terms of ease of doing business in 2019 - 2020. In an effort to improve its ranking, Indonesia issued Law No. 11/2020, which was later replaced by GRLL No. 2/2022, that regulates the ease of doing business as one of its strategic policies. GRLL No. 2/2022 is a continuation of the new business licensing approach introduced by Law No. 11/2020, namely a risk-based approach, to improve the investment ecosystem and business activity. A risk-based approach to business licensing is implemented, involving the determination of risk level and business scale rating for various business activities that are then categorized into the following classifications:

low-risk business activities;
medium risk business activities, divided into:

medium low-risk business activities; and
medium high-risk business activities;

high-risk business activities.

Based on the classifications, the business licensing requirements for each type of level can be seen in Table IX.1:

Classification on Risk-Based Approach on Business Licensing

Source: GRLL 2/2022 jo.GR 28/2025.

These classifications are given based on the assessment of hazard level and potential. The evaluation of the hazard level is carried out using the following aspects: health, safety, environment, utilization and management of natural resources, as well as other elements. The assessment of the hazard level is carried out by calculating the type, criteria, and location of business activity, the limitation of resources, and the volatility risk. The evaluation of potential hazards is divided into the following categories:

very unlikely to happen;
unlikely to happen;
likely to happen; and
most likely to happen.

The government, through GR 28/2025, has restructured the implementation of Risk-Based Business Licensing (PBBR). The scope of PBBR implementation includes: (i) basic requirements, (ii) Business Licensing (PB), (iii) Business Licensing to Support Business Activities (PB UMKU), (iv) norms, standards, procedures, and criteria, (v) OSS services, (vi) supervision, (vii) evaluation and policy reforms, (viii) funding, (ix) problem-solving and obstacles, and (x) sanctions. The mechanism for implementing the risk assessment of business activities is further outlined in Annex III of GR 28/2025. According to Article 3 of GR 28/2025, the objective of PBBR is to enhance the investment and business ecosystem through:

the implementation of the issuance of basic requirements, PB, and PB UKMU in a more effective and simplified manner; and
transparent, structured, and accountable supervision in accordance with the provisions of laws and regulations.

To do business activities, business actors are required to have a PB by first fulfilling the basic requirements, which are processed electronically through the OSS system. Business actors are also required to have a PB UMKU if the PB they hold needs to be complemented with additional business licenses to support their business activities.

The implementation of PB and PB UMKU covers the following sectors:

Sectors of PB and PB UMKU

Source: GR 28/2025.

PBBR in each sector includes the following regulations:

KBLI/related KBLI codes, KBLI titles, scope of activities, business scale, risk level, PB, requirements, issuance period, obligations, PB UMKU, parameters, and authority for PB in each sector (more details are listed in Annex I of GR 28/2025);
Nomenclature of PB UMKU, requirements, issuance period, obligations, validity period, parameters, and authority for PB UMKU in each sector (more details are listed in Annex II of GR 28/2025);
Risk analysis methods (more details are listed in Annex III of GR 28/2025); and
Business activity standards and/or product/service standards, which are further regulated by ministerial/regulatory agency regulations and refer to Annex IV of GR 28/2025.

The PB is valid as long as the business actor is conducting business activities, except for PBs granted for the following purposes:

Implementation of international agreements/treaties;
Utilization of natural resources;
Trade of hazardous and/or toxic substances; and/or
Trade of goods or materials with restricted circulation,

whose validity period is regulated by laws, government regulations, and/or presidential regulations.

Furthermore, to conduct business activities, GR 28/2025 regulates the phased implementation, which is illustrated in the following scheme:

Regional Government Authorities in Risk-Based Business Licensing
Source: Indonesian Investment Coordinating Board.

Risk-based OSS System

The implementation of risk-based business licensing is conducted through an integrated electronic system managed and organized by OSS Agency, namely known as the OSS system. This system consists of the following sub-systems:

information service;
business licensing; and
supervision.

To conduct risk-based business licensing, ministries/agencies, regional governments, KEK administrators, KPBPB entrepreneurs, and entrepreneurs are required to use the OSS system.

Phases of Conducting Business Activities

Source: GR 28/2025.

Basic Requirements

The basic requirements refer to the KKPR, PL, PBG, and SLF, which, in general, are regulated as follows:

General Regulation of Basic Requirements

Source:.GR 28/2025.

*) OSS System will conduct inspections of business locations on land or at sea.

The Conformity of Space Utilization Activities (KKPR)

The implementation of on-land business location inspections is carried out through the KKPR, which consists of KKPR confirmation or KKPR approval. However, for activities classified as national strategic, the KKPR is processed in accordance with the provisions of regulations in the spatial planning sector.

KKPR confirmation is granted based on the conformity of the proposed location for spatial utilization activities with the RDTR that has been integrated into the OSS System. Approval or rejection of a KKPR confirmation application is conducted automatically through the OSS System. In cases where the RDTR is not yet available, the KKPR approval is issued through the OSS system by following the procedures below:

Stages of KKPR Approval

Source: GR 28/2025.

In the event that a business activity is located entirely within the delineation of an RDTR that has not yet been integrated with the OSS System, the issuance of KKPR approval is carried out through an assessment based on the Spatial Plans (RTR) at the regency/municipal, provincial, national strategic area, island, or national levels, and by taking into consideration the RDTR. The mechanism follows the same process as described in Graphic IX.5, but without the land technical considerations.

Furthermore, KKPR Approval may be issued without conducting an assessment of the proposed spatial utilization documents for specific conditions, which include:

the business location and/or activity are situated within a KEK or an industrial estate whose polygon coordinates have been registered in the OSS System, and there is evidence that the business actor is permitted to conduct business activities in the KEK or industrial estate;
the business location and/or activity is situated within an area managed by an authority or an agency responsible for the development of a particular area whose polygon coordinates have been registered in the OSS System, and there is evidence that the business actor is permitted to conduct business activities in that area;
the business location and/or activity is located on land already controlled by another business actor who has obtained KKPR and subsequently transferred to a new business actor with the same KBLI and type of business activity, and with the same land area;
the business location and/or activity are located on land fully controlled by another business actor who has obtained KKPR and leased or lent it to the business actor, with the same KBLI, type of business activity, and land area;
the business location and/or activity relates to upstream oil and gas operations that have been designated by the government;
the business location and/or activity are required for expansion of an existing integrated business, with a land area smaller than the existing area, adjacent to the existing business location, and within the same spatial designation; and/or
the business location and/or activity are required for the construction of housing for low-income communities with a land area no greater than 5 (five) hectares and in accordance with the spatial plan (RTR).

The OSS System routes the application for KKPR approval under these specific conditions to the MoASP, governor, regent, or mayor in accordance with their respective authorities. If the business actor is a micro enterprise and categorized as low-risk, the KKPR for the business location is issued through the OSS System in the form of a self-declaration by the business actor.

In relation to the issuance of KKPR approval for small islands with an area of less than 100 km² (one hundred square kilometers), the following provisions shall apply:

General Regulation of issuance of KKPR approval for small islands with an area of less than 100 km²

Source:.GR 28/2025.

If the conditions and provisions under points 1 and 2 above are not met, and the situation does not fall under special circumstances and the RDTR is not available, then the issuance of KKPR approval for small islands with an area below 100 km² must first obtain a recommendation from the MoMAF. The MoMAF Recommendation is issued through procedures that are substantially similar to those described in Graphic IX.4.

In the event that business activities are located within a forest area, the implementation of the location inspection within the forest area shall be conducted through:

Approval for the Use of Forest Areas, for business activities that are:
- carried out for purposes of business activities outside the forestry sector; and
- located within production forest areas or protected forest areas;
Approval of Forest Utilization Commitment, for business activities involving forest utilization within protected forest areas and production forest areas;
Principle Approval for Environmental Services Utilization in Nature Reserves, Nature Conservation Areas, and Hunting Parks, for activities involving the utilization of environmental services in such areas and parks; and
Approval for the Release of Forest Area, for business activities that are:
- carried out for development purposes outside forestry activities; and
- located within convertible production forest areas,

all of which are issued by the MoFor.

