New Risk-Based Licensing Framework: Enactment of Government Regulation No. 28 of 2025 (Indonesia)

1. Basic Requirements:
   1. Conformity of Spatial Utilization Activities (Kesesuaian Kegiatan Pemanfaatan Ruang or “KKPR”);
   2. Environmental License;
   3. Building Approvals (Persetujuan Bangunan Gedung or “PBG”); and
   4. Building Functional Worthiness Certificates (Sertifikat Laik Fungsi or “SLF”).
2. Business License (Perizinan Berusaha or “PB”)
   1. Low Risk: Business Identification Number (Nomor Induk Berusaha or “NIB”);
   2. Medium Risk: NIB and Standard Certificate; and
   3. High Risk: NIB and License.
3. Business License to Support Business Activities (Perizinan Berusaha untuk Menunjang Kegiatan Usaha or “PB-UMKU”)

Key Takeaways

1. Expansion of Business Sector Coverage: GR 28/2025 expands the scope of the risk-based licensing framework from 16 to 22 business sectors, reflecting a broader and more inclusive regulatory approach. The six newly included sectors are (1) Trade and Legal Metrology; (2) Creative economy; (3) Geospatial information; (4) Cooperatives; (5) Investment; and (6) Electronic systems and transactions service.
2. Stages of Conducting Business Activity: Previously, GR 5/2021 stipulated two stages of business activity, namely the (1) preparation stage; and (2) operational and/or commercial stage. GR 28/2025 introduces a new framework, dividing business activities into two main stages, namely (1) starting a business and (2) running a business. Under this new structure, the “running a business” stage generally includes what was previously referred to in GR 5/2021 as the preparation stage and/or the operational and/or commercial stage.

   The regulation further elaborates on the specific licenses that must be secured before entering each stage of business activity, as detailed below:

   No.	Stage	Risk
   		Low	Medium-Low	Medium-High	High
   1.	Starting a Business
   	Fulfillment of business legality; Fulfillment of basic requirements in the form of KKPR and Environmental License; and※1 Acquisition or submission of PB based on the business activity.	The process of obtaining PB depends on the risk level of business activity.
   2.	Running a Business
   	a. Preparation	NIB	NIB and Standard Certificate	NIB and Unverified Standard Certificate	NIB
   	Land procurement; Fulfillment of basic requirements in the form of environmental license※2 and PBG; Building construction; Procurement of equipment or facilities; Recruitment of human resources; Fulfillment of business standards; and Fulfillment of PB requirements.
   	b. Operational and/or Commercial			NIB and Verified Standard Certificate	NIB and License
   	Production of goods and/or services; Logistics and distribution of goods and/or services; Marketing of goods and/or services; and Other activities for operational and/or commercial purposes.

   Note: PB-UMKU may also be required on operation and/or commercial stage depending on the nature of the business activity.

3. Regulatory Shift in Supporting Business Activities: The concept of supporting business activities was first introduced under GR 5/2021. However, GR 28/2025 brings a significant shift in how these activities are regulated. Under the previous framework, supporting business activities were not permitted if revenue was generated by undertaking such activities. In contrast, GR 28/2025 now permits revenue generation from such activities. This change is particularly beneficial considering that supporting business activity is exempted from several administrative requirements, including minimum capital and investment value. The new approach offers greater flexibility for businesses to structure operations efficiently while reducing compliance burdens for non-core functions.
4. Basic Requirements
   1. Exemption on building or commercial complex: Under GR 28/2025, if a business operates in a building or commercial complex where the management has already fulfilled the basic requirements, the business owner is not required to obtain these permits separately. Instead, they can directly apply for their PB and/or PB-UMKU through the Online Single Submission (“OSS”) system.
   2. Environmental License
      1. Highest Environmental Standard Applies: If a business involves multiple KBLI codes within one integrated location, the environmental license must meet the highest environmental requirement among them.
      2. Streamlined Environmental Approval Process: Business actors may apply for technical approval simultaneously with their application for environmental approval, provided that (1) an environmental assessment shows that the environment can still support the planned business activities; and (2) the management of wastewater and hazardous waste are generated from their own operation/activities.
      3. Exemption of Technical Approval: Business actors operating within industrial estates, Special Economic Zone (Kawasan Ekonomi Khusus or “KEK”), or Free Trade Zone and Free Port (Kawasan Perdagangan Bebas dan Pelabuhan Bebas or “KPBPB”) are exempted from the requirement to obtain technical approval, provided that (1) they do not discharge wastewater into natural water bodies; or (2) if the wastewater is discharged through treatment facilities provided by the estate or zone manager.
      4. Acceleration of Environmental License Issuance: The Minister may delegate the authority to issue environmental licenses and technical approvals to governors, regents/mayors, the head of KEK Administrator, and the head of the KPBPB.
   3. PBG and SLF
      1. Application of PBG and SLF: Under Government Regulation No. 16 of 2021 on Implementing Regulations of Law Number 28 of 2002 on Buildings (“GR 16/2021”), the Ministry of Public Works and Housing handled applications for PBG and SLF through the Building Management Information System (SIMBG), a dedicated platform for building-related permits. However, under GR 28/2025 these processes have been integrated into the OSS system.
      2. Streamlining PBG Requirements: Under GR 16/2021, business actors who owned existing buildings without a PBG were required to obtain SLF before applying for PBG. In contrast, GR 28/2025 simplifies this process by allowing business actors with existing buildings who had not secured PBG prior to the regulation’s enactment to no longer obtain PBG. Instead, they can directly apply for the SLF when submitting or renewing their PB and/or PB-UMKU through the OSS system.
5. Fictious Positive Principle: GR 28/2025 introduces the fictitious positive principle as a safeguard against administrative delays in the business licensing process. Under this principle, if a business license application is submitted in full compliance with applicable laws and procedures but remains unprocessed within the stipulated timeframe, the license will be deemed approved and automatically issued through the OSS system.

   A prominent example is the issuance of the KKPR for land-based business activities. The regulation mandates a maximum assessment period of 20 working days for authorities to assess the submitted spatial utilization documents, including the issuance of land technical consideration. If this deadline is missed, the KKPR will still be granted regardless of whether the land technical consideration has been issued.

Transitional and Closing Provision

Effective as of 5 June 2025, Indonesia’s business licensing framework will transition to GR 28/2025. During this transitional period, applications and approvals currently processed through the OSS system will continue to be governed under the provisions of GR 5/2021 until the OSS system is fully updated to align with the new regulation, no later than 4 months after the enactment of GR 28/2025.

Additionally, business actors who have obtained their basic requirements, PB, and PB-UMKU prior to the enactment of GR 28/2025 are exempt from compliance with the new regulation, unless GR 28/2025 offers more favorable conditions.

Furthermore, existing regulations will remain in effect as long as they do not conflict with GR 28/2025, ensuring legal continuity and a smooth transition for all stakeholders.

Conclusion

GR 28/2025 represents a significant advancement in Indonesia’s business licensing framework. By expanding the scope of regulated sectors from 16 to 22, it streamlines procedures, reduces administrative burdens, and introduces the fictitious positive principle to guarantee timely license approvals. As the new cornerstone for risk-based licensing, GR 28/2025 underscores Indonesia’s commitment to fostering a more efficient and investor-friendly environment for both domestic and foreign businesses.