Need guidance navigating the new business licensing requirements in Indonesia?
Indonesia continues to reform its business licensing framework, aiming to create an attractive investment climate through streamlined and transparent regulatory processes. Central to these reforms is the ongoing revision of Government Regulation No. 5 of 2021 concerning Risk-Based Business Licensing.
Originally designed to simplify licensing via a risk-based approach and integration through the Online Single Submission (OSS) system, the revised regulation promises even greater clarity, simplicity, and efficiency for investors.
Key Takeaways
- Indonesia’s revision of Government Regulation No. 5/2021 simplifies and accelerates risk-based business licensing.
- Significant enhancements include simultaneous technical and environmental approvals, standardised NSPK, and clear authority assignments.
- Businesses benefit from streamlined processes, reduced bureaucratic hurdles, and greater regulatory certainty.
Key Objectives of the Revision
The revision of Government Regulation No. 5/2021 is driven by the need to remove bureaucratic barriers and ensure certainty in the timelines for business licensing processes.
Among the highlighted improvements is the simultaneous processing of technical approvals (Pertek) alongside environmental permits, significantly accelerating the overall licensing timeline while maintaining environmental standards.
Comprehensive Harmonization and Public Input
The revised regulation is currently in the harmonization stage, overseen by the Coordinating Ministry for Economic Affairs.
To ensure that regulatory changes are practical and meet real-world business needs, the government has actively sought input from various stakeholders, including business associations, investors, and experts.
This inclusive approach ensures that the new norms, standards, procedures, and criteria (NSPK) will align closely with business realities.
Fundamental Changes in the Revised Regulation
The proposed amendments feature several critical improvements designed to support business operators:
- Simplification of Basic Licensing Requirements
- Streamlining procedures related to spatial utilization (KKPR), environmental approvals, Building Approval (PBG), and Certificate of Functionality (SLF) to expedite investment processes.
- Standardization of NSPK
- Establishing consistent standards and procedures across various sectors to eliminate confusion and streamline compliance.
- Correction Grace Period for Building Permits
- A 35-day grace period allows businesses to correct any errors in building permit submissions, reducing potential delays.
- Evaluation and Simplification of KBLI
- Assigning clear, singular ministry oversight for each Standard Industrial Classification of Indonesia (KBLI), preventing overlapping authority and simplifying compliance.
Benefits for Business Operators
This regulatory revision offers substantial benefits for companies operating in Indonesia, including:
- Enhanced Ease of Doing Business: Simplified licensing procedures allow businesses to initiate and expand operations more rapidly.
- Greater Legal Certainty: Clear, standardized guidelines eliminate ambiguities and foster a more predictable business environment.
- Accelerated Investment Realization: Faster licensing processes directly contribute to Indonesia’s competitiveness, making it a more attractive destination for both domestic and foreign investments.
Supporting Your Business Through Regulatory Changes
Navigating regulatory updates can be complex, especially for businesses unfamiliar with Indonesian procedures. To assist companies in seamlessly transitioning through these regulatory changes, Permitindo offers specialized Business Licensing Advisory Services.
Our experts guide businesses in aligning with the updated risk-based licensing framework, ensuring compliance, reducing operational risk, and accelerating your investment activities in Indonesia.