Indonesia Government Regulation No. 28/2025 and Its Implications for Foreign Investors and Businesses

Indonesia has introduced a major regulatory update with the issuance of Government Regulation (PP) No. 28 of 2025. The measure replaces PP No. 5/2021 and reshapes the country’s risk-based licensing system for businesses. For both foreign investors and local entrepreneurs, the new rules represent more than just an administrative shift—they alter how businesses must prepare, register, and operate in Indonesia’s evolving investment landscape.

One of the most significant changes in PP 28/2025 is the expansion of sectors requiring formal licensing. Where previously 305 sectors were included, the new regulation brings the total to 327. The additions are not marginal; they include areas that reflect Indonesia’s economic ambitions, such as the creative economy, geospatial information services, legal metrology, cooperatives and investment activities, and electronic systems and digital transactions.

For foreign investors, this change is particularly important. Establishing a Foreign Investment Company (PT PMA) now requires close scrutiny of whether the chosen line of business falls within these newly regulated categories. If so, companies must prepare additional permits and supporting documentation, extending the compliance process.

PP 28/2025 retains the tiered risk-based classification that determines licensing requirements. Businesses are categorized as:

Low Risk: Only a Business Identification Number (NIB) is required.

Medium-Low Risk: NIB plus a self-declared Standard Certificate.

Medium-High Risk: NIB plus a verified Standard Certificate.

High Risk: NIB plus a full business license.

Foreign-owned companies often find themselves in the higher-risk categories, which can lengthen the approval timeline and increase the level of scrutiny. Understanding where a business falls within this framework is essential for both strategic planning and operational readiness.

PP 28/2025 brings two immediate challenges for foreign investors. First, business activities previously exempt from licensing may now require permits, creating additional compliance obligations. Second, ownership in sectors classified as high-risk can trigger stricter requirements, complicating the licensing process.

The government’s Online Single Submission (OSS) system has also been upgraded to assess risk profiles in real time. While this enhances transparency, it demands precision in preparing documents—errors or incomplete filings are more likely to cause delays.

Failure to comply carries heavier consequences under the new rules. Administrative sanctions range from warnings to license revocations, underscoring the need for meticulous compliance strategies. Furthermore, coordination between central and regional authorities is now emphasized, meaning businesses must align not only with national regulations but also with local requirements.

For companies navigating these changes—particularly PT PMAs—expert guidance is becoming increasingly valuable. Many businesses are turning to legal and corporate secretarial service providers to minimize procedural risks and streamline registration processes.

Specialist firms like CPT Corporate have extensive experience assisting both foreign and domestic investors with company registration in Indonesia. By helping businesses analyze risk classifications, prepare licensing applications, and adapt documentation to the OSS framework, such advisors play a key role in avoiding costly missteps.

Ultimately, PP 28/2025 represents more than an administrative reform. It is part of Indonesia’s broader strategy to attract investment while ensuring legal certainty, environmental protection, and higher service standards. For investors, the regulation demands not only compliance but also adaptability, those who understand and prepare for the new requirements can position themselves advantageously.

In this context, regulatory change should not be viewed solely as a hurdle. By adopting sound compliance practices and leveraging professional support where needed, businesses can build stronger operational foundations and enhance their long-term resilience in Indonesia’s dynamic market.