The Indonesian government has officially issued Government Regulation (PP) No. 28 of 2025 concerning Risk-Based Business Licensing (PBBR). Signed by President Prabowo Subianto on June 5, 2025, the regulation came into effect immediately upon its enactment and is designed to improve the ease of doing business in Indonesia.
As an update to PP No. 5/2021 and a follow-up to the Omnibus Law (Law No. 11/2020 on Job Creation), this regulation aims to simplify licensing procedures, enhance legal certainty, and attract both domestic and foreign investment. It introduces a risk-based approach to licensing, helping streamline business permits across various sectors while ensuring regulatory compliance.
Streamlined Licensing through OSS
PP No. 28/2025 covers multiple key sectors including maritime, agriculture, energy, manufacturing, trade, healthcare, transportation, education, tourism, environmental management, defense, and the creative economy, as outlined in Article 5.
All licensing processes under the new regulation are conducted through the Online Single Submission (OSS) system. OSS is a centralized digital platform that integrates data from national and regional government institutions, simplifying procedures from requirements verification to permit issuance. Depending on the risk classification, permits can be issued automatically or manually.
The regulation introduces four risk levels for businesses: low, medium-low, medium-high, and high. Micro businesses considered low-risk can operate by simply submitting a self-declaration via OSS. In contrast, high-risk ventures must fulfill more complex requirements and are subject to stricter supervision.
The implementation of PBBR involves multiple authorities, including the central government, regional administrations, and special institutions such as the administrators of Special Economic Zones (KEK) and Free Trade Zones (KPBPB). Each institution is responsible for managing licensing within its respective jurisdiction.
Beyond simplifying licensing, PP No. 28/2025 also outlines several fiscal incentives for investors, as stated in Article 235. These incentives are designed to stimulate capital investment and support business growth across sectors.
The key incentives include:
- Import Duty Exemptions – Exemptions on the import of machinery, equipment, and raw materials for industrial development or expansion.
- Power Sector Incentives – Duty exemptions for capital goods imported for public electricity generation.
- Mining Contract Relief – Import duty relief for companies under mining contracts or coal mining agreements.
- Corporate Income Tax Reductions – Reductions in corporate income tax for qualifying businesses.
- Regional and Sectoral Tax Incentives – Income tax incentives for investments in specific sectors or regions.
- Gross Income Deductions – Deductions for companies that conduct internships, training, and educational programs.
- R&D Tax Deductions – Deductions for businesses engaging in approved research and development activities.
- Labor-Intensive Industry Support – Net income tax deductions for new investments or business expansions in labor-intensive industries.
By integrating digital systems and offering targeted fiscal incentives, the Indonesian government aims to improve the country’s business climate, reduce red tape, and attract long-term sustainable investments.
Source: Media Indonesia
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