‘Omnibus Law’ Regulation Relaxes Indonesia’s Spatial Planning Rules for Investors
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (known colloquially as the Omnibus Law), which entered into force on 2 November 2020. In this ABNR legal update, we discuss Government Regulation No. 21 of 2021 on Spatial Planning.
In line with one of the key aims of the Omnibus Law – greater efficiency and coherence in business licensing – the government has issued Government Regulation No. 21 of 2021 on Spatial Planning (the “Regulation”) to streamline Indonesia’s spatial planning regime. The Regulation entered into effect on 2 February 2021.
As always in spatial planning, there is continuous tension between the need for tight control of spatial use on the one hand, and the need to maximize the use of available land for economic development and job creation purposes on the other. While Indonesia’s spatial planning rules prior to the Regulation appeared strict on paper, they were frequently ignored on the ground. Nevertheless, they resulted in high costs for businesses as various complex procedures had to be complied with. In contrast, the new rules set out in the Regulation serve to significantly streamline the bureaucratic burden facing businesses, which should result in lower operational costs overall.
It should be noted at the outset that the requirement for a business to obtain a location permit (izin lokasi) before acquiring land for the purpose of its business or operations is unaffected by the Regulation.
A. Macro Spatial Planning
Under the Regulation, the central government is required to prepare a National Spatial Plan (“RTR”), while provincial and regency / municipal governments must prepare local spatial plans. All spatial plans should be in digital format. The RTR must be easily accessible to the public so that information may be obtained on whether any given area is zoned for a particular use or project.
B. Spatial Use Requirements
Efficient spatial use is to be achieved primarily through application of the concept of “Suitability of Spatial Use Activity (Kesesuaian Kegiatan Pemanfaatan Ruang) (“Suitability”), which is defined as coherence between a particular spatial use and the relevant RTR. An investor must obtain a Recognition of Suitability via the Online Single Submission (OSS) system prior to applying for a business license (izin berusaha), and may only start to use the land as proposed after obtaining the business license. A Recognition of Suitability for a business other than an SME (small or medium enterprise) may be issued by way of a confirmation (for those areas that have detailed spatial plans available – this will cover most industrial areas) or an approval (where detailed spatial plans are not yet available). SMEs are only required to provide a written statement confirming Suitability. The procedure for application for a Recognition of Suitability by way of a confirmation broadly consists of (i) registration, (ii) evaluation of spatial use proposal documents, and (iii) issuance of a Recognition of Suitability. The information that should be provided in order to obtain a Recognition of Suitability includes the following:
C. Control of Spatial Use
Control is exercised by the relevant authorities and is intended to ensure conformity of spatial use proposals with RTR zoning. This is achieved through (i) evaluation of spatial use proposals; (ii) evaluation of conformity with RTR; (iii) provision of incentives and disincentives; (iv) sanctions; and (v) resolution of spatial use disputes.
D. Spatial Use Supervision
This is carried out by government to achieve the wider aims of spatial planning, for law enforcement purposes in relation to spatial use proposals, and to ensure that the designations contained in spatial use plans are properly reflected in the quality of the built environment. This is to be achieved through monitoring, evaluation and reporting. As regards sanctions under the Regulation, these are similar to those under the previous regulation, taking the form of administrative sanctions such as written warnings, administrative fines, suspension of operations, withholding of public services, forcible closure of site, revocation or annulment of a Recognition of Suitability, demolition of structures and/or restoration of spatial functions.
Broadly, the Regulation covers similar ground to Government Regulation 15 of 2010 (“GR 15/2010”), which has now been revoked. However, the Regulation significantly simplifies the rules and procedures governing the licensing of spatial use. Whereas a business had to obtain a spatial use permit (izin pemanfaatan ruang) from the relevant provincial or regency/municipal government under the GR 15/2010, the Regulation only requires it to obtain a Recognition of Suitability from the OSS system prior to securing its business license. This bureaucratic streamlining is, of course, to be welcomed, given that the Regulation also incorporates protections and sanctions to ensure good spatial planning practices going ahead.
 Law No. 11 of 2020 on Job Creation / Undang-Undang No. 11 Tahun 2020 tentang Cipta Kerja
 Peraturan Pemerintah Nomor 21 Tahun 2021 Tentang Penyelenggaraan Penataan Ruang
 The OSS is Indonesia’s online national business licensing system
 Government Regulation No. 15 of 2010 on Spatial Planning / Peraturan Pemerintah No. 15 of 2010 tentang Penyelenggaraan Penataan Ruang
This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.