If the business activity is conducted within a KPBPB area, the authority to issue forest area approvals lies with the Head of the KPBPB Management Agency, in accordance with the laws and regulations governing free trade zones and free ports.

In summary, the regulatory framework and process for obtaining forest area approvals as described above may be illustrated as follows:

The Process to Obtain Approval for the Use of Forest Areas

Source: GR 28/2025

The Process to Obtain Principle Approval

Source: GR 28/2025

The Process to Obtain Approval for the Release of Forest Area

Source: GR 28/2025

In the event that a business location is situated in marine waters, the location assessment shall be conducted through the (approval of) KKPRL. To obtain KKPRL approval, the following mechanism shall apply:

The Process to Obtain KKPRL Approval

Source: GR 28/2025

However, if there are business activities that utilize marine space on a permanent basis within a nature reserve or nature conservation area designated by the MoFor, the issuance of the KKPRL approval must be preceded by a recommendation for the utilization of the nature reserve or nature conservation area from MoFor, and must be accompanied by a map of the proposed marine spatial utilization activities.

In summary, the issuance of such recommendation is carried out upon submission of an application by the business actor to MoFor, followed by verification of the requirements based on the conservation principles for the utilization of nature reserve or nature conservation areas, which must be completed within 15 days. Subsequently:

If the requirement verification is rejected by MoFor, MoMAF will also reject the related KKPRL approval application through the OSS system; or
If the requirement verification is accepted, the application will proceed to the stage of examining the proposed marine spatial utilization documents through the OSS system, as previously described in Graphic IX.10.

Environmental Approval (PL)

As is known, PL must be obtained by business actors for every business/activity that has either significant or non-significant impacts on the environment. The PL is issued based on the fulfillment of environmental documents, which may consist of an AMDAL, UKL-UPL, or SPPL. Furthermore, the PL is issued in the following forms:

an Environmental Feasibility Decree for businesses and/or activities that have significant impacts on the environment and fall within the criteria requiring an AMDAL;
an Environmental Management Undertaking for businesses and/or activities that do not have significant impacts on the environment and fall within the criteria requiring a UKL-UPL; or
an SPPL for businesses and/or activities that do not have significant impacts on the environment and do not fall within the criteria requiring an AMDAL or UKL-UPL.

The application and issuance of the PL shall be conducted by and to the business actor through the OSS system. For business activities with more than 1 (one) KBLI that form part of an integrated business activity located within a single ecosystem area, the application and issuance of the PL refer to the environmental document requirement with the highest level.

The stages for obtaining Environmental Approval (PL), in simple terms based on GR No. 28 of 2025, can be illustrated in the following diagram:

The Process to Obtain PL Approval

Source: GR 28/2025

Business actors located within an industrial estate, KEK, or KPBPB that already has an area-wide AMDAL and area-wide PL must prepare a detailed RKL-RPL based on the area’s environmental documents as a statement of their commitment to environmental management, which serves as a requirement for the business actor’s PB within the area and must be submitted to the estate management for review and approval.

Business actors within an industrial estate, KEK, or KPBPB who do not discharge wastewater into a water body, or who discharge wastewater through a wastewater treatment facility provided by the estate management, are not required to obtain technical approval. MoE may delegate the authority to issue PL and technical approvals to governors, regents/mayors, the Head of the KEK Administrator, and the Head of the KPBPB Management Agency. More detailed discussion, with reference to the sectoral regulations on Environmental Approval, will be addressed in sub-chapter 9.3.

Building Approval (PBG) and Certificate of Building Worthiness (SLF)

PBG and SLF are required for business actors who need to construct buildings as business facilities. Building construction activities shall include technical planning (must meet the technical standards set in accordance with provisions of laws and regulations in the building sector), construction execution/implementation, and construction supervision.

PBG must be owned by business actors before the construction implementation and must be submitted to the Central Government or Regional Government in accordance with their respective authorities, shall be processed through:

The Process to Obtain PL Approval

Source: GR 28/2025

SLF must be obtained by business actors before a building can be utilized which is a requirement for fulfilling the feasibility of a building. Fulfillment of SLF for existing Building shall be carried out based on the results of functionality feasibility inspection of a Building conducted by:

technical assessor; or
technical assessment team formed by Regional Government, consisting of relevant agencies organizing building.

Based on the building feasibility inspection, MoPW or the technical agency responsible for building in the Regional Government in accordance with their respective authority shall issue SLF through the OSS System. business actors who have buildings that have been constructed but do not have a building permit/PBG before GR 28/2025, does not need to obtain a PBG and can directly submit an SLF application at the time applying for or renewing PB and/or PB UMKU application through the OSS system, and for business actor who has buildings that have been constructed and have obtained a building permit/PBG can directly submit an SLF application at the time applying for or renewing PB and/or PB UMKU application through the OSS system.

Business Licensing (PB)

PB is carried out based on the determination of the risk level and the business scale rating of a business activity, as produced from a risk analysis. The risk level determines the type of PB. The risk analysis is conducted by involving the MoM, the MoH, the MoE, the relevant sectoral ministries, and business actors/the public. The risk analysis is conducted by the central government through the following stages:

identification of business activities, referring to the scope of business activities under the KBLI;
identification of business scale, carried out based on laws and regulations on the ease, protection, and empowerment of cooperatives and micro, small, and medium enterprises;
hazard level assessment, conducted on aspects of health, safety, environment, and/or utilization and management of resources, taking into account the type of business activity, activity criteria, business location, resource limitations, and/or volatility risks; and
assessment of the likelihood of hazards, consisting of:
1. almost impossible to occur;
2. unlikely to occur;
3. possible to occur; or
4. almost certain to occur,

and produces an output in the form of the determination of the risk level and business scale rating of the business activity, consisting of:

business activities with a low-risk level;
business activities with a medium-risk level, divided into:
1. medium-low risk level; and
2. medium-high risk level,
business activities with a high-risk level.

The forms of PB may include a NIB, a standard certificate, or a business permit, depending on the risk level of the business activity as described in Table IX.1. Classification on Risk-Based Approach on Business Licensing. Further details regarding the risk analysis method are regulated in Appendix III of GR 28/2025.

PB may be expanded and/or amended for the purpose of business development, shall consist of an increase of (i) production/service capacity; (ii) business location; and/or (iii) business activity. PB may have its validity period extended in accordance with provisions of laws and regulations. For business actor that already has PB and has carried out business activities, the extension process of PB may not be preceded by a new submission of basic requirements.

Business Licensing to Support Business Activities (PB UMKU)

PB UMKU is the legality given to business actor to support business activities. PB UMKU is the license required, particularly at the operational/commercial stage of a business activity, as identified by the relevant Ministries/Agencies while still considering the risk level of the business activity and/or the product of the business activity. Furthermore, PB UMKU is the business licensing required for the purposes of:

product circulation;
operational feasibility;
product/service standardization; and/or
the smooth conduct of business activities other than those referred to in letters a, b, and c.

However, PB UMKU does not include licensing related to the conduct of export and import activities, nor compliance with export–import prohibitions or restrictions and commodity balance requirements carried out through the OSS System.

PB UMKU must be fulfilled by business actors by submitting a PB UMKU application to the relevant ministries/agencies, Regional Governments, the KEK Administrator, or the KPBPB Authority, in accordance with their respective authorities, through the OSS System. If the PB UMKU application submitted by the business actor is:

approved, the relevant ministries/agencies and Regional Governments, in accordance with their respective authorities, shall deliver the PB UMKU approval to the OSS System, and the OSS System will issue the PB UMKU to the business actor; or
rejected or requires completion of additional requirements, the relevant ministries/agencies, Regional Governments, the KEK Administrator, or the KPBPB Authority, in accordance with their respective authorities, shall notify the business actor through the OSS System along with an explanation.

PB UMKU may be expanded and/or amended for the purpose of business development, shall consist of an increase of (i) production/service capacity; (ii) business location; and/or (iii) business activity. PB UMKU may have its validity period extended in accordance with provisions of laws and regulations. For business actor that already has PB UMKU and has carried out business activities, the extension process of PB UMKU may not be preceded by a new submission of basic requirements.

