Reform of Risk-Based Licensing and Investment Facilities under Minister of Investment and Downstreaming Regulation Number 5 of 2025
Summary
Regulation of the Minister of Investment and Downstreaming/Head of the Investment Coordinating Board (BKPM) Number 5 of 2025 concerning Guidelines and Procedures for the Implementation of Risk-Based Business Licensing and Investment Facilities Through the Electronically Integrated Business Licensing System (Online Single Submission) ("BKPM Regulation 5/2025") was issued on October 1, 2025, and took effect on its date of promulgation, on October 2, 2025. BKPM Regulation 5/2025 is an implementing regulation for Government Regulation [Peraturan Pemerintah (PP)] Number 28 of 2025 concerning the Implementation of Risk-Based Business Licensing ("GR 28/2025").
The primary objective of this regulation's issuance is to provide legal certainty [kepastian hukum] in the Risk-Based Business Licensing [Perizinan Berusaha Berbasis Risiko (PBBR)] process and to realize PBBR services, PBBR supervision, and investment facilities [fasilitas penanaman modal] that are electronically integrated, standardized, fast, simple, and transparent through the OSS system.
Background and Context
The “considerations” section of this Regulation states that its issuance is based on the need to provide legal certainty in the process of implementing risk-based business licensing. This is also an implementation of the mandate of Article 219 paragraph (5), Article 256 paragraph (8), Article 257 paragraph (3), Article 262, Article 342, and Article 528 of GR 28/2025.
Therefore, it was deemed necessary to prepare guidelines and procedures regarding the implementation of PBBR and investment facilities through the OSS system. Based on these considerations, the Minister of Investment and Downstreaming/Head of the BKPM issued this regulation as an integrated technical legal basis.
Comparison with Previous Regulations
BKPM Regulation 5/2025 repeals three previous regulations, namely:
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Regulation of the Investment Coordinating Board [Peraturan Badan Koordinasi Penanaman Modal] Number 3 of 2021 concerning the Electronically Integrated Risk-Based Business Licensing System ("BKPM Regulation 3/2021").
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Regulation of the Investment Coordinating Board Number 4 of 2021 concerning Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities ("BKPM Regulation 4/2021").
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Regulation of the Investment Coordinating Board Number 5 of 2021 concerning Guidelines and Procedures for Supervision of Risk-Based Business Licensing ("BKPM Regulation 5/2021").
Thus, this new regulation unifies all subject matter regarding the OSS system, licensing services, and supervision into one integrated regulation.
| Aspect | BKPM Regulation 3/2021, BKPM Regulation 4/2021, and BKPM Regulation 5/2021 | BKPM Regulation 5/2025 |
| Regulatory Structure | Subject matter [materi muatan] regarding the OSS system, licensing service procedures, and supervision procedures were stipulated in three separate regulations. | All subject matter regarding the OSS system, guidelines for business licensing services, investment facilities, and supervision mechanisms are integrated into one comprehensive regulation. |
| Procedural Details | Governed the procedures applicable at that time. | Updates and further details various procedures, such as the application mechanism for "Specific Condition" KKPR for Special Economic Zones (KEK) or Industrial Estates, the examination stages for UKL-UPL and Amdal, and a more structured flow for supervision and sanctions. |
| Sanctions | Administrative sanctions were governed generally in the supervision regulation. | The mechanism for imposing sanctions is explained in more detail, not only for Business Actors but also for government agencies that do not implement licensing in accordance with the OSS system provisions. |
Key Provisions
The following are the details of the main provisions governed in this Minister Regulation, which serve as an operational guide for Business Actors [Pelaku Usaha].
A. General Basis and Status of Business Actors
| Aspect | Description | Article |
| Rights of Business Actors | Every Business Actor is entitled to: legal certainty [kepastian hak], rights, and protection; open information; the right to services; and various forms of facilities in accordance with statutory regulations. | Article 4 |
| Fundamental Obligations of Business Actors | Every Business Actor is obligated to: apply good corporate governance principles; implement corporate social responsibility; submit an Investment Activity Report [Laporan Kegiatan Penanaman Modal (LKPM)]; respect the cultural traditions of the surrounding community; and comply with all provisions of statutory regulations. | Article 5 |
| Types of Applicants in the OSS System |
The OSS system serves various types of applicants, including:
|
Article 23 & 24 |
B. Business Identification Number (NIB)
| Aspect | Description | Article |
| Dual Function of NIB | Every Business Actor must have one Business Identification Number [Nomor Induk Berusaha (NIB)]. The NIB functions as the Business Actor's identity and as the legality to commence and run business activities, especially for Low-Risk business activities. | Article 16 |
| Automatic Facilities Attached to the NIB |
After the NIB is issued through the OSS System, the NIB automatically also serves as:
|
Article 16 |
| NIB as Single License for MSEs |
Specifically for Micro and Small Enterprises [Usaha Mikro dan Kecil (UMK)] with Low-Risk business activities, the NIB can function as a single license which also covers:
|
Article 210 & 211 |
C. Business Licensing Based on Risk Level
| Risk Level | Required Licensing | Process & Legality Status | Article |
| Low | NIB | NIB is issued automatically through the OSS System and is immediately effective as the license to conduct preparation, operational, and commercial activities. | Article 187 |
| Medium-Low | NIB + Standard Certificate | NIB and Standard Certificate [Sertifikat Standar] are issued automatically based on the Business Actor's self-declaration in OSS. Both are immediately effective for preparation, operational, and commercial activities. | Article 188 |
| Medium-High | NIB + Standard Certificate (Verified) |
|
Article 189-195 |
| High | NIB + License |
|
Article 201-206 |
D. Fulfillment of Basic Requirements
| Aspect | Description | Article |
| Suitability of Activities for Spatial Utilization (KKPR) |
This document is the location permit to ensure suitability with the Spatial Plan [Rencana Tata Ruang (RTR)].
