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Simplifying Business Licensing in Indonesia

The Indonesian government has issued a new regulation to simplify the business licensing process for low and medium-risk businesses. Government Regulation (GR) No. 5/2021 replaces GR No. 24/2018 on Integrated Electronic Business Licensing Services.

Streamlined Licensing Process

Under the new regulation, the licensing process will be more streamlined with fewer requirements and faster processing times. The government has introduced a risk-based approach to business licensing, where businesses are categorized based on their level of risk and complexity.

Key Changes

  • Simplified application process: Businesses only need to submit a profile, capital structure, NPWP, business field classification, number, and legalization decree number.
  • Reduced requirements for low-risk businesses: These businesses are no longer required to obtain an environmental permit or fulfill certain other conditions.
  • Risk-based approach: The government will categorize businesses based on their level of risk and complexity, with higher-risk businesses requiring more stringent licensing requirements.

Online Licensing System

The regulation also introduces a new system for issuing licenses, which will be integrated online down to the regional level. This means that businesses will be able to apply for and obtain licenses electronically, without having to visit physical offices.

Implementation Timeline

  • Implementing regulations for GR 5/2021 are expected to be issued within two months of its issuance date.
  • Full implementation of the risk-based business licensing system is set to take effect in four months.

Key Takeaways

  • Simplified business licensing process for low and medium-risk businesses
  • Risk-based approach to business licensing
  • Expedited license issuance for businesses operating in strategic locations
  • Certificate and/or product standard statement required for certain businesses
  • Online integrated licensing system to be implemented

The new regulation is expected to have a positive impact on the business environment in Indonesia, making it easier and more efficient for companies to obtain the licenses they need to operate. However, further clarification is needed on how the implementing regulations will work and how the national licensing system will be fully integrated online down to the regional level.

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