Norms, Standards, Procedures, and Criteria

The Central Government formulates and establishes the norms, standards, procedures, and criteria for each sector, which serve as the single reference for the implementation of PBBR by the Central Government, Regional Governments, KEK Administrators, and/or KPBPB Authorities. The Central Government may delegate the issuance of internal implementing regulations for such norms, standards, procedures, and criteria to regional heads through regional head regulations, and regional heads may not expand the provisions of the norms, standards, procedures, and criteria as regulated under GR 28/2025.

Basic requirements, PB, and PB UMKU are issued by the Central Government and Regional Governments in accordance with the norms, standards, procedures, and criteria established by the Central Government, with the following implementing provisions:

General Regulation on Implementation of the issuance of PB and PB UMKU

Source:.GR 28/2025.

However, there are exceptions to this general framework, which are explained as follows:

The Exception on Implementation of the issuance of PB and PB UMKU

Source:.GR 28/2025.

Below are the sectoral norms, standards, procedures, and criteria for business activities as regulated under GR 28/2025:

OSS System

As previously explained, the OSS system is used as an integrated system in the implementation of PBBR, consisting of the information service subsystem, basic requirements subsystem, business licensing subsystem, investment facility subsystem, partnership subsystem, and supervision subsystem, which are utilized by ministries/agencies, regional governments, KEK administrators, KPBPB managing bodies, and business actors. The following is an explanation of the types of business actors that submit applications for PB through the OSS system:

The Provision of Types of Business Actors that Submit Applications for PB through OSS

Source:.GR 28/2025.

Business actors provided with the access right shall include an individual and board of directors/management/persons in charge or other terms in the business entity, and shall be used to:

submit an application of basic requirements, PB, and/or PB UMKU including its amendment and revocation;
submit periodic report from business actor;
submit complaint;
submit application for investment facilities;
follow-up to the results of supervision implementation;
access the profile of business actor;
submit application for the revocation of part or all basic requirements, PB, and/or PB UMKU; and/or
In the event that a business actor carries out business activities of development of industrial estate, the access rights shall be used to carry out a notification on the fulfillment of environmental basic requirements to business actors in the industrial estates.

Business Identification Number (NIB)

In principle, NIB must be held by every business actor, and each business actor is entitled to only 1 (one) NIB (business actor fill in the data in and issued through the OSS system). Such NIB serves as the identity of the business actor as proof of registration to conduct business activities and is also valid as:

importer identification number as referred to in provisions of the laws and regulations governing import policy and regulations, and may choose:
1. general importer identification number for import of goods for trade; or
2. producer importer identification number for import of goods to be used themselves as capital goods, raw materials, auxiliary materials, and/or materials to support production processes.
customs access rights as referred to in laws and regulations in the customs sector, which can be used by:
1. business actor that is a business entity, to carry out import and/or export activities; or
2. business actor that is an individual, may only carry out export activities.;
registration of business actor’s membership in the social security for health and social security for employment; and
first-period mandatory employment reporting for business actor.

NIB is in the form of random numbers which are secured and accompanied by an electronic signature and it’s valid as long as the business actor carries out the business activities in accordance with provisions. NIB shall include at least the following data:

profile:
1. for an individual business actor is the national identification number integrated with the system in the ministry that organizes government affairs in the home affairs sector;
2. for a business actor that is a business entity, shall be in accordance with the integration between the OSS system and the system in MoL;
business capital, for a business actor that is a business entity, shall be in accordance with the integration between the OSS system and the system in MoL;
taxpayer identification number:
1. for a business actor that is a business entity, shall be in accordance with the integration between the OSS system and the system in MoL;
2. the OSS system shall carry out validation in accordance with the integration with the system in MoF;
3. for individual business actor who has yet to have a taxpayer identification number, may submit an application for a taxpayer identification number through the OSS system;
KBLI, for a business actor that is a business entity, shall be in accordance with the integration between the OSS System and the system in MoL;
business location, shall be in accordance with the integration or validation between the OSS System and the system in MoASP;
for the business actor in the form of a representative office or foreign business entity, in addition to fulfillment of the provisions as referred to point a-e, shall also fill in at least the following data (i) name of the overseas company that designates; (ii) address of the overseas company that designates; and (iii) data of the representative office in Indonesia.

In the event of use of foreign workers, business actor shall submit a plan on the number of foreign workers to be used through an electronic system operated by the MoM and the MoM shall forward the ratification of the plan on the number of foreign workers to be used to the OSS agency and the MoIC.

Business Actor Data and Business Data

Business actor shall carry out a clarification of business activities in the form of:

primary business activity, is a business activity stated in the legality/deed of the business actor and is a source of income for the business actor;
supporting business activity, shall consist of one or more business activities that:
1. are categorized as supporters of the primary business activity;
2. may become a source of income for the business actor; and
3. may be carried out and completed first before the implementation of the primary business activity;
administrative branch office, is a unit or division of a parent company that may be domiciled in other places and is of administrative support in nature. Business actor may register an administrative branch office in the OSS system by completing at least the following data:
1. address of the administrative branch office;
2. taxpayer identification number of the administrative branch office or identity number of the business activity premise;
3. person in charge of the administrative branch office; and
4. in the event that the administrative branch office has more than 1 (one) location, the business actor shall complete the data (point i, ii, and iii) for each location of administrative branch office.

Business actor that has filled in the data must continue the process in the OSS system to obtain PBBR by filling in the primary business activity data for each 5 (five) digits KBLI code and business location which shall at least contain:

types of products produced;
product capacity;
number of workers; and
planned investment amount;
- for foreign investment, the OSS system shall examine the provisions on business data in the form of planned investment amount submitted by business actor which shall encompass:
investment minimum, with the provisions per 5 (five) digits KBLI business sector per business location is more than Rp10,000,000,000,00 (ten billion Rupiah), excluding land and building. However, shall be exempted for business activities of:
- wholesale trade per 4 (four) initial digits of KBLI, the total investment is more than Rp10,000,000,000,00 (ten billion Rupiah) excluding land and building;
- food and beverage service as long as open to Foreign Investment per 2 (two) initial digits of KBLI per 1 (one) business location point, the total investment is more than Rp10,000,000,000,00 (ten billion Rupiah) excluding land and building;
- construction as long as open to Foreign Investment per 4 (four) initial digits of KBLI, the total investment is more than Rp10,000,000,000,00 (ten billion Rupiah) excluding land and building within one activity; or
- industry which produces the types of products with different 5 (five) digits KBLI within 1 (one) production line, the total investment is more than Rp10,000,000,000,00 (ten billion Rupiah) excluding land and building.
capital provisions.
- for foreign investment, supporting business activities shall be exempted from the examination process on the provisions on the amount of capital and investment minimum as referred to point (i) above as well as the obligation to include KBLI in the aims and objectives in the legality of business actor.

In the event that 1 (one) primary business activity is:

an activity within 1 (one) production line which produces more than 1 (one) product with different 5 (five) digit KBLI codes in one location; or
an activity that produces more than 1 (one) services with different 5 (five) digit KBLI codes in one location,

the data completeness may be combined into one, may be in the form of (i) land area needs; (ii) building needs; (iii) machines and equipment; and (iv) investment amount.

OSS Subsystem

The following is a summary of important information regarding the subsystems provided by the OSS for business actors:

Information Summary Regarding the Subsystems Provided by OSS for Business Actors

Source:.GR 28/2025.

Issuance of PB and Acceleration Permit

The following is a summary of key information for business actors regarding the issuance of PB based on business risk, as well as the regulatory framework for UMKMs and the acceleration of licensing issuance:

Information Summary Regarding the Subsystems Provided by OSS for Business Actors

Source:.GR 28/2025.

