REFORM OF LICENSING IN INDONESIA

THE DILEMMA BETWEEN INVESTMENT FACILITATION, ENVIRONMENTAL PROTECTION, AND LEGAL CERTAINTY IN THE RISK-BASED APPROACH (RBA) SYSTEM

Abstract

This study critically analyzes Indonesia's national licensing reform, pivoting governance to the Risk-Based Approach (RBA) via the Online Single Submission (OSS) system, governed by the Law on Job Creation (UUCK) and PP 5/2021. The reform aims to boost economic competitiveness by simplifying licensing, notably by integrating environmental permits into Environmental Approvals. This simplification sparks debate, as critics argue it weakens the preventive control of environmental law and compromises legal
certainty and ecosystem protection. The study finds that despite successfully streamlining formal procedures, OSS-RBA implementation is severely hampered by vertical and horizontal regulatory disharmony, a critical lack of data synchronization, and fundamental instability of the OSS digital infrastructure. The reform's long-term success is critically dependent on the competence of public administrators to exercise proper discretion when addressing high-risk activities. Therefore, the RBA framework requires continuous structural and institutional evaluation to ensure investment facilitation does not compromise legal certainty and environmental sustainability.