Indonesia's New Risk-Based Business Licensing: What Investors Must Know About PP 28/2025

What Is PP 28/2025 and Why Does It Matter?

The Indonesian government has long sought to simplify the country's business licensing process. The Online Single Submission Risk-Based Approach (OSS-RBA) system, introduced in 2021, was a significant step in that direction. PP 28/2025 builds on that foundation and introduces major structural improvements.

The new regulation expands the coverage of risk-based business licensing from 16 to 22 business sectors, adds three new OSS subsystems, and introduces a tiered administrative sanction framework that applies uniformly across all regulated sectors.

Key takeaway: Every business operating in Indonesia, whether newly established or already running, must review its licensing compliance under this new regulation.

End-to-End Legal Support: The Astayuda Approach

Understanding where your business stands in its lifecycle helps identify which licensing requirements apply to you:

Starting Business	Running Operations	Exiting the Market
Land Acquisition	General Contract Drafting	Company Dissolution
Company Establishment	Mergers & Acquisitions	Asset Settlement
Basic Business Licensing (OSS-RBA)	Legal Dispute Resolution

 

What Has Changed? Key Updates Under PP 28/2025

1. Expanded Sector Coverage

Six new business sectors are now subject to risk-based licensing requirements, bringing the total from 16 to 22 sectors:

2. Clearer Two-Stage Business Activity Process

PP 28/2025 introduces a clearer two-stage framework for conducting business activities:

(i) Starting a Business: This covers: (a) fulfilling business legality sub-requirements; (b) fulfilling basic prerequisites, including spatial activity conformity (KKPR), environmental approvals, and building permits; and (c) obtaining the relevant business license.

(ii) Running Operations: This stage involves obtaining supplementary operational and commercial licenses required for day-to-day business activities.

3. Expanded OSS System Capabilities

The OSS (Online Single Submission) system now includes three new subsystems that were not available under PP 5/2021:

• Basic Prerequisites Subsystem: Provides access to KKPR, environmental approvals, and building permits, accessible only through designated access rights.

• Investment Facilitation Subsystem: Offers eight new services, including applications for import duty exemptions on machinery and materials for investment projects, and tax facilities for gross income reduction related to internships and training.

• Partnership Subsystem: Covers mandatory and voluntary partnerships, as well as monitoring and evaluation of partnership commitments.

4. Tiered Administrative Sanctions

One of the most significant changes in PP 28/2025 is the introduction of a unified, tiered administrative sanction framework applicable to all regulated businesses, not just those in specific subsectors as was previously the case.

Sanctions are applied progressively based on the level of non-compliance identified during oversight activities:

Important: All sanctions must be imposed by authorized officials (such as ministers, agency heads, governors, or mayors/regents) and must be processed through the OSS system. Businesses operating in Special Economic Zones (KEK) and Free Trade/Free Port Zones (KPBPB) are subject to additional delegated authority arrangements.

What Should Businesses Do Now?

Given the breadth of changes introduced by PP 28/2025, businesses are strongly advised to take immediate, structured action:

1. Review Existing Licenses: Verify that your current business licenses (PB or PB UMKU) remain valid and compliant with the new framework. Existing licenses issued under PP 5/2021 remain enforceable unless they conflict with PP 28/2025.

2. Update OSS System Profiles: Businesses that already have access to the OSS system must update their profiles before PP 28/2025 takes full effect. Updates will be communicated via registered email addresses on the platform.

3. Identify New Sectoral Requirements: If your business falls within any of the six newly added sectors (e.g., investment activities, electronic systems, or creative economy), you are now subject to risk-based licensing obligations for the first time.

4. Prepare for Implementing Regulations: The government is obligated to issue implementing regulations by 5 October 2025. Businesses should monitor these closely, as they will provide the detailed procedural requirements for compliance.

5. Consult Legal Counsel: Given the complexity of the regulatory transition, early legal consultation is critical to ensuring your business remains on the right side of the law.

Conclusion

PP 28/2025 represents Indonesia's most comprehensive reform of business licensing since the introduction of the OSS-RBA system in 2021. With expanded sectoral coverage, strengthened subsystems, and a new uniform sanction regime, the stakes for non-compliance are higher than ever. Businesses, whether local or foreign-invested, must act proactively to assess their licensing status and prepare for the transition.

Waiting is not a strategy. The regulatory deadline is approaching, and the costs of non-compliance, including potential license revocation and administrative fines, far outweigh the cost of timely legal advice.

 Protect Your Interests with Astayuda Law Office

Navigating Indonesia's evolving regulatory landscape requires precision, experience, and a partner who understands both the legal framework and your business objectives. Astayuda Law Office provides comprehensive, end-to-end legal services designed for domestic and international investors operating in Indonesia.

Our services cover the full investment lifecycle: from land acquisition and company incorporation, through licensing, contract drafting, and mergers & acquisitions, to dispute resolution and company dissolution. Whatever stage your business is at, Astayuda is ready to support you.