Legal Updates

Reform of Risk-Based Licensing and Investment Facilities under Minister of Investment and Downstreaming Regulation Number 5 of 2025

16 October 2025
Ivonnie Wijaya, Steven Aristides Wijaya
Legal Updates
Pembaruan Tata Cara Perizinan Berbasis Risiko dan Fasilitas Investasi dalam Permen Investasi dan Hilirisasi Nomor 5 Tahun 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:

  1. 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").

  2. 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").

  3. 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: 

  1. Individuals: Indonesian Citizens [Warga Negara Indonesia (WNI)] who are legally competent.
  2. Business Entities [Badan Usaha]: Both legal entities (Limited Liability Companies [Perseroan Terbatas], Cooperatives, Public Corporations [Perusahaan Umum (Perum)]) and non-legal entities (Limited Partnerships [CV], Firms [Firma]) established in the territory of Indonesia.
  3. Representative Offices: Such as Representative Offices of a Foreign Company [Kantor Perwakilan Perusahaan Asing (KPPA)], Representative Offices of a Foreign Trading Company [Kantor Perwakilan Perusahaan Perdagangan Asing (KP3A)], and Representative Offices of a Foreign Construction Services Business Entity [Kantor Perwakilan Badan Usaha Jasa Konstruksi Asing (BUJKA)].
  4. Foreign Business Entities: Foreign entities conducting specific business activities in Indonesia, such as in the upstream oil and gas sector or as foreign Operators of Trade Through Electronic Systems [Penyelenggara Perdagangan Melalui Sistem Elektronik (PPMSE)].
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:

  1. Importer Identification Number [Angka Pengenal Importir (API)]: Business Actors can directly choose API-General or API-Producer.
  2. Customs Access Rights [Hak Akses Kepabeanan]: To conduct export and import activities.
  3. Social Security Participation Registration: The company is automatically recorded as registered for BPJS Health and BPJS Manpower.
  4. Mandatory Manpower Report [Wajib Lapor Ketenagakerjaan (WLKP)]: Automatic fulfillment of the reporting obligation for the first period.
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:

  1. Fulfillment of the Indonesian National Standard [Standar Nasional Indonesia (SNI)] for MSE Development.
  2. Halal Assurance Statement, which is then followed up with the certification process.
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)
  1. OSS issues an NIB & Standard Certificate with "Unverified" status. 

  2. This legality can only be used for the preparation stage (e.g., construction). 

  3. Business Actors must fulfill the required standards and then submit for verification through OSS. 

  4. Once approved, the status changes to "Verified" and only then becomes effective for operational/commercial activities.

Article 189-195
High NIB + License
  1. OSS issues an NIB that is only valid for the preparation stage. 

  2. Business Actors must fulfill all License requirements stipulated for their KBLI. 

  3. The Ministry/Institution/Regional Government will verify the fulfillment of these requirements. 

  4. Once approved, the License will be issued through OSS and becomes the basis for operational/commercial activities.

Article 201-206

D. Fulfillment of Basic Requirements

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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)]. 

  1. Process: If the region has a Detailed Spatial Plan [Rencana Detail Tata Ruang (RDTR)] that is digitally integrated with OSS, a KKPR Confirmation will be issued automatically. If not, it must go through a KKPR Approval process which requires an assessment (max. 20 days) by the spatial planning agency.

  2. Function: The KKPR becomes the legal basis for land acquisition and subsequent licensing applications.

Article 45, 47, 49, 56
Environmental Approval (PL)

The type of document is determined based on screening of potential environmental impacts: 

  1. SPPL [Statement of Ability to Manage and Monitor the Environment]: For activities with no significant impact. Issued automatically with the NIB. 

  2. UKL-UPL [Environmental Management and Monitoring Efforts]: For activities that have an impact but can be managed. Requires administrative and substantive examination (max. 5 days). 

  3. Amdal [Environmental Impact Analysis]: For activities with a significant impact on the environment. Requires assessment by the Environmental Feasibility Test Team (max. 50 days). Important: For UKL-UPL and Amdal, Business Actors must first fulfill the Technical Approval (related to quality standards for wastewater, emissions, Hazardous and Toxic Waste [Limbah B3] management, and Traffic Impact Analysis [Andalalin]).

Article 147, 149, 157, 165
Building Approval (PBG) & Certificate of Worthiness (SLF)

Both are mandatory for business activities that require building construction:

  1. PBG [Building Approval]: Must be obtained before commencing construction. Applied for through the Building Management Information System [Sistem Informasi Manajemen Bangunan Gedung (SIMBG)] which is integrated with OSS. 

  2. SLF [Certificate of Worthiness]: Must be obtained before the building is utilized for business activities. Applied for after construction is complete and has passed a worthiness inspection.

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
  1. Small Enterprises: Every 6 months (January-June and July-December periods).

  2. Medium & Large Enterprises: Every 3 months (per quarter).

Article 286
Supervision Mechanism

Supervision is divided into: 

  1. Routine Supervision: Based on LKPM data analysis and scheduled field inspections. 

  2. Incidental Supervision: Conducted without prior notification, based on public complaints, urgent needs, or indications of violations. The supervision results are documented in an Inspection Report [Berita Acara Pemeriksaan (BAP)], which forms the basis for compliance assessment.

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: 

  1. First Warning: Given with a 30-day period to fulfill obligations.
  2. Second Warning: Imposed if the First Warning is not obeyed, with a 15-day period to fulfill obligations.
  3. Third Warning: Imposed if the Second Warning is not obeyed, with a 10-day period to fulfill obligations.
  4. Temporary Suspension of Business Activities: Imposed if the Third Warning is not obeyed. This sanction halts business activities and may restrict corporate actions in the OSS System.
  5. Revocation of RBBL: This is the most severe sanction, imposed if obligations are still not met after the temporary suspension, and may take the form of revoking the Standard Certificate, License, or NIB. 

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. 

  1. Form of Sanction: Written warnings, a maximum of 2 (two) times. 

  2. Follow-up: If the warnings are disregarded, the agency's authority to issue licenses will be taken over by a higher-level government agency.

Article 379
Transitional Provisions: Status of Previously Issued Licenses
  1. Licenses from Risk-Based OSS: Business Licensing issued through the risk-based OSS System before this regulation took effect is declared to remain valid. 

  2. Licenses Before Risk-Based OSS: Licensing issued before the implementation of risk-based OSS also remains valid, but Business Actors are required to register them through the OSS System. 

  3. Licenses Based on Commitment (PP 24/2018): Business Actors holding licensing based on commitment that is not yet effective must adjust it to become RBBL. 

  4. Principle of Favorability [Asas Keberpihakan]: The provisions in this new regulation do not apply to existing and still valid licensing, unless these provisions are more favorable to the Business Actor.

Article 389, 390, 391, 394

Appendices

The Appendices to this Minister Regulation provide standardized formats for documents used in various licensing stages, as follows:

  1. 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.

  2. 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).

  3. 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.

  4. 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).

  5. 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:

  1. Process Standardization: With one integrated regulation, the licensing process across various sectors and regions becomes uniform, reducing the potential for confusion and inconsistency.

  2. 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.

  3. 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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