Supervision

The implementation of PBBR is supervised by the relevant government authorities in accordance with their respective powers. Such supervision is carried out under the following provisions:

routine supervision, conducted through:
- review of reports submitted by business actors, which include:
1. compliance with the fulfillment of basic requirements, PB, and/or PB UMKU; and
2. progress in the realization of investment obligations, covering investment realization, workforce realization, production realization, investment obligations, and constraints encountered by the investor;
- routine on-site inspections, subject to the following conditions:
1. conducted in an integrated and coordinated manner through the OSS system;
2. carried out in stages, namely planning, implementation, compliance assessment, and determination of follow-up actions based on the results of the routine on-site inspection;
3. conducted either physically or virtually; and
4. the government, in accordance with its authority, is prohibited from conducting routine on-site inspections for routine supervision purposes outside the planned routine on-site inspection schedule.

Incidental Supervision, subject to the following conditions:
- conducted at a specific time;
- carried out based on public complaints, complaints and/or requests from business actors, and/or indications that a business actor is conducting activities not in compliance with the basic requirements, PB, and/or PB UMKU; and
- conducted through incidental on-site inspections, the results of which shall be recorded in an official inspection report generated through the OSS system.

Based on the reports referred to above, the government, in accordance with its authority, shall conduct a review and prepare a review result report categorizing the business actor’s compliance profile as very good, good, less satisfactory, or unsatisfactory, which shall be followed up by guidance/assistance measures, the imposition of administrative sanctions, or on-site inspections.

For MSMEs, the government provides facilitation in the supervision of business activities in the form of:

no requirement to submit investment activity reports for micro enterprises;
investment activity reports to be submitted once every six (6) months within one (1) reporting year for small enterprises;
routine PBBR supervision for micro and small enterprises to be conducted through guidance, assistance, or outreach related to business activities; and
where, based on the results of prior routine supervision on standards and obligations, micro and small enterprises are deemed compliant, no on-site inspection is required.

As a note, the revocation of basic requirements, PB, and/or PB UMKU shall be carried out through the OSS Institution in the event of the following:

an application submitted by the business actor through the OSS system;
an application for dissolution of the business entity submitted by the business actor through the OSS system;
violations of laws and regulations related to PBBR committed by the business actor, based on follow-up actions resulting from supervision by the competent authority;
a court decision having obtained final and binding legal force; and/or
the expiration of land rights or land allocation over management rights.

In addition to the provisions described above, supervision is also conducted on a sectoral basis. By way of example, in the marine and fisheries sector, supervision is carried out not only by the governor, regent, mayor, head of the KEK Administration, and head of the KPBPB, but also by the Minister and/or agency responsible for the relevant sector (i.e., the MoMAF) and by the police, in accordance with their respective authorities. Similarly, in other sectors, such as the agricultural sector, supervision falls within the authority of the MoA, and in the nuclear energy sector, supervision is conducted by the authority competent in the field of nuclear energy, in accordance with its statutory powers.

Sanctions

Business actor who violates the basic requirements, PB, and/or PB UMKU shall be subject to administrative sanctions, may be in the form of:

reprimand;
temporary suspension of business activities;
imposition of administrative fines;
imposition of police coercive force;
revocation of Permit/certification/approval; and/or
revocation of the basic requirements, PB, and/or PB UMKU.

The imposition of administrative sanctions shall be carried out based on the level of compliance found in supervision activities. In addition to the forms of administrative sanctions referred to above, there are other sector-specific administrative sanctions, including (i) written reprimand/reprimand; (ii) government coercion; (iii) administrative fines; (iv) suspension of KKPRL, PB, and/or PB UMKU; and/or (v) revocation of KKPRL, PB, and/or PB UMKU, for certain violations in the marine and fisheries sector. Forms of government coercion may also vary, including (i) temporary suspension of activities; (ii) sealing; (iii) closure of locations; (iv) demolition of buildings; (v) temporary reduction or revocation of quotas and fishing locations; (vi) termination of government services; (vii) restoration of marine space functions; and/or (viii) other actions aimed at stopping the violation and actions to restore the sustainability of resources.

Other sector-specific sanctions may be referred to in GR 28/2025 and other applicable laws and regulations. The amount of administrative fines is contingent upon the violation committed, with more detailed provisions stipulated in GR 28/2025.

Correlation between BKPM, Central PTSP, and DPMPTSP

Based on the information in the previous sections, it can be concluded that BKPM, Central PTSP, and DPMPTSP have important responsibilities in conducting business licensing, and the roles each institution plays are related to one another. The correlation between these three institutions is illustrated in the graphic below:

Correlation between BKPM, Central PTSP, and DPMPTSP

Source: GR 6/2021 jo. BKPM Reg. 9/2015 jo. BKPM Reg. 4/2021.

Referring to BKPM Reg. 4/2021, Central PTSP is an investment related service authorized by central government and organized in an integrated manner in one-stop service process. This process begins from the application phase and continues until the completion phase through BKPM. DPMPTSP is defined as an organization authorized by provincial or regency/city government and is responsible for carrying out government affairs in investment sector.

Therefore, these institutions are investment-related units with different authorizations. Both the Central PTSP and DPMPTSP play a role in providing services for business actors, enabling them to submit offline applications for risk-based business licensing in instances where OSS services are not yet accessible.

Land

Identical to Law 11/2020, one of the objectives of GRLL 2/2022 is the simplification of the business licensing process. To accomplish this, the location permit has been replaced with a document known as KKPR, which appears to be a document that verifies whether planned operations are compatible with RDTR.

In the event that the regional government has not provided the RDTR, the authority to approve and grant the location permit will be delegated to the central government. Such approval will be given via the OSS system. If a business is situated in a coastal area and jurisdiction, it is mandatory to obtain approval from the marine KKPR. For a business located in forest areas, it is mandatory to obtain an approval document known as Approval for the Use of Forest Areas. As part of the alteration, GRLL 2/2022 specifies that each regional government must upload a comprehensive RDTR to the OSS system. Another simplification regarding location permits is as follows:

Simplification of Location Permit

Source: GRLL 2/2022.

As the implementing regulation on this subject has not yet been released, this chapter will discuss the matter based on the existing framework. However, investors should become familiar with the new requirements to avoid incurring risks in this field.

Land Titles

With the emergence of investments and business activities in Indonesia, many investors require buildings or land for their businesses. Consequently, investors should acquaint themselves with various types of land rights that are recognized and attainable in Indonesia.

Freehold Title

The freehold title is the right to use the land for any purpose with an indefinite duration of validity.[1] Only Indonesian citizens and certain Indonesian legal entities, whose requirements are determined by the Indonesian government, are eligible to be granted a freehold title.

The freehold title can be transferred to other parties. It represents the most comprehensive type of land rights in Indonesia that can be owned.[4] Therefore, the highest form of land rights available in Indonesia is the freehold title.

Right to Build

HGB is the right to construct and own buildings on land that is not one’s own property for a maximum period of 30 (thirty) years, with the possibility of extension for an additional 20 (twenty) years. Those who may possess HGB are Indonesian citizens and legal entities incorporated under Indonesian law and domiciled in Indonesia, including PT PMA.

HGB can be granted for (i) the state’s lands; (ii) lands with HPL; and (iii) lands with freehold title. For HGB over the state’s lands and lands with HPL, it can be renewed for a maximum of 30 (thirty) years. However, it is important to note that an HGB over lands with freehold title can be continued indefinitely with a deed of granting HGB on freehold title.

An HGB over the state’s lands and lands with HPL shall be granted with the issuance of a grant of rights decree by the MoASP. In the case of HGB over lands with HPL, the MoASP decree is issued with approval from HPL holders. An HGB over the lands with freehold title occurs through the holder granting the rights, accompanied by a deed made by PPAT.

Right to Cultivate

Hak Guna Usaha (HGU) is the right to cultivate lands directly controlled by the state, including farming, fishing, or livestock. The period of an HGU applies for 25 (twenty-five) years for individuals and 35 (thirty-five) years for legal entities.However, an HGU may be extended for another 25 (twenty-five) years and renewed for a maximum of 35 (thirty-five) years. HGU can be obtained by Indonesian citizens and legal entities incorporated under Indonesian law and domiciled in Indonesia, including PT PMA.

