In line with the Indonesian Government’s commitment to cut bureaucratic red tape, the Omnibus Law puts in place reform attitudes and mechanisms to improve Indonesia’s business environment. Regulatory reforms are ongoing in various sectors, including the environmental sector. To streamline various administrative approvals in the environmental sector, on 2 February 2021, the Government enacted Government Regulation No. 22 of 2021 on Environmental Protection and Management (“GR 22”), which repeals and replaces the previous Government Regulation No. 27 of 2012.
To see our analytical reviews on the other regulatory reforms introduced by the Omnibus Law, please click here, here and here.
The Omnibus Law, as implemented by GR 22, seeks to overcome the existing bureaucratic hurdles by simplifying the licensing procedure and requirements. GR 22 integrates the environmental permit with the company’s ‘Business Authorization’ (Perizinan Berusaha), so businesses are now no longer required to obtain a standalone environmental permit. In addition, the Environmental Management and Monitoring Undertaking Letter (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup, “SPPL”) for businesses engaging in certain fields is now integrated into the company’s Business Identification Number (“NIB”). Consequently, businesses that are required to submit the SPPL can now start their business activities immediately once they obtain their NIB without the need to obtain any additional permit. These changes significantly increase the efficiency of time and costs for businesses.
With the integration of the environmental permit into the Business Authorization, however, administrative sanctions are now directed towards the Business Authorization, implying that if the Business Authorization is revoked, the company will be compelled to immediately cease its activities.
| No. | Matters | Before the Omnibus Law & GR 22 | After the Omnibus Law & GR 22 |
| 1. | Environment
Permit |
Two separate, independent permits were required: (1) environmental permit, and (2) business license, each of which was required to start the company’s commercial/operational activities. | The previously required environmental permit is now integrated into the Business Authorization; consequently, a valid Business Authorization will suffice for a business to commence its commercial/operational activities. |
| 2. | Procedures
|
1) Prepare environmental documents (Environment Impact Analysis (AMDAL) or Environmental Management and Monitoring Efforts (UKL-UPL);
2) Obtain approval for the environmental documents; 3) Obtain the environmental permit; and 4) Obtain the business license. |
1) Prepare environmental documents;
2) Obtain the Environmental Approval (persetujuan lingkungan); and 3) Obtain the Business Authorization. |
| 3. | Authorities | The relevant Regional Government for activities requiring the UKL-UPL. | The Central Government for activities requiring the UKL-UPL. |
| 4. | Administrative Sanctions | Suspension or revocation of the environmental permit only, thus affecting the continuity of the company’s operation. | Sanctions are imposed directly on the company’s Business Authorization, leading to the suspension or cessation of the company’s business activities as a whole. |
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