Status of GR 28/2025

GR 28/2025, which replaces the previous regulation (GR 5/2021), is now the key regulation on the risk-based licensing framework applicable in Indonesia. Article 549 of GR 28/2025 introduces a grandfather clause, which states that all licenses issued under GR 5/2021 shall remain valid, unless the provisions of GR 28/2025 are more favourable. This creates an opportunity for business actors to request re-issuance of the business license under GR 28/2025 if they deemed the condition set out in GR28/2025 is more favourable than the same under GR5/2021.

 

Minimum Threshold for Foreign Investment

GR 28/2025 addresses the anticipated changes to the minimum investment requirement which requires foreign investment companies (“PT PMA”) to have the minimum investment threshold amount of over IDR 10 billion for PT PMA, excluding land and buildings, for each 5-digit KBLI business field per project location. However, it does not specifically address the minimum paid-up requirement, and we believe that it will be addressed in the implementing BKPM regulations.

Further, GR 28/2025 revises and clarifies the requirement for the term “supporting business activities”. Under GR 28/205, the supporting business activities are exempted from the minimum investment requirement for PT PMA and can be conducted without specifying the business description in the Articles of Association. Further, Article 135 of GR 28/2025 states that “Business Licensing to Support Business Activities” includes permits for product distribution, operational feasibility, and product or service standardization.
The process for obtaining a Business Identification Number (Nomor Induk Berusaha, “NIB”) shall remain the same, and therefore details of the supporting business activities and the Standard Classification of Business Fields (Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”) code shall be included in the application submitted to the OSS.

 

Introduction of “fictitious positive” approval (fiktif positif)

GR 28/2025 also introduces new term and mechanism of a “fictitious positive” approval. “Fictitious positive” approval (fiktif positif) is a legal mechanism whereby, if a government agency does not issue a decision within a specified timeframe, subsequent processes, including the issuance of: (i) Technical Approvals (Persetujuan Teknis); (ii) Environmental Approvals (Persetujuan Lingkungan); and (iii) Building Approval and Worthiness Certificates, can continue.
The process of issuance of the respective license is now subject to a maximum processing time that has to be specified by the responsible government agency and identified in the OSS system, and if a delay is caused by a bureaucratic process, an approval is deemed to be issued. If the deemed approval is granted under the “fictitious positive” approval mechanism, the OSS system must issue the relevant proof of licensing, which has the same legal validity as a manually issued license. Under Articles 244 and 245 of GR 28/2025, the OSS and relevant authorities retain the right to: (i) conduct post-licensing audits; (ii) verify the completeness and accuracy of the application materials at the time of deemed approval; and (iii) revoke the license if the audit reveals that the applicant misrepresented data or failed to meet material requirements. If a license is revoked in accordance with these articles, a written notice is served to the applicant, and such decision is recorded and archived digitally in the OSS system.

 

New Business Sectors Classification

Although the classification of Low, Medium-Low, Medium-High, and High risk remains unchanged, GR 28/2025 updates the risk classification of business. Under GR 28/2025, some activities that were previously unregulated under GR 5/2021 are now formally categorized into the OSS, and GR 28/2025 provides more clarity on numerous KBLI codes. Although the Positive List (Presidential Regulation No. 10 of 2021 as lastly amended by Presidential Regulation No. 49 of 2021 on Investment Field) remains effective following the issuance of GR 28/2025, it is still unclear on how the new inclusions introduced in GR 28/2025 will be implemented.

For example:

1. New classification for gaming publishing business activities: Based on Attachment I of GR 28/2025, gaming publishing activities now fall under the software publishing business (KBLI code 58200), and are deemed as a medium-low risk business line that requires a business identity number (NIB) and an unverified standard certificate as its business license. In addition, companies engaging in gaming publishing activities are required to fulfill the electronic system operator (ESO) registration requirement and the gaming classification requirement.

2. New division of business scopes for certain KBLIs: GR 28/2025 divides the business scope of some KBLIs, resulting in different risk levels and different licensing requirements for such business scopes, such as (i) KBLI 35111 (electric power generation) and (ii) KBLI 35129 (other supporting electricity activities). GR 28/2025 also provides clarity on the supervising authority for certain KBLIs. For example: KBLI 21012 (pharmaceutical products industry (for humans)), KBLI 21022 (traditional medicine industry (for humans)), KBLI 23124 (clinical laboratory devices industry), KBLI 32502 (medical and dental equipment, orthopedic and prosthetic equipment industry), and KBLI 20232 (cosmetics (for humans) and tooth paste industry), that were under the Ministry of Industry and the Ministry of Health previously under GR 5/2021, are now under the authority of the Ministry of Industry only under GR 28/2025.

3. Relaxation of foreign investment restrictions for certain KBLIs: GR 28/2025 has changed the business scale of certain KBLIs, which were open only to micro, small, and medium enterprises (“MSMEs“) and in partnership with MSME, opening them up to large scale business as well. Therefore, those KBLIs, which were previously closed to foreign investment, are now open to foreign investment. For example: (i) KBLI 47723 (traditional medicine retail trading (for humans))was open only to MSMEs under GR 5/2021, but is now open to large scale business based on Attachment I.J.1 of GR 28/2025; (ii) KBLI 47724 (cosmetics retail trading (for humans))was also open only to MSMEs under GR 5/2021, but is now open to large-scale business based on Attachment I.J.40 of GR 28/2025; (iii) KBLI 47111 (retail of various goods that are primarily foods, beverages or tobacco in minimarkets/supermarkets/hypermarkets), particularly minimarket, is now categorized separately from supermarkets and hypermarkets, and is open to large-scale business based on Attachment I.G.128 of GR 28/2025.

 

Sanctions and Compliance

GR 28/2025 clarifies the sanctions applicable across all sectors and sets out the types of administrative sanctions to be applied in certain sectors. As general sanctions under GR 28/2025,  any failure to obtain, make necessary updates to, and comply with a licensing requirement will result in administrative sanctions being imposed such as: (a) warning letters; (b) temporary suspension of business activities; (c) administrative fines; (d) enforcement of administrative coercive measures, such as refusal to issue a sectoral license within a prescribed timeframe; (e) revocation of licenses, certifications, or approvals; and (f) revocation of sectoral licenses. The sector-specific sanctions apply to specific business sectors and involve the application of penalties tailored to each industry sector. For example, industrial businesses that fail to relocate after being sanctioned for operating outside designated industrial zones are now subject to administrative fines of up to 1% of their investment value, as determined by an independent audit.

We believe the upcoming months will be crucial for the implementation of GR 28/2025, and we will continue to monitor closely on any development.

TMI Indonesia Practice Group