An HGU can be granted over: (i) the state’s lands; and (ii) lands with HPL. An HGU over the state’s lands and lands with HPL shall be granted with the issuance of a grant of rights decree by the MoASP. For HGU over lands with HPL, the MoASP regulation shall be provided with approval from the HPL holders.

Right to Use

Hak Pakai (HP) refers to the right to use and/or collect products from land directly controlled by the state, or land owned by other persons, under the rights and obligations stipulated in the decision upon granting the right by the authorized official or through an agreement with the owner of the land. HP is classified into:

HP with a period

Lands that are eligible for HP with a period include (i) the state’s lands; (ii) lands with freehold titles; and (iii) lands with HPL. The HP period over the state’s lands and lands with HPL can be granted for a maximum of 30 (thirty) years which can be extended for another 20 (twenty) years, and renewable for up to 30 (thirty) years. The HP period over lands with freehold title can be granted for 30 (thirty) years and can be renewed with a deed of granting HP on freehold title. It should be noted that HP with a period may be granted to (i) Indonesian citizens; (ii) legal entities incorporated under Indonesian law and domiciled in Indonesia; (iii) foreign legal entities that have representatives in Indonesia; (iv) social and religious organizations; and (v) foreign citizens.

HP (as long as it is used)

Lands eligible for HP (as long as it is used) include (i) the state’s lands; and (ii) lands with HPL. The HP period is granted for an unspecified time as long as it is being utilized. Entities who may possess HP for as long as it is used are (i) central government institutions; (ii) regional governments; (iii) rural governments; and (iv) representatives of foreign states and international organizations.

HP over the state’s lands and the lands with HPL shall be granted with the issuance of a grant of rights decree by the MoASP. For HP over the lands with HPL, the MoASP ordinance shall be provided with the HPL holders’ approval. HP over the land with freehold title occurs through the holder's granting of rights with a deed made by the PPAT.

Right to Manage

Hak Pengelolaan Lepas (HPL) refers to the right to control the state land, with part of its implementation authorities delegated to management rights holders. HPL can originate from state land and customary land. HPL over state land is granted provided the main duties and functions are directly related to land management. HPL holders are given the authority to determine land designation, usage, and the utilization all or parts of the land in accordance with the spatial layout plan. They may do so alone or in cooperation with other parties, with the aim of determining the annual compulsory rate and/or money of the other party in accordance with the agreement.

HPL originating from state land or customary land is determined by a ministerial decree. HPL must be registered with the land office, and it comes into effect when it is registered by the land office. HPL holders are given a certificate as proof of ownership of HPL. HPL cannot be used as debt collateral and is encumbered with mortgage. HPL cannot be transferred to other parties. Release of HPL is made by and in front of the competent official and must be reported to the MoASP.

Land titles over HPL that are in cooperation with other parties may be encumbered with security rights, transferred, or waived. In the event that the land titles over the HPL are to be waived, then the waiver shall be drawn up by, and in front of, authorized officials and shall be reported to the MoASP.

Right to Lease

A person or a legal entity has Hak Sewa (HS) over lands if they are entitled to use another person's land for building purposes by paying the owner a certain amount of money as rent. It is imperative that this land lease agreement does not include terms that contain elements of extortion. Payments of rent can be made once, or at certain times, or before, or after the land is used. The state cannot lease land as it is not the owner of the land. Those who can become holders of HS are:

Indonesian citizens;
foreign citizens who are domiciled in Indonesia;
a legal entity incorporated under Indonesian laws and domiciled in Indonesia; and
foreign legal entities that have representatives in Indonesia.

Land Ownership by Foreigners

In the case that foreigners intend to conduct business in Indonesia, they are required to incorporate a company in the form of a PT PMA, which will be incorporated under Indonesian law and domiciled in Indonesia. The land titles that can be possessed by foreigners include:

HP, which can be given to foreign legal entities that have representatives in Indonesia and foreigners; and
The right of ownership over stacked units/hak milik atas satuan rumah susun, which is granted to foreigners who have permits in accordance with the provisions of laws and regulations, foreign legal entities that have representatives in Indonesia, or representatives of foreign countries and international institutions that are located or have representatives in Indonesia.

Foreigners, who are eligible to live or occupy a house, must possess immigration documents in accordance with the provisions of laws and regulations. In the event that a foreigner dies, the house or residence can be inherited by their heir. If the heir is a foreigner, the heir will be required to obtain immigration documents according to the provisions of laws and regulations.

Residential houses that can be owned by foreigners, along with the accompanying rights, are as follows:

house tread on land:

HP; or
HP on property rights, which are controlled through right-to-use granting agreement over freehold title with a deed from a Land Deed Official.

flats built on a plot of land:

HP or right to build on state land;
HP or building usage rights over land management rights; or
HP or right to build on freehold land.

Foreign ownership of residential houses is subject to the following limitations: (i) minimum price requirements; (ii) land area limitations; (iii) restriction on the number of land parcels or apartment units; and (iv) allotment for residency or occupancy.

A PT PMA, which is a property developer, is permitted to purchase land in Indonesia for property development. In addition to the facilities, the Government shall provide ease of servicing and/or licensing to investment companies to acquire:

land titles;
immigration service facilities; and
import licensing facilities.

The ease of servicing and/or licensing of land titles may be granted, extended, and renewed at the request of the investors. The land titles may be granted and extended for investment activities, under the following conditions:

an investment made for a long-term and related to changes in the structure of the Indonesian economy aimed at improving competitiveness;
an investment with a risk level that requires a long-term return on capital based on the types of investment activities being carried out;
investments that do not require a large area;
investment using state land title; and
investments that do not undermine the public’s sense of justice and do not harm the public interest.

A land title is renewable upon an evaluation that determines whether the land remains in good use and cultivation in accordance with the condition, nature, and purpose of the title granting. The granting and extension of land titles, when given all at once in advance, for use, and as renewable, may be terminated or canceled by the Government if the investment company abandons the land, harms the public interest, uses or exploit the land that are inconsistent with the objectives and purposes of granting the land title, as well as violates the provisions of laws and regulations in the land sector.

Foreigners can also purchase property in Indonesia, depending on the type of property:

for landed buildings (house, office, factory), a foreigner or PT PMA are allowed to own it along with the status of the land. Regarding the ownership of landed houses, the Government of Indonesia has revealed a new regulation that allows foreigners to buy a landed house under the HP category for a period of up to 80 (eighty) years (an initial period of 30 (thirty) years, which can be extended twice by 20 (twenty) years, and a further 30 (thirty) years).
for a condominium or apartment and office space, the foreigner or PT PMA can own it as long as it is not part of a government-subsidized housing development, and the status of the building is under the HP.

Registration of Land Titles

The purpose of land registration is to provide legal certainty and protection to holders of rights over a land parcel, ownership rights over stacked units, and other registered rights. This ensures that they can readily demonstrate their status as holders of the rights concerned. To enhance legal certainty and provide protection to the right holder concerned, a land title certificate is issued.

First Time Land Registration Scheme

Source: GR 24/1997.

The administration and implementation of land registration can be conducted electronically. The results of the operation and implementation of electronic land registration include data, electronic information, and/or electronic documents. Electronic data, information, and/or printouts serve as valid legal evidence and constitute an extension of valid evidence in accordance with applicable Indonesian procedural law. The application of electronic land registration is applied incrementally, taking into account the preparedness of the electronic system built by the MoASP. All data and/or documents related to land registration activities are gradually stored and presented as electronic documents by utilizing information and communication technology.

Official land deeds can be produced electronically. To expedite land registration, systematic land registration must be embraced by land parcel owners. If the owner of the land parcel does not participate in systematic land registration, they are obliged to register their land sporadically.

The announcement of the results of physical data collection and juridical data:

in systematic land registration, for 14 (fourteen) calendar days;
in sporadic land registration, for 30 (thirty) calendar days.

The announcement can be posted on the website provided by the MoASP.

