The Government of Indonesia has enacted Government Regulation No. 28 of 2025 (PP 28/2025), effective June 5, 2025. This regulation replaces the previous Government Regulation No. 5 of 2021 (PP 5/2021), simplifying licensing procedures by introducing risk classification, Service Level Agreements (SLAs), and the automated “fictitious‑positive” approval system. It integrates licensing steps into the Online Single Submission – Risk Based Approach (OSS‑RBA) platform and clarifies requirements for Supporting Business License (PB‑UMKU), environmental permits, and sanctions.
Indonesia’s business licensing framework has historically faced criticism for being overly complex, fragmented. In response, the government introduced PP 28/2025 to streamline licensing procedures, strengthen centralized coordination, and improve legal certainty. The regulation builds on key principles established under Law No. 6 of 2023 on the Implementation of Job Creation.
Enactment and Legal Changes
PP 28/2025 was enacted and officially promulgated on June 5, 2025, revoking and replacing PP 5/2021. To ensure a smooth transition, licensing procedures under the previous regulation will remain valid until the OSS system is fully updated. In accordance with Article 551 of PP 28/2025, all relevant licensing systems primarily the OSS platform must be adjusted within 4 (four) months of promulgation. The full implementation of the OSS-RBA is scheduled to commence on October 5, 2025, marking the end of the transition period.
New Business Sectors
Article 5 (2) PP 28/2025 expands Indonesia’s risk-based business licensing framework by increasing the number of regulated sectors from 16 to 23. The regulation introduces 7 (seven) new sectors: Creative Economy, Geospatial Information, Legal Metrology, Cooperatives, Investment Facilitation, Electronic Systems and Transactions, and Environment. This expansion reflects the government’s ongoing efforts to modernize the licensing system and ensure broader regulatory coverage across emerging and support-driven industries, as outlined in official legal commentaries and policy updates.
Business Licensing & PB‑UMKU under PP 28/2025
PP 28 of 2025 improves Indonesia’s risk-based business licensing system by formally including Perizinan Berusaha untuk Menunjang Kegiatan Usaha (PB UMKU), or supporting business licenses, as part of the process. PB UMKU covers the additional licenses required to support a business’s main activities and must be obtained when relevant. Article 4 PP 28/2025 stated both the main business license and PB UMKU, are processed through the Online Single Submission (OSS) system to ensure consistency and efficiency. The regulation also places PB UMKU under official government supervision. If businesses fail to meet these requirements, they may face administrative sanctions such as warnings, temporary suspension, fines, forced measures, or license revocation, following the rules set under the Omnibus Law.
Environmental Approval (“PL”)
Article 78 PP 28/2025, environmental approvals, including AMDAL and UKL‑UPL, are now fully integrated into the Online Single Submission (OSS) system. This marks a departure from the previous process, which often required separate, manual submissions through environmental agencies. The new streamlined process enables businesses to submit environmental approval documents entirely online via OSS, improving transparency and efficiency. Article 83 PP 28/2025 also introduces clear processing timelines for environmental assessments, such as 30 days for emissions and wastewater reviews, 16 days for hazardous waste evaluations, and 23 days for traffic impact assessments. Should these deadlines be exceeded and the application deemed complete, businesses may proceed by submitting proof of their request. In addition, Article 78 PP 28/2025 allows for a single environmental approval document to cover multiple integrated business classifications (multi‑KBLI) that are integrated business activities located within a single ecosystem expanse. The submission and issuance of PL shall refer to the highest level of environmental documents requirement. Thus, reducing delays and maintaining environmental oversight.
Service Level Agreements (SLA)
General Elucidation (Part I – General)PP 28 of 2025 introduces Service Level Agreements (SLA) to establish clear timelines for every stage of the business licensing process. These timeframes apply to activities such as document verification, technical assessments, and the issuance of business licenses or supporting approvals. Each relevant ministry or agency is required to comply with these deadlines when processing applications through the Online Single Submission system. General Elucidation (Part I – General) PP 28 of 2025 also stated that if the authority does not complete its review within the specified period, the regulation applies the fictitious positive principle. This means that, as long as the application is complete, it will be considered approved and automatically proceed to the next stage. This mechanism ensures faster processing, minimizes administrative delays, and provides legal certainty for businesses seeking to start or expand operations in Indonesia.
Sanctions
Article 355 PP 28 of 2025 establishes a comprehensive enforcement framework to handle violations of licensing requirements within the risk based business licensing system. The regulation outlines several types of administrative sanctions that may be applied to businesses that do not comply with basic requirements, business licenses, or supporting business licenses referred to as PB UMKU. Sanctions include written warnings, temporary suspension of business activities, administrative fines, forced compliance through administrative authority, and the revocation of licenses, approvals, or certifications. The regulation also introduces a structured process for imposing these sanctions, requiring prior notification, opportunity for clarification, and documentation through the OSS system. By applying these measures uniformly across all risk levels and sectors, PP 28 of 2025 ensures legal certainty and accountability, while maintaining flexibility for authorities to act in proportion to the severity of the violation.
Conclusion
PP 28 of 2025 marks a significant step forward in reforming Indonesia’s business licensing landscape. By replacing the previous framework under PP 5 of 2021, the regulation introduces a more streamlined, transparent, and centralized approach through the OSS Risk Based system. It expands sector coverage, strengthens supervision through supporting business licenses (PB UMKU), and integrates environmental approvals into a single digital platform. The inclusion of Service Level Agreements and the fictitious positive principle promotes faster processing and regulatory certainty. At the same time, the introduction of structured administrative sanctions ensures consistent enforcement across all risk levels. Overall, PP 28 of 2025 aims to simplify compliance, enhance legal clarity, and foster a more business-friendly environment without compromising regulatory oversight.
Author: Chelsya Mulyadi
Gaffar & Co. is a full service law firm in Indonesia that focuses on Commercial Law area, including an Investment & General Corporate Matters.
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