Reform of Risk-Based Business Licensing Under Government Regulation Number 28 of 2025

Abimanyu Rhesa Agatha

Background

Investment is one of the principal pillars in driving economic growth and job creation. According to the Ministry of Finance's press release (February 5th, 2026), Indonesia has set an economic growth target of 8%, with 5.39% achieved in 2025 as part of the trajectory toward that target.

In order to accelerate materialization of the said target, the Government has undertaken regulatory reform by replacing Government Regulation Number 5 of 2021 (GR 5/2021) with Government Regulation Number 28 of 2025 (GR 28/2025) concerning the Implementation of Risk-Based Business Licensing. This article examines the key amendments introduced under GR 28/2025 and their implications for business actors.

Basic Requirements For Business Licensing

Basic Requirements are mandatory prerequisites that business actors must fulfil before obtaining business licenses. These mandatory prerequisites are Spatial Utilization Conformity (Kesesuaian Kegiatan Pemanfaatan Ruang/KKPR), Environmental Approval, Building Approval (Persetujuan Bangunan Gedung/PBG), and Certificate of Feasibility (Sertifikat Laik Fungsi/SLF) (collectively the “Basic Requirements”). Under GR 28/2025, the regulation of Basic Requirements is set out under a separate chapter, in contrast to GR 5/2021 which governed such matters in a more general manner.

While GR 5/2021 was a general form of integration, GR 28/2025 adopts a comprehensive end-to-end process integration approach. The submission of Basic Requirements is now regulated in greater detail and fully integrated with the Online Single Submission System (OSS). Furthermore, such integration extends beyond system linkage to include the standardization of business processes. Each stage is equipped with a clearly defined workflow, specified timeframes, and measurable outputs. For instance, in the case of KKPR, the process has been standardized from the registration stage through to the issuance of approval, without reliance on manual inter-agency coordination.

Integration of Ministerial Systems into the OSS

OSS is an electronic system administered by the Ministry of Investment for the centralized issuance of business licenses. Under the framework of Government GR 5/2021, although the entire process was conducted through OSS, in practice several ministries continued to operate their respective systems, resulting in suboptimal integration. Consequently, business entities were still required to access the relevant ministerial systems to obtain the Basic Requirements as well as business licenses.

With GR 28/2025, the Government has enhanced OSS integration by connecting some 30 ministerial systems into a single business licensing ecosystem as stipulated under Article 4, paragraph (5). Accordingly, the issuance of licenses by other ministries/agencies has been integrated into OSS and can be accessed through a single account. This policy reflects enhanced efficiency and improved ease of services for business entities.

Implementation of The Service Level Agreement Principle in the OSS System

One of the key reforms GR 28/2025 introduces is the strengthening of service quality assurance through the implementation of service level agreements (SLA) at each stage of the business licensing process. The Government has established more stringent and measurable time limits, particularly in the fulfillment of Basic Requirements, in order to provide legal certainty and minimize uncertainties that may adversely affect business entities.

Within this framework, the principle of fictitious positive approval has also been introduced for certain processes within the OSS system. This principle imposes a legal consequence: if the competent authority fails to render a decision within the stipulated timeframe, the application submitted by the business entity shall be deemed approved by operation of law.

One such implementation is stipulated under Article 75 of GR 28/2025 concerning the Approval of Conformity for Marine Spatial Utilization Activities (Kesesuaian Kegiatan Pemanfaatan Ruang Laut/KKPRL). The provision stipulates that if within 6 (six) days from the payment of Non-Tax State Revenue (Penerimaan Negara Bukan Pajak/PNBP) for KKPRL the approval has not been issued, such KKPRL approval shall be deemed automatically granted through the OSS system.

Business Licensing to Support Business Activities

Business Licensing to Support Business Activities is a form of authorization granted to business entities to support their operational activities (Supporting Business Licenses or Perizinan Berusaha Untuk Menunjang Kegiatan Usaha/PB UMKU), found in  GR 28/2025. It represents a new regulatory framework previously not contemplated under GR 5/2021. While previously PB UMKU could be applied for upon the issuance of a Business Identification Number (Nomor Induk Berusaha/NIB), its application now requires that the relevant business activities have entered the operational and/or commercial stage.

PB UMKU does not cover licensing related to export and import activities, including compliance with prohibitions or restrictions and commodity balance requirements, which remain processed through the Indonesia National Single Window system.

Substantively, PB UMKU under GR 28/2025 governs licenses required to support business activities, including, among others, product distribution, operational feasibility, product/service standardization, and other aspects necessary to ensure the continuity of business operations. The regulatory framework also encompasses the application processing mechanism by ministries/agencies, regional governments, as well as special economic zone authorities, including the potential involvement of certified institutions or professional experts. The outcome of the application is delivered through the OSS system: approvals are issued in the form of PB UMKU, while rejection or request for rectification must come with sound justification addressed to the relevant business entity.

Conclusion

GR 28/2025’s business licensing reform reflects an increasingly progressive policy direction toward establishing an integrated, standardized, and legally certain licensing system. Improvement of OSS integration, implementation of service-level agreements, introduction of PB UMKU, and adoption of the fictitious positive approval principle serve as key instruments in reducing bureaucratic barriers and enhancing the efficiency of licensing services. Nevertheless, the ultimate success of this policy will depend on the consistency of its implementation, the readiness of supporting systems, and the effectiveness of inter-agency coordination in practice.