The government is reviewing the revision of Government Regulation No. 5/2021 on the Implementation of Risk-Based Business Licensing (‘PP 5/2021’), with discussions still ongoing.

Director of Harmonisation of Laws and Regulations II of the Ministry of Law and Human Rights, Unan Pribadi, stated that the harmonisation of the new regulation plan covers several articles. ‘There are 548 articles in the body, more than 11,000 attachments,’ Unan told hukumonline.com.

The government will resume discussions on the revision this week. Harmonisation is needed to ensure regulations are in line with national needs in improving the investment climate with a risk-based approach that is key to simplifying licensing and reducing bureaucratic obstacles.

The purpose of this regulation is to improve the ease of doing business, provide legal certainty for business actors, and strengthen supervision, so that national competitiveness and economic growth can be spurred.

The implementation of risk-based business licensing includes norms, standards, procedures, and criteria for business licensing, supervision procedures, policy evaluation and reform, funding, problem solving, and sanctions.

Legal Analysis

The current implementation of risk-based business licensing still refers to the provisions stipulated in GR 5/2021 and its derivative regulations that are relevant for each business sector. GR 5/2021 consists of 12 Chapters, 567 Articles and several attachments that contain the following aspects: 1) Description of the line of business; 2) Business risk; 3) Form of business licensing; 4) Period of licensing fulfilment; 5) Period of licensing validity; and 6) Government authority.

In general, GR 5/2021 requires business actors to fulfil basic licensing requirements, which can be obtained through the Online Single Submission (‘OSS’) institution before starting activities in 16 business sectors in accordance with the Indonesian Standard Industrial Classification (KBLI). In addition, GR 5/2021 also stipulates that administrative sanctions may be imposed on businesses that violate the licensing provisions applicable in their sector.

Recommended Actions

While waiting for the revision of GR 5/2021 to be enacted, businesses are still required to apply for business licences through the OSS system and conduct their business activities in accordance with applicable regulations, including those contained in GR 5/2021 and other relevant regulations for each sector.
In addition, business actors must continue to follow the development of the revised GR 5/2021, including the changes in the regulation to reduce legal risks that may arise from the implementation of the revised GR 5/2021, as well as to facilitate adaptation to the new regulation.

Source: hukumonline.com