|
Article 45, 47, 49, 56 |
| Environmental Approval (PL) |
The type of document is determined based on screening of potential environmental impacts:
|
Article 147, 149, 157, 165 |
| Building Approval (PBG) & Certificate of Worthiness (SLF) |
Both are mandatory for business activities that require building construction:
|
Article 170, 171, 182 |
E. Supervision and LKPM
| Aspect | Description | Article |
| Obligation to Report LKPM | Every Business Actor (except Micro Enterprises) must submit an Investment Activity Report [Laporan Kegiatan Penanaman Modal (LKPM)] online via OSS. This report contains data on investment realization, manpower, production realization, and problems faced. | Article 284, 285 |
| Report Frequency |
|
Article 286 |
| Supervision Mechanism |
Supervision is divided into:
|
Article 283, 304, 309 |
F. Sanctions and Transitional Provisions
| Aspect | Description | Article |
| Administrative Sanctions for Business Actors |
Sanctions are imposed based on supervision results for violations of provisions. The mechanism for imposing sanctions can be gradual or non-gradual. Gradual Sanctions Mechanism: Applied for administrative violations and provides an opportunity for the Business Actor to make corrections through the following stages:
Non-Gradual Sanctions Mechanism: For severe violations that cause danger, environmental damage, or economic disruption, the government can directly impose severe sanctions such as Temporary Suspension, Police Coercive Force [Daya Paksa Polisional], or Revocation without going through the warning stages. |
Article 364, 366, 368, 372 |
| Sanctions for Government Agencies |
Government agencies (Ministry/Institution [K/L]/Regional Government [Pemda]) that do not implement business licensing through the OSS System may be subject to sanctions.
|
Article 379 |
| Transitional Provisions: Status of Previously Issued Licenses |
|
Article 389, 390, 391, 394 |
Appendices
The Appendices to this Minister Regulation provide standardized formats for documents used in various licensing stages, as follows:
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Statement and Commitment Formats (Appendices I, VIII-XI, XIII): Contains standard formats for self-declaration letters to be completed by Business Actors. These include the Foreign Investment [Penanaman Modal Asing (PMA)] Self-Declaration not to transfer paid-up capital, the Statement of Ability to Meet Security, Safety, Health, and Environment (K3L) Standards, and the Statement of Ability to meet Business Standards or License Requirements.
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Basic Requirement Document Formats (Appendices III-VII): Provides official templates for basic requirement documents. These include formats for KKPR Confirmation, KKPR Approval, KKPRL (Marine) Approval, Approval for Forest Area Utilization, various types of Environmental Approvals (SPPL, UKL-UPL, Environmental Feasibility Decree [Surat Keputusan Kelayakan Lingkungan Hidup (SKKL)]), to the formats for Building Approval (PBG) and Certificate of Worthiness (SLF).
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Business Licensing Formats (Appendices VIII-XII): Displays the final form of licensing documents that Business Actors will receive, such as NIB, Standard Certificates (both "Unverified" and "Verified" status), and Licenses. Special formats are also available for licensing issued through accelerated mechanisms.
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Facility and Supervision Formats (Appendices XV-XXVIII): Contains important formats for the operational and supervision stages. Appendix XV details the list of required documents for applying for investment facilities. Appendices XVI to XXIII provide Decree [Surat Keputusan (SK)] templates for the approval of fiscal facilities (import duty [bea masuk] exemption, tax allowance, tax holiday). Appendix XXVII contains the format for the Investment Activity Report (LKPM), and Appendix XXVIII governs the format for the Inspection Assignment Letter and Inspection Report (BAP).
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Other Administrative Document Formats (Appendices XXIX-XLIV): Covers various other administrative document formats, such as the letter of appointment for Access Rights [Hak Akses] managers in government agencies, as well as decree formats for the processes of cancellation, revocation, and imposition of administrative sanctions.
Conclusion
BKPM Regulation 5/2025 serves as the main foundation integrating various provisions related to business licensing in Indonesia. This regulation not only details technical procedures but also establishes a systematic, transparent, and accountable framework based on the OSS digital platform. Three key points to note:
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Process Standardization: With one integrated regulation, the licensing process across various sectors and regions becomes uniform, reducing the potential for confusion and inconsistency.
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Data-Driven Compliance: The digitalization of LKPM reporting positions data as the main instrument in supervision. Supported by system digitalization, this approach enables the objective measurement of business actor compliance and the implementation of more effective and targeted supervision.
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Comprehensive Legal Certainty: This regulation clarifies the application flow for new licenses, the status of old licenses, supervision mechanisms, and the legal consequences of any violations.
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