Specific Regulation of The Conformity of Space Utilization Activities (KKPR)

GRLL 2/2022 simplifies the basic requirements of business licensing, including the introduction of KKPR, which is defined as the conformity of planned activities and/or business locations with RTR. As explained in the previous sub-chapter, GR 28/2025 also regulates KKPR. Accordingly, for a general overview of the regulation of KKPR, reference may be made to the discussion in sub-chapter 9.1.1.1.

Nevertheless, GR 21/2021 on the implementation of spatial planning remains in force. Under GR 21/2021, the implementation of KKPR consists of the following: (i) KKPR for business activities; (ii) KKPR for non-business activities; and (iii) KKPR for national strategic activities. It is important to note that the KKPR period is valid for 3 (three) years from the date of issuance.[3]

KKPR for Business Activities

The implementation of the KKPR for business activities is facilitated through the OSS system. After the entrepreneur obtains KKPR, they can apply for business licensing and, subsequently, carry out space utilization activities. The confirmation of KKPR for business activities shall be applied through the OSS system following these stages:

Issuance of Confirmation of KKPR for Business Activities Procedures

Source: GR 21/2021.

The approval of KKPR for business activities will be given if the RDTR is not yet available at the location of the planned space utilization activity. Additionally, the approval of KKPR for business activities is also provided for space utilization in the forest areas where purposes and functions have changed and have not been included in RDTR. Approval of KKPR for business activities shall be applied for through the OSS system in accordance with the following stages:

Issuance of Approval of KKPR for Business Activities Procedures

Source: GR 21/2021.

Subjects exempted from the above-mentioned assessment stage if their applications for KKPR under the following categories: (i) industrial and tourism areas that already have business licensing; and (ii) KEK. Moreover, in the event that the MoASP, governors, or regents/mayors, in accordance with their respective powers, do not issue an approval of KKPR for business activities within 20 (twenty) days, the OSS agency shall issue such approval instead.

Space utilization activities carried out by UMK entrepreneurs are exempt from KKPR issuance process. They only need to make an independent statement confirming their business activities are in accordance with the RTR.

KKPR for Non-Business Activities

The implementation of KKPR for non-business activities is obtained through an electronic system organized by the MoASP.[1] Applicants can carry out their space utilization activities after obtaining the KKPR. The confirmation of KKPR for non-business activities shall be applied through an electronic system organized by the MoASP via the following stages:

Issuance of Confirmation of KKPR for Non-Business Activities Procedures

Source: GR 21/2021.

If the RDTR is not yet available at the location of the planned space utilization activity, approval of KKPR for non-business activities shall be given. Approval of KKPR for non-business activities is also provided for space utilization in the forest where purposes and functions have changed and have not been included in RDTR. Applications for approval of KKPR for non-business activities shall be submitted through an electronic system organized by the MoASP in the following stages:

Issuance of Confirmation of KKPR for Non-Business Activities Procedures

Source: GR 21/2021.

In the event that the MoASP, governors, or regents/mayors, in accordance with their respective authorities/powers, fail to issue an approval of KKPR for non-business activities within a period of 20 (twenty) days, such approval will be issued by the electronic system organized by the MoASP.

KKPR for National Strategic Activities

The implementation of KKPR for national strategic activities is applicable to the plan for space utilization activities, whether included in or excluded from the RTR, RZ KAW, or RZ KSNT. It is important to note that the relevant national strategic activities are stipulated by laws and regulations. The application for KKPR for national strategic activities must be submitted by the minister, head of agencies, governors, regents, or mayors.

KKPR for space utilization activity plans included in the RTR, RZ KAW, or RZ KSNT must be implemented through the confirmation of KKPR and the approval of KPPR. The following graphic explains the procedures necessary to obtain confirmation and approval of KKPR for national strategic activities.

Issuance of Confirmation of KKPR for Non-Business Activities Procedures

Source: GR 21/2021.

Issuance of Approval of KKPR for National Strategic Activities Procedures

Source: GR 21/2021.

Furthermore, KKPR for space utilization activity plans that are not included in the RTR, RZ KAW, or RZ KSNT shall be implemented through a recommendation of KKPR. Additionally, this recommendation may be for: (i) space utilization plans on a bank’s land; and/or (ii) space utilization plans in area or on land that will be granted HPL for national strategic activities. Recommendations of KKPR for national strategic activities are also given for space utilization in forest areas that have undergone changes in purposes and functions, and which have not been included in RTR.

The applicant can carry out space utilization activities after obtaining a recommendation of KPPR for national strategic activities, which is issued according to the following procedures:

Issuance of Recommendation of KKPR for National Strategic Activities Procedures

Source: GR 21/2021.

Certainly, in addition to the previously explained KKPR, KPPR for coastal waters, waters, and jurisdictions areas are issued by the MoMAF. This type of KPPR remains valid until the expiration of business and non-business licensing. However, if the issuance of business and non-business licensing is pending, such KPPR is valid for 2 (two) years from the time it was issued by the MoMAF.

KPPR in coastal waters, waters, and jurisdictions areas for (i) business activities; (ii) non-business activities; and (iii) national strategic activities that are exclude from the RTR, RZ KAW, or RZ KSNT, is implemented by way of KKPRL’s approval. The applicant must submit an application for approval of KKPRL via the following procedure:

Issuance of Approval of KKPRL Procedures

Source: GR 21/2021.

The application for the approval of KKPRL for business activities must be submitted through the OSS system. If the MoMAF does not issue approval of KKPRL for business activities within 20 (twenty) days, such approval will be issued by the OSS agency.

The application for the approval of KKPRL for non-business activities must be submitted through an electronic system organized by the MoMAF. If the MoMAF does not issue such approval within 20 (twenty) days, it will instead be issued via the electronic system organized by the MoMAF.

Furthermore, the approval of KKPRL cannot be granted for an area located within the core zone of marine protected areas. Additionally, approval for KKPRL is not permissible both inside and outside the core zone of marine protected areas for activities such as open mining, dumping, and reclamation. In cases where it is technically impractical to relocate such activities from marine protected areas, approval of KKPRL can only be granted for national strategic activities and/or for the interest of marine protected areas management. Approval of KKPRL may be granted within customary law communities’ territories following approval from the relevant customary law communities.

Moreover, utilization of sea space for non-business activities, not included in national strategic policies and implemented by the central government and/or regional governments, may be approved through a confirmation of sea space conformity. Such central government and/or regional government activities are financed by the APBN and/or APBD. Confirmation of sea space conformity is processed through an electronic system organized by the MoMAF following these procedures:

Issuance of Confirmation of Sea Space Conformity Procedures

Source: GR 21/2021.

The MoMAF may delegate its authority for the issuance of confirmation of sea space conformity to the governor. If such confirmation is not issued within 14 (fourteen) days, the MoMAF or governor shall be deemed to have given the confirmation of sea space conformity.

In addition to the aforementioned KKPR, there is also P2KH, which stands for the approval of the use of part of the forest area for development purposes outside forestry activities, without altering the function and designation of the forest area. The issuance of P2KH is carried out by the MoEF through an application process. The MoEF has the authority to delegate the granting P2KH within a certain area to the governor, particularly for the construction of non-commercial public facilities and community mining.

The use of forest areas for development purposes other than forestry activities is restricted to activities with an inevitable strategic objective.[6] Development purposes outside forestry activities include:

religion;
mining;
electricity generation, transmission and distribution installations, as well as new and renewable energy technologies;
construction of telecommunication networks, radio transmitting stations, television relay stations, and space observation earth stations;
public roads, toll roads and railways;
transportation not categorized as a means of public transportation for the purpose of transporting production products;
reservoirs, dams, weirs, irrigation, drinking water channels, sewerage and sanitation, and other irrigation structures;
public facilities;
industries other than forest product processing;
defense and security;
public safety supporting infrastructure;
shelter for victims of natural disasters and their temporary business land or specific types of agriculture for food and energy security; and
final waste processing sites, waste treatment facilities, or environmental restoration activities.

