Indonesia’s GR 28/2025: Faster licences, clearer rules for businesses
16 July 2025
On 5 June 2025, Indonesia issued Government Regulation No. 28 of 2025 on Risk-Based Business Licencing (“Regulation 28”), which took effect immediately. Regulation 28 revoked Government Regulation No. 5 of 2021 on the same subject (“Regulation 5”) and implements Law No. 6 of 2023 on Job Creation, regulating risk-based business licensing submitted electronically through the Online Single Submission (“OSS”) system.
This Article outlines the key provisions of Regulation 28.
Authority
Under Regulation 28, the central government retains the authority to establish norms, standards, procedures, and criteria (“Regulatory Framework”) for risk-based business licensing. The Regulatory Framework serves as the sole reference for the central and regional governments, the special economic zone administrator, and the free trade zone and free port authority in implementing risk-based business licensing.
Prerequisites
Under Regulation 28, businesses must obtain a licence to conduct business activities. To do so, they must first have in hand stipulated approvals, including confirmations and approvals for spatial utilisation, environmental approvals, building approvals, and certificates of building worthiness.
Although this provision is not new, having appeared in Regulation 5, it has been amended in Regulation 28 to provide more detailed rules on these prerequisites. Whereas Regulation 5 referred generally to other laws and regulations on spatial planning, environmental protection, and building construction, Regulation 28 sets these prerequisites out in full.
New sectors and restructuring of existing sectors
Regulation 28 expands the scope of the risk-based business licensing system by incorporating several additional sectors that were not addressed in Regulation 5. These include sectors such as legal metrology, the creative economy, geospatial information, cooperatives, and investments.
In addition to introducing these sectors, Regulation 28 also reorganises how certain existing sectors are structured for licensing purposes. For example, the legal metrology sector is now integrated with the trade sector. The previously combined environmental and forestry sector under Regulation 5 is split into separate sectors under Regulation 28. Similarly, the electronic systems and transactions sector, which was grouped with post, telecommunications, and broadcasting under Regulation 5, is now regulated as a distinct sector.
Business activity stages clarified
Regulation 28 introduces clearer distinctions between the stages of a business’s lifecycle for licensing purposes. It specifies requirements that apply from the business commencement stage (e.g. incorporation, land use approvals) through to preparation (e.g. land acquisition, construction) and operational stages (e.g. production and distribution). This provides businesses with greater certainty about when specific approvals must be obtained, allowing for better planning and reducing regulatory risk.
Business support licences
Regulation 28 provides more detailed clarification and regulation on business support licences. A business support licence is required for activities such as:
- product distribution, including food and beverages, pharmaceuticals, and cosmetics;
- operational feasibility, such as transportation, electricity, and public works;
- product or service standardisation, such as certification of tourism services, sanitation, and telecommunications equipment; and/or
- smooth business operations, such as groundwater extraction, operation of special terminals, and warehousing.
Enhancements to OSS
In addition to revising sector classifications, Regulation 28 expands the OSS system to cover a broader range of regulatory processes. New OSS subsystems now support the online management of basic requirements (such as spatial planning and environmental approvals), investment incentives (including applications for import duty exemptions and tax reductions), and partnership obligations. For businesses, this integration offers a clearer, more streamlined path to fulfilling key compliance and investment-related obligations online.
Environmental approvals
Regulation 28 introduces more specific and detailed provisions on environmental approval, which were not addressed in Regulation 5. Under Regulation 5, applications for environmental approval were submitted to central or regional environmental agencies, and the regulation did not specifically regulate environmental approval in detail.
Under Regulation 28, businesses must apply for environmental approval through the OSS system. Businesses must have environmental approval for every business and/or activity that has any impact on the environment. Specific documentation as set out in Regulation 28 must be submitted to obtain the relevant approval.
Before they are able to obtain environmental approval, businesses must first obtain technical approval confirming that they have fulfilled wastewater and emission quality standards, appropriately managed hazardous and toxic waste, and undertaken a traffic impact analysis.
Zone environmental approvals
Regulation 28 introduces new provisions on zone environmental approvals, which were not addressed in Regulation 5. Businesses operating in industrial estates, special economic zones, free trade zones, and free port areas (“Industrial Zones”) that are covered by a zone environmental impact assessment and have obtained a zone environmental approval must prepare detailed environmental management and monitoring plans based on the zone’s environmental documents.
Businesses in Industrial Zones are not required to obtain separate technical approval if they either do not discharge wastewater into bodies of water or if their wastewater is treated through facilities provided by the zone’s management.
Revocation and sanctions
Regulation 28 introduces new provisions on violations and the revocation of basic requirements, business licences, and business support licences (“Approvals and Licences”), which were not addressed under Regulation 5.
Businesses that violate these Approvals and Licences may face administrative sanctions, including (i) warnings; (ii) suspension of business activities; (iii) administrative fines; (iv) coercive measures under administrative police authority; (v) revocation of licences, certifications, or approvals; and/or (vi) revocation of the Approvals and Licences themselves.
Regulation 28 also enables businesses to apply for the revocation of their own Approvals and Licences through the OSS system. In addition, authorities may revoke Approvals and Licences if:
- the business violates risk-based business licensing laws and regulations;
- a final and binding court decision has been issued; or
- land rights or land allocation under the right to manage are terminated.
Transitional policies
From 5 June 2025, Approvals and Licences that are being processed in the OSS system will continue to be processed under Regulation 5 until the system is adjusted to comply with Regulation 28.
Businesses that obtained access rights to the OSS system before 5 June 2025 must update their data in the OSS system.