On February 2, 2021, the Indonesian Government enacted the implementing regulation of the Omnibus Law (Law No.11 of 2020 on Job Creation) regarding the environmental sector, Government Regulation No. 22 of 2021 on Environmental Protection and Management (“GR No.22/2021”). GR No. 22/2021, which came into force in February 2021, simplifies the licensing and certain other procedures required in the environmental sector, and revokes the previous Government Regulation No. 27 of 2012 on Environmental Permits.
We discuss notable changes in GR No. 22/2021 below.
Prior to the issuance of the Omnibus Law, a company was required to obtain an environmental permit as the pre-requisite to obtain its business license. The Omnibus Law and GR No. 22/2021 have removed the requirement to obtain a separate environmental permit and instead have integrated this permit into the company’s business license (perizinan berusaha). As a result, companies are required only to prepare the documents mentioned in the section below regarding the environmental impact study before obtaining their business licenses.
With the integration of the environmental permit into the business license, sanctions imposed for environmental violations may directly impact the status of the business license of a company, including, for example, revocation of the business license (as compared to revocation of the environmental permit previously).
Environmental Impact Study
Prior to the issuance of the Omnibus Law, a company was required to prepare one of the following documents to assess the potential environmental impact of its business or operational activities:
- a comprehensive environmental impact study in the form of an Environmental Impact Analysis Document ("AMDAL") (for businesses whose activities potentially had a significant impact on the environment); or
- an environmental impact study in the form of an Environmental Management/Environmental Monitoring Program ("UKL-UPL") (for certain type of businesses that did not fall under category (a) above).
In the case where an AMDAL or UKL-UPL above was not required because the company's activities had a low environmental impact risk, the government could require the company to submit an undertaking letter of environmental management and monitoring capability (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup or "SPPL").
The Omnibus Law and GR No. 22/2021 have simplified these requirements by:
- requiring a company to provide an undertaking letter to manage the environment as evidence of its compliance with UKL-UPL; and
- integrating the SPPL with the company's Business Identity Number (Nomor Induk Berusaha, "NIB"), especially relevant for businesses whose activities have a low environmental impact risk.
As a result, there is now only the requirement either for an AMDAL in relation to business activities that may cause significant impacts on the environment, or an undertaking letter for business activities with no impact on the environment. Thus, companies that were previously required to submit the SPPL may start their business activities once they obtain their NIBs.
For further information on the above, please contact this form.
The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.