New Procedures on Granting Business Permits of Industrial Area and Permits of Expansion of Industrial Area

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In implementing the Government Regulation No. 24 Year 2009 on Industrial Area ("GR No. 24/2009"), the government promulgates the Regulation of the Minister of Industrial of Republic of Indonesia Number 05/M-IND/PER/2/2014 ("Permenperin No. 5/2014") to regulate business permits of industrial area ("BP Industrial Area") and permits of expansion of industrial area ("PE Industrial Area"). Under Article 1 paragraph (1) of Permenperin No. 5/2014, the definition of an industrial area ("Industrial Area") is the region where the concentration of industry activity is completed by facilities and infrastructure which are developed and maintained by the industrial area company. Whereas, the industrial area company ("Industrial Area Company") is a company that is seeking the business development and management of Industrial Area.

BP Industrial Area

The authority of granting the BP Industrial Area and and PE Industrial Area Industrial are granted by:

  1. Regent/Mayor for Industrial Area located in the regency/city;
  2. Governor for Industrial Area located in regency/city area; or
  3. Minister for Industrial Area located in inter-province area and Industrial Area which is a foreign investment and investors using foreign capital, which comes from the governments of other countries, under agreement made by the government and other state governments.

Any business activity of Industrial Area is obliged to have BP Industrial Area Industrial Area and to comply with the technical guidelines for the industrial area. BP Industrial Area is valid as long as the Industrial Area Company conducts business development of Industrial Area. BP Industrial Area is given to the Industrial Area Company as a legal entity established under Indonesian law and domiciled in Indonesia such as state-owned Enterprises (“BUMN”) or regional-owned Wnterprises (“BUMD”), cooperatives, or private entities.

In addition, the Industrial Area Company shall provide lands for the activities of micro, small and medium enterprises at least 2 % (two percent) of the total industrial plot. If within 2 (two) years industrial land is not fully utilized by micro, small and medium enterprises, it can be used by other industrial companies as far as the land for other industrial companies are no longer available.

In obtaining BP Industrial Area, it shall obtain the principle approval in accordance with the prevailing regulations.

The application of principle approval is submitted by form of PMK-I and attaching the following documents:

  1. photocopy of deed of establishment that has been legalized by the Minister of Law and Human Rights or minister who is organizing the government affairs in the field of cooperative for the applicant who has a status of cooperative, and especially for foreign investment, it shall attach the requirement which is stipulated by Head of Investment Coordinating Board;
  2. photocopy of Taxpayer Registration Number (“NPWP”), except for foreign investment;
  3. sketch plan of the location (village, sub-district, regency/city, province); and
  4. statement letter that the site plan is located in the designation industrial area in accordance with regional spatial layout plan.

Subsequently, the Industrial Area Company which has obtained principle approval for a maximum period of 2 (two) years, shall (“Requirements after Principle Approval”):

  1. obtain a nuisance permit;
  2. obtain a location permit;
  3. implement the procurement/possession of land in accordance with the prevailing laws and regulations;
  4. obtain an environmental permit;
  5. conduct the site plan;
  6. conduct land clearance;
  7. implement the planning and construction of supporting infrastructure and facilities as well as required installation/equipment in Industrial Area;
  8. have a rules of industrial area;
  9. provide land for the activities of micro, small, and medium enterprises.

BP Industrial Area is granted to the Industrial Area Company that has complied with:

  1. filling out the form of PMK-III regarding Industrial Area application and attach the data of the last progress of Industrial Area development using the form of PMK-II;
  2. the requirements set forth in Requirements after Principle Approval;
  3. comply with the technical guidelines of industrial area;
  4. some part of Industrial Area are already operated with at least already has supporting infrastructure and facilities including the entrance to the Industrial Area, roads and rainwater channel in Industrial Area, as well as installation of waste water treatment for Industrial Area, operational office; and
  5. has made minutes of investigation  by team of industrial area assessor stating that the relevant companies may be granted the BP Industrial Area.

PE Industrial Area

Any Industrial Area Company which already has the BP Industrial Area and has already operated, and will carry out the expansion of Industrial Area shall obtain BP Industrial Area. Nevertheless, the expansion of the Industrial Area located in the regency/city does not require principle approval.

PE Industrial Area is granted if the relevant Industrial Area Company has obtained the BP Industrial Area with the following requirements:

  1. have an environmental permit of expansion of Industrial Area;
  2. have a location expansion permit;
  3. land which is planned as an expansion area has been controlled and evidenced by a waiver letter (“SPH”) or certificate; and
  4. located in designated industrial area.

Sanction

Industrial Area Company is warned in writing if it meets one of the following conditions:

  1. Industrial Area Company conducts the  expansion without having BP Industrial Area;
  2. Industrial Area Company does not submit data of Industrial Area for 3 (three) times consecutively or submit incorrect data in purpose;
  3. Industrial Area Company does not  conduct business in accordance with the provisions stipulated in the obtained  permit;
  4. Industrial Area Company that causes damage and/or pollution to the environment which is not in accordance with the document environmental impact assessment (“AMDAL”);
  5. does not comply with the provisions of the BP Industrial Area and/or PE Industrial Area as well as the development of technical guidelines for the industrial area;
  6. does not complete the construction of  industrial area completely.

The written warning above is granted for 3 (three) times consecutively by grace period each of  2 (two) months.

If within the period of written warning, Industrial Area Company has failed to remedy its violation, its permit will be freezed. The freezing of permit is applicable within 6 (six) months since the determination of freezing has been issued.

If within the period of freezing of permit, Industrial Area Company has failed to remedy its violation, the BP Industrial Area and PE Industrial Area are revoked and invalidated.

Sarastika Putri Walian

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