Business Licensing and Environmental Permits under the Omnibus law

The Omnibus Law on Job Creation (commonly known as the "Omnibus Law") was passed in Indonesia in 2020, aiming to streamline regulations and boost investment. The law has significantly reformed various aspects of Indonesia's legal and regulatory framework, including the processes for business licensing and environmental permits.

Key Changes in Licensing under the Omnibus Law:

1. Simplification of Licensing Processes:

• The Omnibus Law centralizes and simplifies business licensing by introducing the Online Single Submission (OSS) system, which allows businesses to apply for licenses electronically. This reduces the bureaucratic burden and speeds up the process.
• Various licenses, such as location permits, environmental permits, and building permits, have been merged into one or eliminated, simplifying the regulatory landscape for businesses.

1. Risk-Based Licensing:

• The law introduces a risk-based approach to licensing, categorizing businesses into low, medium, or high risk. The level of scrutiny and the types of licenses required depend on the risk category, making it easier for low-risk businesses to start operations.

1. Streamlined Environmental and Land Use Permits:

• Environmental and land use permits have been integrated or simplified, reducing delays in project approvals. This is expected to encourage investment, particularly in infrastructure and natural resource sectors.

Benefits of the Omnibus Law

The Omnibus Law on Job Creation offers several potential benefits:

1. Increased Investment: By simplifying licensing and reducing red tape, the law makes Indonesia more attractive to both domestic and foreign investors. This is expected to stimulate economic growth and create jobs.
2. Ease of Doing Business: The streamlined and digitalized licensing process lowers the cost and time required to start and operate a business in Indonesia, improving the country's global competitiveness.
3. Enhanced Legal Certainty: The law clarifies and consolidates various regulations, providing businesses with greater legal certainty and reducing the risks associated with regulatory ambiguities.
4. Economic Growth and Job Creation: By fostering a more business-friendly environment, the Omnibus Law aims to drive economic growth, reduce unemployment, and improve overall welfare in Indonesia.

However, it is important to note that while the Omnibus Law brings many benefits, it has also faced criticism, particularly from labor unions and environmental groups, who argue that it could weaken labor protections and environmental safeguards. The long-term impact of the law will depend on its implementation and the balance between promoting economic growth and protecting workers' rights and the environment.