In addition to development purposes outside forestry activities, as referred to in Article 91 (2) GR 23/2021, the utilization of forest areas can be carried out for other activities that support forest management, either directly or indirectly, through a cooperative mechanism. Furthermore, P2KH serves as approval for both timber utilization and the entry and use of equipment. Utilization of forest areas for development purposes, excluding forestry activities but for public interest–especially for Central Government priority projects–is regulated under these conditions:

in case where land acquisition is carried out by government agencies, it must be done through the mechanism of releasing forest areas; or

in case where land acquisition is carried out by entities other than government agencies, it must comply with the following conditions:

for permanent land acquisition: the mechanism of releasing forest area; or
for non-permanent acquisition or to avoid fragmentation of forest areas: and the mechanism of Approval for Forest Area Use must be applied, ensuring the area may later become part of forest management.

Furthermore, the provisions for submitting a P2KH application are as follows:

The Provisions for Submitting an P2KH Application

Source: GR 23/2021

Land Environmental Approval

Environmental Approval as one of the Main Requirements for Business Licensing

Prior to the enactment of Law 11/2020, Law 32/2009 required operational business entities to obtain environmental permits. However, since the issuance of Law 11/2020, environmental permits are no longer required. Currently, Law 11/2020 has been superseded by GRLL 2/2022, which addresses the same provisions regarding environmental permits. Instead, GRLL 2/2022 regulates that business licensing requirements shall be preceded by obtaining an environmental approval. Furthermore, following the issuance of GR 28/2025, environmental approval (PL) constitutes one of the basic requirements for business actors to conduct business activities.

Environmental approval is a decree indicating environmental feasibility, or a statement of capability in environmental management that has obtained approval from the central government or regional government. In other words, the environmental permit is replaced by the environmental approval pursuant to GRLL 2/2022.

Provisions regarding environmental approval are further regulated by GR 22/2021, which specifies that environmental approval comprises an environmental feasibility decree/keputusan kelayakan lingkungan hidup (KKLH) or a statement of commitment to environmental management/pernyataan kesanggupan pengelolaan lingkungan hidup (PKPLH) that has received approval from the central government or regional government. Furthermore, in addition to those previously mentioned, environmental approval may also be granted based on the fulfillment of environmental documents in the form of an SPPL. Environmental approval must be obtained by every business and/or activity that may have either a significant or insignificant impact on the environment. Possessing an environmental approval is a prerequisite for issuing business permits or government approvals for conducting the relevant business/activities. Environmental approval is carried out through:

AMDAL preparation and AMDAL feasibility test; or
preparation of the UKL-UPL Form and examination of the UKL-UPL Form.

Every business and/or activity plan that impacts the environment must have AMDAL, UKL-UPL, or SPPL. In particular, AMDAL is required for a business plan and/or activity that will significantly impact the environment. Business and/or activity plans that are required to have AMDAL including, but not limited to, (i) type of business plans and/or activities whose size/scale is obligatory for AMDAL; and/or (ii) types of business and/or activity plans where the business and/or activity location is carried out within and/or directly adjacent to a protected area.

Criteria for businesses and/or activities that are considered to have a significant impact on the environment that require the business actors to obtain AMDAL are as follows:

land and landscape conversion;
exploitation of natural resources, both renewable and non-renewable;
processes and activities that could potentially cause environmental pollution and/or environmental damage as well as waste and degradation of natural resources in their utilization;
processes and activities whose results can affect the natural environment, the artificial environment, and the social and cultural environment;
processes and activities whose results will affect the preservation of natural resource conservation areas and/or protection of cultural heritage;
introduction of types of plants, animals, and bodies miniscule;
manufacture and use of biological and non-biological materials;
activities that have high risk and/or affect national defense; and/or
application of technology that is estimated to have great potential to affect the environment.

Meanwhile, UKL-UPL is only required for businesses and/or activities that will not have a significant impact on the environment. Criteria for businesses and/or activity plans that are required to have UKL-UPL are as follows:

types of business plans and/or activities that will not have a significant impact;
type of business plans and/or activities whose business location and/or activity is carried out outside and/or not directly adjacent to a protected area; and
types of business plans and/or activities that are exempted from compulsory AMDAL.

Lastly, SPPL is required for businesses and/or activities that will not have a significant impact on the environment and are not included in the compulsory UKL-UPL criteria. Business and/or activity plans that must have a SPPL include:

types of business plans and/or activities that do not have a significant impact and are not required to obtain UKL-UPL;
micro and small business and/or business activities which have no significant impact on the environment; and/or
types of business plans and/or activities that are exempted from being UKL-UPL compulsory.

Provisions Regarding the Issuance of AMDAL and/or UKL-UPL as Prerequisites of Environmental Approval

AMDAL or UKL-UPL serve as prerequisites in obtaining environmental approval. AMDAL is a study regarding the significant impact of planned business and/or activity on the environment. The feasibility test shall be conducted against the AMDAL document which results in KKLH, which acts as a requirement for decision making regarding the implementation of business and/or activity, as well as for business licensing, or the approval from the central government or regional governments.

Meanwhile, UKL-UPL is a series of environmental management and monitoring processes set forth in the form of a standard. The fulfilment of UKL-UPL standard is further stipulated in PKPLH, which acts as a prerequisite when making decisions on the implementation of business and/or activity, as well as for business licensing, or the approval from the central government or regional governments.

To determine whether an environmental impact is considered substantial, the following criteria are used:

quantity of population to be affected by the business and/or activity plan;
size of distribution area of impact;
intensity and duration of impact;
environmental components to be affected;
cumulative characteristic of impacts;
whether the impacts are revertible or not; and/or
other criteria in accordance with the development of science and technology.

It should be noted that there is no obligation for low-risk business activities to comply with the provisions of AMDAL and/or UKL-UPL. Instead, entrepreneurs conducting low-risk business activity will be required to apply for a SPPL that will be integrated into the NIB.

Business and/or activity plans that are not subject to AMDAL and/or UKL-UPL or SPPL can be determined as a type of business plan and/or activity that is required to possess an AMDAL by the MoEF, by conveying written proposals to the MoEF. The parties who can propose such are as follows:

ministers and/or heads of non-ministerial government agencies;
governor;
regent/mayor; and/or
public.

The MoEF evaluates the written proposal and provides the business and/or activity plan with either of the following evaluation results:

if the proposal is accepted, officials in charge of AMDAL, UKL-UPL, and SPPL will issue recommendations to the MoEF to stipulate an adjustment to the current business plans and/or activities that initially did not require an AMDAL to become one that does require an AMDAL; or
if the proposal is rejected, officials in charge of AMDAL, UKL-UPL, and SPPL may issue a recommendation to the MoEF that the evaluated business plan and/or activity that does not require an AMDAL.

The results of the evaluation are used as material for the MoEF's consideration to:

invoke a decision upon business plans and/or activities that formerly do not require an AMDAL to now mandate possession of an AMDAL; or
reject the proposal to stipulate a business plan and/or activity that is not required to have an AMDAL, so it is mandatory to have an AMDAL.

The time period for the evaluation and determination or rejection of the determination of the business plan and/or activities that initially were not required to have an AMDAL is carried out no later than 30 (thirty) working days since the application is declared complete.

In the process of determining whether a business and/or activity plan requires an AMDAL, UKL-UPL, or SPPL, the person in charge of such business and/or activities will carry out an independent screening process. If the person in charge of a business and/or activity is unable to carry out screening independently, the person in charge of the business and/or activity shall submit a screening determination to the central environmental agency, the regional apparatus organization in charge of the provincial environment, or the regional apparatus organization in charge of the regency environment/city according to their authority.

Preparation for AMDAL

AMDAL document is formulated by the person in charge of a business and/or activity at the planning stage of a business and/or activity. In preparing for an AMDAL, the person in charge of a business and/or activity will use one of the following study approaches:

Single Study Approach

The single study approach is carried out if the person in charge of a business and/or activity is planning to carry out 1 (one) type of business and/or activity whose development and/or supervision authority is under 1 (one) ministry, non-ministerial government agency, provincial regional apparatus organization, or regency/regional/city apparatus organization.

