Business License Simplification: A Risk-Based Approach in Indonesia for the Palm Oil Industry

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Business License Simplification: A Risk-Based Approach in Indonesia for the Palm Oil Industry. Photo by: Sawit Fest 2021 / Yorri Farli

PALMOILMAGAZINE, JAKARTA – In recent developments, the General Director of the Ministry of Agriculture’s Plantation Department issued Circular Number 245/KB.410/E/03/2024, which focuses on supervising business permits based on risk for industries classified under the Indonesian Standard Industrial Classification (KBLI) 10431, including crude palm oil (CPO) industries.

This circular serves as a follow-up to the implementation of previous regulations in the Omnibus Law on Job Creation (Cipta Kerja) and other related legislation. The circular is based on Law Number 2/2022 on Job Creation, which was later amended to Law Number 6/2023 concerning Government Regulation in Lieu of Law Number 2/2022 on Job Creation. One of the main objectives of this regulation is to simplify the business permit process through the implementation of risk-based business permits.

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In line with this, Government Regulation Number 5/2021 was enacted regarding the Implementation of Risk-Based Business Permits. The aim is to realize the provisions outlined in Chapter 12 of the Omnibus Law on Job Creation, with the goal of expediting and streamlining investment processes and business procedures for stakeholders.

The government has also introduced the online single submission (OSS) system, utilizing a risk-based approach (RBA). This system integrates all stages of obtaining business permits, from proposal submission to verification and supervision. Through the OSS RBA, it is expected that processes will become more efficient and transparent, providing stakeholders with greater ease in conducting their business activities.

The circular was signed by General Director of Plantation, Andi Nur Alam Syah in April 2024. It was about to deliver guidelines for governor and regent/mayor to examine, and publish permit in KBLI 10431. This would create more conducive investment climate in CPO industries.

“To accelerate and escalate investment and business, and ease every stakeholder, the government implements online single submission (OSS) risk based aproach (RBA). Every process to get business permit, verification, and supervision would be integrated in the system,” the circular noted, as got, Wednesday (15/5/2024).

Besides delivering guidelines, the circular emphasized the obligation for the governor, regent/mayor to supervise RBA permit according to their authority. The effective supervision would confirm that every permit would be obeyed so that it would escalate not only obedience of law but support sustainability and develop CPO industries in Indonesia. (T2)

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