Legal Insights

Risk-Based Business Licensing Regulation Reform: What’s New?

Risk-Based Business Licensing, or Perizinan Berusaha Berbasis Risiko (“PBBR”), is a system where the licenses required for a business are determined by the potential risks associated with its activities. This approach was introduced by the Indonesian Government in 2021 under the Government Regulation (“GR”) No. 5 of 2021. 

On 5 June 2025, GR No. 28 of 2025 came into effect, replacing the previous PBBR regulation. This new GR aims to improve the previous implementation of Risk-Based Business Licensing. by providing updates to the PBBR aspects. The updates include the types and number of licenses a business must obtain, as well as the procedure to obtain them. Below are some key updates within GR 28/2025: 

Chapter Novelties

GR 28/2025 added 2 (two) new chapters. The first new chapter covers provisions regarding Basic Requirements (persyaratan dasar), and the second new chapter provides details on Supporting License for Business Activities (Perizinan Berusha Untuk Menunjang Kegiatan Usaha – “PB UMKU”).  

It is aimed to provide clarity of the procedures, as follows: (1) basic requirements; (2) business licenses; and (3) PB UMKU. All these procedures can be done through the Online Single Submission (“OSS”) System. 

Annexes Improvements

With relation to the new chapters brought by GR 28/2025, the Annexes of the regulation was also given some updates to provide greater clarity. Previously on GR 5/2021, the provisions on the type of license, issuance period, validity period, and authority were present in Annex I. Whereas the provisions on business actors’ obligations and requirements are stipulated in Annex II.  

In GR 28/2025, the provisions for business license types, requirements, obligations, parameters, and scope are simplified and all provided in Annex I. Meanwhile Annex II provides more detailed information on the PB UMKU pertaining to each sector. This update further highlights the regulation’s aim to streamline the PBBR system. 

Service Level Agreement Implementation

A service level agreement (SLA) is implemented across all licensing stages, where the registration, document assessment, verification, and permit issuance stage now have a clear deadline. For example, the approval stage for the Suitability of Spatial Use Activities (Kesesuaian Kegiatan Pemanfaatan Ruang) has a maximum assessment deadline of 25 working days without revisions or 40 working days if revisions are required. 

Additional Sectors and Business Activities Classification

The regulation added several new sectors in the PBBR framework, including the investment, creative economy, and cooperatives sector. These updates are accompanied by the additions to the Standard Classification of Indonesian Business Fields (Klasifikasi Baku Lapangan Indonesia – “KBLI”); increasing from 1.348 KBLI to 1.417 KBLI, with 1.455 business licenses in total.  

Validity Period of Business Licenses

One of the significant updates in GR 28/2025 is the revision of business license validity periods. Previously, GR 5/2021 regulates the validity period of business licenses differently depending on the business sector and the level of risk assessed. Now, Article 5(10) of GR 28/2025 standardizes the business license’s validity period, stipulating that business licenses are now valid for the entire duration of the business’ operations.  

Nevertheless, Article 5(11) of the regulation introduces specific exceptions to this general rule. Licenses issued for the following type of business activities are subject to limited validity periods: 

1. Implementation of international provisions or agreements; 

2. Utilization of natural resources; 

3. Trade in hazardous and/or toxic materials; and 

4. Trade in goods or materials whose circulation is restricted. 

The validity period of business licenses under these categories are determined in statutes, government regulations, and/or presidential regulations. 

Access Rights Renewal

All business actors who have received their access rights prior to the enactment of GR 28/2025 must conduct a renewal of their access rights through the OSS System. The OSS System will send a notification towards the business actors concerned through the registered email. 

Exemption from GR 28/2025 Provisions

Business actors who already possess basic requirements, business licenses, and PB UMKU prior to GR 28/2025’s enactment are exempted from its provisions, unless the provisions are more beneficial for the business actors concerned. 

Additionally, all business licenses, basic requirements, and PB UMKU which are currently under process will be processed according to the provisions of GR 5/2021 until the OSS System is adjusted to the new regulation.