PP No. 28/2025 Provides Certainty in the Licensing Process
NIKEL.CO.ID, JAKARTA – The government is reforming the business licensing system through Government Regulation (PP) No. 28 of 2025 on the Implementation of Risk-Based Business Licensing, replacing PP No. 5 of 2021. The reform is intended to provide greater certainty in the licensing process, simplify application procedures and clarify the stages for environmental approvals for businesses.
Rossi Abi Al Irsyad, a senior investment governance officer at the Investment Deregulation Directorate of the Ministry of Investment and Downstreaming/BKPM, said the changes followed an evaluation of how the previous regulation had been implemented.
“At least three matters were identified in the evaluation,” Abi said in a presentation on risk-based business licensing reform under PP No. 28 of 2025 in Jakarta on Wednesday (21 October 2026).
He said the evaluation covered certainty over the issuance of licences, simplification of the licensing process, and specific provisions on business licensing to support business activities (PBUMKU).
One issue with the implementation of PP No. 5 of 2021, he said, was the lack of certainty about the time required for the examination, verification and issuance of licences. PP No. 28 of 2025 therefore introduces service-level agreements (SLAs), or service time standards, to clarify how long the licensing process should take.
“When we talk about a service-level agreement, we are talking about the time the government needs to examine documents submitted by businesses, verify them and grant approval,” he said.
Abi added that the SLAs were expected to create a balance between the government and businesses. Deadlines would apply not only to the government’s processing of applications, but also to applicants who need to amend returned documents.
The government is also seeking to limit repeated returns and revisions of documents so they do not hold up the queue of other licensing applications, Abi said.
“So, when we talk about processing and issuing licences, the back-and-forth – applications being returned, amended and resubmitted, and so on – must be limited,” he said.
On basic requirements, PP No. 28 of 2025 clarifies the steps businesses must complete before obtaining a business licence. These include confirming that planned activities comply with spatial planning requirements, obtaining environmental approval and, where required, securing building approval.
Businesses must ensure that their proposed locations comply with spatial planning rules before proceeding with the environmental approval process, he said. Once the basic requirements are met, they can move on to business and operational licensing in accordance with the applicable rules.
Other changes include restructuring the regulations and revising annexes to clarify their substance and the stages of licensing. The government hopes these measures will make business licensing more structured and efficient, while providing greater certainty for businesses.