Integrated Study Approach

The integrated study approach is carried out if the person in charge of a business and/or activity plans to carry out more than 1 (one) type of business and/or activity whose planning and management are interrelated in a single ecosystem stretch. Their development and/or supervision is under more than 1 (one) ministerial staff, non-ministerial government agencies, provincial regional apparatus organizations, or district/city regional apparatus organizations.

Area Study Approach

The area study approach is carried out by the area manager as the person in charge of a business and/or activity planning to carry out more than 1 (one) business and/or activity that will be carried out by entrepreneurs in the area, located in a single zone development plan area, which has obtained a zoning and area management in accordance with laws and regulations.

The person in charge of the business and/or activity may undertake the preparation of the AMDAL independently, or they can delegate the task to another party if unable to carry out the function personally. AMDAL drafting must be done by compilers who have a certificate of competence. State civil apparatus working for the central environmental agency, regional apparatus organizations in charge of the provincial environment, or regional apparatus organizations in charge of district/municipal environment are prohibited from compiling AMDAL. AMDAL preparation begins with the provision of the following data and information:

the results of the AMDAL assessment authority screening;
description of the business plan and/or activity;
initial environmental baseline in and around the location of the planned business and/or activity; and
results of announcements and public consultations.

AMDAL is prepared through the following stages:

implementation of community involvement in the business and/or activity plan;
filling out submissions, examining, and issuing minutes of agreement on the terms of reference form;
preparation and submission of AMDAL and RKL-RPL; and
AMDAL assessment and RKL-RPL.

The person in charge of the business and/or activity in preparing an AMDAL must involve directly affected communities through public consultation and the announcement of business plans and/or activities. Communities directly affected have the right to submit suggestions, opinions, and responses to planned business and/or activities within a period of 10 (ten) working days from the announcement. Communities directly affected by the AMDAL are those within the boundary of the AMDAL study area who will be directly impacted either positively and/or negatively by the existence of a planned business and/or activity.

Preparation for UKL-UPL

The UKL-UPL form is filled by the person in charge of the business and/or activity at the business and/or activity planning stage. The preparation of the UKL-UPL form begins with the provision of data and information in the form of a description of the business plan and/or activity and/or technical approval. 1 (one) UKL-UPL form can be used for a business and/or activity that is planned for more than 1 (one) business and/or activity whose planning and management are interrelated and located within a single ecosystem stretch.

The UKL-UPL form is prepared in the form of a standard for environmental management and monitoring. The person in charge of business and/or activity fills in a specific standard UKL-UPL form available in the environmental document information system. A specific standard UKL-UPL or UKL-UPL form that has been filled is accompanied by a declaration of environmental management capability.

The person in charge of a business and/or activities applies for the examination of a specific standard UKL-UPL or UKL-UPL form that has been filled with the:

minister, for businesses and/or activities that:

business license or government approval issued by the relevant institution;
is located across provinces; and/or
is located in a sea area of more than 12 (twelve) nautical miles measured from the coastline to open sea.

governor, for businesses and/or activities that:

business license or government approval issued by the relevant provincial institution;
located across districts/cities within 1 (one) province; and/or
located in a sea area of no more than 12 (twelve) miles from the coastline to open sea and/or to archipelagic waters;

regent/mayor for businesses and/or activities whose business license or government approval is issued by the district/city government.

Submission of a request for examination of a specific standard UKL-UPL Form or a standard UKL-UPL Form that has been filled is done through:

a business licensing system integrated electronically, if the person in charge of a business and/or activity is an entrepreneur; or
an environmental document information system, if the person in charge of a business and/or activity is a government agency.

SPPL Filling

SPPL for businesses conducted by entrepreneurs is integrated into the NIB. SPPL for activities carried out by government agencies shall be carried out through the filling of a form, which becomes the basis for the issuance of government approval. The integration of SPPL into the NIB is conducted through the electrically integrated business licensing system. The SPPL form contains:

The capability of the individual overseeing the business and/or activities to ensure compliance with laws and regulations in the field of environmental protection and management;
the location of the business and/or activity plan that has a confirmation on the suitability of space utilization activities, or a recommendation on the suitability of space utilization activities in accordance with laws and regulations; and
basic environmental management obligations.

Building Construction and Utilization

In general, buildings are regulated under Law 28/2002. This law regulates the functions, requirements, and operations of buildings, including the rights and obligations of building owners and users at each stage of building operation. The law also covers provisions regarding community roles and guidance from the government, as well as sanctions.

Every building is required to meet technical standards that align with the building function and classification. Building operation is a development activity that includes technical planning and construction implementation, as well as utilization, preservation, and demolition activities. Building operators consist of building owners, construction service providers, professional experts, supervisors, technical reviewers, and building users.

Building utilization can be carried out after obtaining SLF. Thus, in building operations, the building owner is obligated to have PBG. The application for a PBG is submitted through an electronic system administered by the central government, namely, the Building Management Information System for non-business buildings, and the Integrated Business Licensing service for business buildings.

Building Construction

As previously explained, building construction is a phase of building operations. Building construction is carried out through the planning, implementation, and supervision stages, which will be elaborated below.

Planning

Planning of building construction consists of drawing up technical planning of a building in accordance with the function and technical requirements which shall be enacted, as the guideline of implementation and supervision of building construction. Planning must be carried out by the construction planning service provider with reference to technical building standards. Technical building standards are references that contain provisions, criteria, quality, methods and/or procedures that must be met in the building operations process, in accordance with the function and classification of the building. Furthermore, planning results must be consulted with the central government or regional governments in accordance with their respective authorities to obtain a fulfilled statement of technical building standards.

Implementation

At the implementation stage, as previously explained in sub-chapter 9.1.1.1.3, that If the building has fulfilled technical building standards, the building owners can apply for a PBG from the central or regional government through an electronic system operated by the central government. Construction can be carried out after a PBG has been obtained.

Supervision

Supervision of building construction is carried out by a supervisory service provider, or manager of construction who is responsible for the reporting of each stage of work. The central or regional government carries out inspections at each stage to supervise and determine whether construction can continue to the next stage.

Building Utilization

Building utilization is the activity of utilizing the building as per its predetermined function. This includes periodic maintenance, maintenance, and inspection activities. After the last stage of inspection, which provides that the building meets technical building standards, the supervisory service provider or manager of construction will submit a statement of feasibility to the central or regional government through an electronic system operated by the central government. Based on the aforementioned statement of feasibility, an SLF is issued by the central or regional governments according to their respective authority. Based on the SLF, the building owner and/or users can use the building.

Stages in Obtaining Business Licensing

Source: Law 28/2002 and GR 28/2025

Pre-requisite for Obtaining Business Licensing

Source: GR No. 5/2021.

Building Construction

Planning

Planning must be carried out by the construction planning service provider with reference to technical building standards. Technical building standards are references that contain provisions, criteria, quality, methods and/or procedures that must be met in the building operations process, in accordance with the function and classification of the building. Furthermore, planning results must be consulted with the central government or regional governments in accordance with their respective authorities to obtain a fulfilled statement of technical building standards.

Implementation

If the building has fulfilled technical building standards, the building owners can apply for a PBG from the central or regional government through an electronic system operated by the central government. A PBG is a permit given to building owners to build a new, change, expand, reduce, and/or maintain buildings in accordance with building technical standards. Construction can be carried out after a PBG has been obtained.

Supervision

Supervision of building construction is carried out by a supervisory service provider, or manager of construction who is responsible for the reporting of each stage of work. The central or regional government carry out inspections at each stage to supervise and determine whether construction continues on to the next stage.

Building Utilization

Building utilization is the activity of utilizing the building as per its predetermined function. This includes periodic maintenance, maintenance, and inspection activities. After the last stage of inspection, which provides that the building meets technical building standards, the supervisory service provider or manager of construction will submit a statement of feasibility to the central or regional government through an electronic system operated by the central government. Based on the aforementioned statement of feasibility, an SLF is issued by the central or regional governments according to their respective authority. Based on the certificate of eligibility for function, the building owner and/or users can use the building.

Stages in Obtaining Business Licensing

Source: Law No. 28/2002 and GR No. 5/2021

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