GR 28/2025 on Risk-Based Business Licensing – Business Licensing in Free Trade Zone
Authors
This edition of ARMA Updates explores the business licensing provisions and procedure in Free Trade Zone based on the current issued regulation, Government Regulation No. 28 of 2025 (“GR 28/2025”) on Risk-Based Business Licensing. At present, Indonesia’s designated Free Trade Zones comprise Batam, Bintan, Karimun, and Sabang.
Procedures in Free Trade Zone
Pursuant to GR 28/2025, business licenses are administered through the Online Single Submission (“OSS”) System, with the issuing authority determined by the business location. In the Free Trade Zone, the authority lies with the Free Trade Zone Authority. 1 In substance, the licensing procedure in the Free Trade Zone follows the same steps as in other or general areas, namely: 2
- Company establishment and legality obtainment;
- Basic requirements (persyaratan dasar), which include Environmental Approvals and Spatial Use Approval (Kesesuaian Kegiatan Pemanfaatan Ruang – “KKPR”);
- Application of business license through OSS.
Environmental Approval
Although the general licensing process appears similar with other areas, GR 28/2025 introduces a key distinction for companies located in Free Trade Zone. Where a zone-level Environmental Impact Assessment (Analisis Mengenai Dampak Lingkungan – “AMDAL”) and Environmental Management Plan (Persetujuan Lingkungan Kawasan) are already in place, companies operating within Free Trade Zone are only required to prepare a Detailed Environmental Management and Monitoring Plan (Rencana Pengelolaan Lingkungan – “RKL” and Rencana Pemantauan Lingkungan – “RPL Rinci”), which refers to the zone’s environmental documents. 3
In practice, this means that companies located in Free Trade Zone are not required to prepare an AMDAL or UKL-UPL individually, which would normally involve a more complex analysis conducted by the companies and/or consultants. Instead, companies simply align with and elaborate on the zone’s master environmental documents, thereby reducing both time and cost.
KKPR
Under GR 28/2025, where business activities are conducted in a building or commercial/service complex that is jointly used, and the manager has already obtained a KKPR, companies are exempted from applying for a KKPR separately. 4 In the context of Free Trade Zone, this interacts with GR 28/2025, which vests the Free Trade Zone Authority with licensing powers. In practice, the Free Trade Zone Authority generally already holds the KKPR, meaning that companies are not required to obtain one independently.
Acceleration of Licensing for High-Risk Businesses
GR 28/2025 also introduces an accelerated licensing mechanism for high-risk business activities within Free Trade Zone. Normally, business licenses are issued only after all requirements are fulfilled. However, in Free Trade Zone, the authority may issue the license first, while businesses are permitted to complete the required approvals in parallel after the license has been issued. 5 However, if the companies ultimately fail to fulfil the outstanding requirements, the Free Trade Zone Authority, pursuant to its authority, may revoke the license through the OSS system.
Conclusion
In essence, GR 28/2025 establishes a more streamlined licensing regime for businesses operating in Free Trade Zone. By centralising authority in the Free Trade Zone Authority and simplifying key requirements, such as exemptions from individual Spatial Use Approval applications and reduced environmental approval obligations, companies can benefit from faster licensing processes, lower compliance costs, and greater regulatory certainty. These provisions reflect the government’s policy objective of enhancing investment attractiveness and economic competitiveness in Indonesia’s Free Trade Zone.
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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