Government Regulation 38 of 2025 Boosts Strategic Projects and Regional Economy
By: Dhita Karuniawati
The Indonesian government has reaffirmed its commitment to strengthening the investment climate and accelerating national economic development through the issuance of Government Regulation (PP) Number 28 of 2025 concerning the Implementation of Risk-Based Business Licensing. This regulation refines the previous licensing system stipulated in PP Number 5 of 2021 and is also an important part of structural reforms to create more transparent, efficient, and results-oriented investment governance. This regulation marks a shift in the role of the Online Single Submission (OSS) from merely a facilitation tool to a more systemic instrument for monitoring and controlling business compliance.
The issuance of PP 38/2025 is part of the national strategy to promote sustainable economic growth within the 2025-2029 National Medium-Term Development Plan (RPJMN). This deregulation aims to create a more conducive investment climate and increase investment’s contribution to Gross Domestic Product (GDP).
Riyatno, Deputy for Investment Climate Development at the Ministry of Investment and Downstream Investment Coordinating Board (BKPM), stated that this deregulation will foster investment interest, a key driver of economic growth, second only to domestic consumption. The goal is to facilitate investment, which is expected to have a multiplier effect on various other business sectors.
Riyatno stated that Government Regulation 38/2025 was introduced as an improvement to the previous policy. It aims to address three crucial challenges in the business licensing system. First, it provides licensing certainty through the establishment of Service Level Agreements (SLAs) for Basic Licensing (PD), Business Licensing (PB), and Business Licensing to Support Business Activities (PBUMKU).
This certainty is also supported by setting deadlines for the improvement process and standardizing document inspections. Second, it focuses on process simplification by streamlining the licensing flow, eliminating layered procedures, reducing redundant requirements, and organizing licensing stages more systematically.
Third, restructuring regulations through more integrated consolidation of regulations, refining regulatory appendices, and harmonizing nomenclature between sectors to eliminate overlap and facilitate implementation in the field.
Riyatno explained that the direction of this investment licensing policy targets ease of doing business, risk-based licensing, regulatory simplification, fairness for MSMEs, certainty of service times, and inclusive and sustainable investment.
Meanwhile, Ahmad Heri Firdaus, a researcher at the Institute for Development of Economics and Finance (INDEF), stated that business actors and strategic decision-makers are expected to adjust their approach to investment policy. PP 38/2025 represents a new hope for creating a more conducive and efficient business climate.
According to Heri, PP 38/2025 also expands the sectors covered by it. While previously several sectors were not accommodated, PP 38/2025 now includes new sectors. These sectors include the creative economy, geospatial information, employment, cooperatives, electronic systems, investment, and environmental protection and management. In terms of supervision, the scope of objects has also been expanded, including PBUMKU.
The government has also established new administrative sanctions, ranging from written warnings, temporary suspensions, fines, to revocation of basic permits or business legality. Police coercion can even be applied in certain cases. This Government Regulation (PP) is also emphasized as the sole legal reference in the risk-based licensing system.
With its status as a single legal reference, PP 38/2025 prevents all ministries, institutions, regional governments, and area managers from adding additional requirements beyond those stipulated in this regulation. This approach is believed to prevent overlapping policies and strengthen legal certainty for business actors.
Regional governments also support PP 38/2025. One such supporter is Hasfarizal Handra, Head of the Riau Islands (Kepri) Provincial Investment and One-Stop Integrated Services Agency (DPMPTSP). Hasfarizal urged all parties to implement the regulation.
The Head of the Riau Islands Department of Investment and Private Goods (DPMPTSP), Hasfarizal Handra, stated that the purpose of Government Regulation 38/2025 is inseparable from the primary objective of developing investment in Indonesia, including in the Riau Islands. This will drive continued economic growth.
