The Indonesian government has introduced major updates to its\nbusiness licensing system through the issuance of Government Regulation\nNo.\u00a028 of 2025 (PP 28\/2025). The regulation replaces PP No.\u00a05 of 2021,\nstreamlining procedures whilst enhancing legal clarity and compliance.\nFor both local and foreign businesses, understanding the new licensing\nsystem is essential for market entry and legal operations in\nIndonesia.<\/p>\n
From PP 5\/2021 to PP 28\/2025: What Has Changed?<\/p>\n
PP 28\/2025 brings a major overhaul to the business licensing system.\nWhilst retaining the risk-based model, its scope has been expanded from\n16 to 22 sectors, including metrology, the creative economy, geospatial\ninformation, cooperatives, investment, and electronic systems and\ntransactions. These changes ensure that the business licensing process\naligns with Indonesia\u2019s economic and digital development.<\/p>\n
Two-Stage Licensing Model<\/p>\n
The business licensing system is now divided into two main phases.\nThe first phase, \u201cStarting a Business\u201d, covers legal documentation,\nbasic requirements such as spatial planning compliance and environmental\npermits, and licence applications through the Online Single Submission\n(OSS) system. The second phase, \u201cRunning a Business\u201d, encompasses land\nacquisition, recruitment, equipment procurement, and full operations\nincluding production, marketing and distribution. Each step in the\nprocess is governed by centralised criteria that have been simplified\nunder the new regulation.<\/p>\n
OSS Expansion and Digital Licensing Infrastructure<\/p>\n
The Indonesian government is committed to digital transformation, and\nPP 28\/2025 reflects this. The OSS platform has been updated with new\nsubsystems to handle the licensing process from start to finish. Key OSS\nsubsystems include: Basic Requirements, providing access to spatial\nplanning permits (KKPR), environmental permits and building permits;\nInvestment Facilities, including import duty exemptions, training\nincentives and other benefits; and Business Partnerships, both mandatory\nand voluntary, with monitoring features. The updated OSS enables\nreal-time permit tracking and direct compliance updates.<\/p>\n
New NSPK and Regional Authority Limitations<\/p>\n
PP 28\/2025 strengthens the central government\u2019s role in establishing\nNorms, Standards, Procedures and Criteria (NSPK) for business licensing.\nRegional governments are prohibited from adding to or modifying\ncentrally established requirements. This aims to reduce bureaucratic\ndisparities between regions and ensure process clarity across all parts\nof Indonesia.<\/p>\n
Clearer Roles for Licensing Institutions<\/p>\n
Business licence issuers have now been clearly delineated: the OSS\nsystem and ministries handle general permits; regional Investment and\nOne-Stop Integrated Services offices (DPMPTSP) at provincial and\ndistrict\/city level manage regional permits; and Special Economic Zone\n(KEK) and Free Trade Zone authorities handle permits for designated\nareas. This clarity supports faster approval processes and better\ncoordination, particularly for foreign investors.<\/p>\n
Risk-Based Approach and Administrative Sanctions<\/p>\n
Indonesia\u2019s business licensing reform remains grounded in risk\nassessment. Each sector is classified according to risk level: low,\nmedium or high, with licensing requirements tailored to each\ncategory.<\/p>\n
PP 28\/2025 introduces tiered administrative sanctions for violations,\nranging from official warnings, temporary suspensions and administrative\nfines through to enforcement by state institutions, licence revocation\nand cancellation of basic legal requirements. All sanction processes are\nmanaged through the OSS platform to ensure transparency and\naccountability.<\/p>\n
The new licensing system represents a step forward towards\ntransparency, efficiency and economic growth. With simpler processes and\nstronger digital infrastructure, Indonesia is positioning itself as a\ncompetitive global investment destination. However, adapting to the new\nsystem demands a thorough understanding of regulatory nuances.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/new-era-of-business-licensing-in-indonesia-government-regulation-28-2025-overhauls-permit-system-1771250901", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }