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Indonesia has long been known for its complex bureaucracy and slow business licensing processes. Entrepreneurs and investors often face uncertainty as their applications stall while awaiting official approval. To address this issue, Indonesia has adopted the "silent approval" policy, known locally as the "positive fictitious assumption" (asas fiktif positif). In simple terms, if the licensing authority fails to respond within a specified time frame, the application is automatically deemed approved, allowing businesses to proceed with their processes. This paradigm shift under the Online Single Submission – Risk-Based Approach (OSS-RBA) system aims to provide greater certainty and speed in business licensing.

How “Silent Approval” Works Under OSS-RBA Under the OSS-RBA framework, the principle of the positive fictitious assumption compels government agencies to act promptly in processing license applications—or risk having the system approve them automatically. The legal foundation for this policy is found in Law No. 11 of 2020 on Job Creation (Omnibus Law), which amended Law No. 30 of 2014 on Government Administration to reinforce the “silence means approval” approach. Government Regulation No. 5 of 2021 on Risk-Based Business Licensing (GR 5/2021) explicitly adopts this principle as an innovation in the licensing process.

This principle requires ministers, heads of agencies, governors, regents, and mayors—each within their respective authority—to evaluate licensing requirements within a specified timeframe and issue business permits during that period. If the officials fail to issue a decision within the stipulated time, the OSS system will automatically grant the license on their behalf. In practice, this means that once an application and its supporting documents are fully submitted through OSS, a countdown begins. Each type of license has a predetermined Service Level Agreement (SLA)—typically measured in working days—within which the relevant authority must raise objections or conduct inspections. If this SLA expires without action, the application is considered legally approved.

Example of Silent Approval Implementation in OSS

For instance, OSS guidelines set strict deadlines for various required approvals. Land use permits (location permits) for non-marine areas must be processed within 5–10 working days, minor environmental approvals (UKL-UPL) within 5 days, and most medium-risk business licenses within approximately 10 days. If these deadlines pass without a clear response or rejection, the OSS platform will issue the business license or permit as though the relevant authority had approved it. This positive fictitious mechanism reverses the old paradigm—government inaction no longer means uncertainty for investors; instead, silence is treated as approval. The goal is to eliminate indefinite waiting periods and provide legal certainty.

Of course, the relevant agencies are notified through OSS of incoming applications and are expected to promptly conduct the necessary reviews. Government Regulation No. 6 of 2021 (GR 6/2021) delegates much of this direct licensing implementation to local one-stop service offices (DPMPTSP) at the provincial and district/city levels. These local offices coordinate technical verification with the relevant departments. In short, the OSS-RBA silent approval policy legally binds authorities to meet strict deadlines—failure to do so will automatically accelerate the license issuance process.

Beyond OSS: Silent Approval in Land, Construction, and Environmental Permits Silent approval does not apply only to general business licenses—it also extends to several sectoral permits as part of Indonesia’s broader licensing reform, such as:

1. Spatial Land Use Permits: Before the OSS era, businesses needed to obtain a Location Permit to confirm that the proposed land use complied with spatial plans. Now, OSS integrates the Conformity of Spatial Utilization Activities (KKPR) approval. If a detailed local spatial plan (RDTR) is available and the proposed use aligns with it, OSS can immediately issue confirmation. If no detailed plan exists, approval must be sought from the local spatial planning office.
2. Building Construction Permits: The traditional Building Permit (IMB) has been replaced by the Building Approval (PBG) under the new system. The PBG process involves the submission of building plans online via the SIMBG system for technical review. Here too, the silent approval mechanism applies. Technical agencies must review the architectural and engineering plans within a set timeframe. If all documents meet the required standards, a compliance recommendation is issued; if the agency fails to respond in time, the system proceeds and assumes the plans have met the necessary criteria. In practice, once applicants upload all required drawings and certificates, a countdown begins for officials to request revisions or grant approval. If no response is provided by the deadline, the process moves forward—the PBG is issued provided the applicant has paid the necessary fees. This mechanism ensures that investors in the construction sector (such as hotels, factories, etc.) are not left waiting indefinitely for local officials to approve building plans.
3. Environmental Licenses: Environmental permits have long been a source of delay due to the rigorous Environmental Impact Assessment (AMDAL) process and multi-level approvals that can take significant time. The Omnibus Law reforms have integrated environmental licensing into the broader business licensing framework. Now, businesses are required to obtain Environmental Approval as a prerequisite for their OSS license. Government Regulation No. 22 of 2021 aligns environmental assessments with the OSS system, and a 2024 Ministerial Decree delegates much of the environmental approval process to provincial authorities to speed up processing times. Although AMDAL approvals are not automatically granted (due to the inherent risk of bypassing environmental oversight), the spirit of silent approval is indirectly reflected—through decentralization and strict evaluation timelines, the government aims to avoid unnecessary delays. For simpler environmental management plans (UKL-UPL), required for medium- to low-risk activities, OSS enforces a short 5-day review period. If this period passes without objections, the implied response is that the business may proceed with operations—provided it complies with environmental regulations.

In all cases, the burden remains on businesses to meet environmental standards, but these changes prevent environmentally responsible projects from being trapped in administrative gridlock. Through this system, Indonesia seeks to create a more investor- and business-friendly environment by minimizing uncertainty and accelerating the licensing process—while still upholding principles of accountability and environmental sustainability.

This sectoral framework demonstrates how the positive fictitious approval approach is applied across various domains—from land use and construction permits to environmental management. The primary goal is clear: time-bound processes and automatic approvals to support a more efficient and predictable business climate. This approach makes it easier for entrepreneurs to obtain the required licenses without lengthy delays, thus accelerating business activities and enhancing legal certainty.

Reducing Barriers: Benefits for Businesses and Investors The introduction of the silent approval mechanism is fundamentally aimed at reducing bureaucracy and increasing Indonesia’s appeal as an investment destination. By guaranteeing decisions within a fixed timeframe, the OSS-RBA system provides the level of certainty that businesses desperately need. Its key benefits include:

1. Faster Time to Market: Entrepreneurs can now start operations more quickly without waiting months for permits. Automatic approval means that a small café owner or a factory investor can plan their opening with a more reliable schedule. This is particularly beneficial for MSMEs (Micro, Small, and Medium Enterprises), which are often the most burdened by bureaucratic delays. The new system gives them a chance to obtain the necessary licenses quickly and begin business operations sooner.
2. Improved Ease of Doing Business: The concept of silent approval is inspired by global best practices (often referred to as “lex silencio positivo”). By adopting this system, Indonesia signals its serious commitment to improving ease-of-doing-business rankings and fostering a pro-investment climate. Simpler and more efficient regulations are a structural move to encourage investment. Both domestic and foreign investors can now feel confident that business permits won’t be held up due to local inefficiencies or rent-seeking practices. In fact, this positive fictitious approval principle is seen as a major bureaucratic reform—an important step toward better governance, reducing the potential for corruption by limiting discretionary delays.
3. Accountability and Transparency: With clearly defined Service Level Agreements (SLAs) for each type of license, government officials are more accountable. The digital footprint within OSS logs when applications are submitted and whether they are processed on time. If an official misses a deadline, the automatic approval system reflects that lapse—making it easier to identify bottlenecks and enforce institutional discipline.
4. Regional Consistency By delegating licensing to regional OSS offices under uniform regulations, greater consistency is now achieved across the country. A foreign investor applying for a permit in Jakarta and a local MSME in Bali will go through the same standardized timeline. This reduces previous regional disparities, where some areas were slower or more complicated in handling licensing. Government Regulation (GR) No. 6/2021 requires local governments to adjust their agencies to implement risk-based licensing more efficiently. Over time, this will create a more level playing field, enabling businesses to expand across provinces without facing unpredictable delays in different regions.

Positive Impact of These Benefits Taken together, all these advantages make Indonesia a more attractive place to start and grow a business. Particularly for emerging sectors like digital startups or creative industries, fast and predictable licensing becomes a major competitive edge. As long as applicants ensure their submissions meet the requirements, they can rely on the OSS system to issue the necessary permits on schedule—either through active approval or approval by default (silent approval).

The Bali Experience: Easing Permits in a Tourism Hub However, Bali also highlights certain tensions and challenges with the silent approval approach. The island's environmental and cultural sensitivities mean that unchecked development can become a double-edged sword. At times, licensing bottlenecks have functioned as a control mechanism—for example, by slowing down permits for new hotels in already saturated areas. With automatic approvals, these barriers are weakened, raising concerns about overdevelopment and license misuse in Bali's prime tourist zones.

By the end of 2023, then-Minister of Investment Luhut Pandjaitan even proposed a temporary moratorium on new tourism-related businesses in Bali's busiest regencies. The moratorium targeted hotels, beach clubs, villas, and other tourist accommodations, especially those catering to foreign visitors. It aimed to suspend the issuance of new permits for two years in tourism hotspots such as Canggu, Ubud, and Kuta.

The main reason for this moratorium was the observation that, under risk-based OSS, many small-scale businesses owned by foreigners (e.g., cafes, homestays, etc.) could easily obtain business permits with minimal verification, as they fall under low-risk categories. The lack of stringent manual verification for these low-risk licenses, according to Pandjaitan, "creates opportunities for license abuse." In other words, some foreigners were allegedly exploiting the silent approval system—for example, registering small businesses to bypass other regulations or operating in ways that did not align with the intended use of their permits.

The Bali Scenario Highlights a Crucial Point: While silent approval significantly benefits legitimate businesses by removing bureaucratic hurdles, it also requires robust post-licensing oversight. Bali's authorities will need to rely more on monitoring and enforcement after licenses are issued, since early-stage reviews may not catch all issues. For instance, local regulations concerning zoning, traditional village permissions (izin desa adat), or environmental constraints must still be observed—even if the OSS system automatically issues a license. To ensure sustainable and culturally respectful development, Bali may need to develop complementary local policies, such as improved spatial planning and community consultation mechanisms, to support the OSS framework.

Summary: Overall, the implementation of silent approval in Bali has had a positive impact on business ease—accelerating investments in tourism recovery and creative enterprises. However, it also underscores the importance of balancing speed with wise local governance. Bali’s experience serves as a reminder that no single approach fits all, and each region must adapt the OSS system to suit its local needs and capacities.

Risks and Challenges of the Silent Approval System Although the silent approval mechanism marks a significant leap in bureaucratic efficiency, it also comes with risks and implementation challenges. Both businesses and regulators need to be mindful of the following:

1. Quality Gaps and Lack of Thorough Review Since licenses can be issued automatically once deadlines lapse, there's a risk that applications may not be properly reviewed. For example, a building permit might be issued even if the structural design or safety aspects haven't been examined. This places a heavy responsibility on applicants—if the data submitted is inaccurate, it could lead to major issues down the line.
2. Post-License Compliance Risks Even if a license is automatically approved, business owners must still comply with all relevant laws and standards. If false or non-compliant data is later discovered, the license can be revoked. However, the revocation process can be complex, especially if the business is already operational. So, businesses should not assume they're in the clear just because a permit was easy to obtain—they must still uphold compliance at all times.
3. Not All Permits Are Eligible for Automation Certain licenses still require direct approval, such as mining permits or large-scale, high-risk projects. The OSS system is designed to accelerate licensing for low- to medium-risk ventures, but sensitive sectors remain subject to stricter and lengthier review processes.
4. Technical Issues and Coordination The effectiveness of silent approval heavily depends on the smooth functioning of the OSS system and the readiness of regional governments. In the early stages, some regions were not fully integrated or not yet technically prepared. This could cause permit delays not due to slowness, but because the systems were not yet connected. Training for local officials is therefore crucial to avoid errors or permits being automatically issued without proper oversight.
5. Maintaining Balanced Development The Bali case illustrates a key challenge: rapid licensing can lead to uncontrolled development if not accompanied by proper supervision. Local governments must ensure that automatic approvals still align with spatial planning, local culture, and environmental regulations. Business owners also need to be aware that even though the OSS license has been issued, there may still be additional local permits that must be fulfilled.

When weighing its risks, the silent approval mechanism in Indonesia can be seen as a double-edged sword. On one hand, it significantly improves efficiency and is a breath of fresh air for the business climate. But on the other hand, it also shifts part of the responsibility to business actors to “do the right thing,” and to the government to monitor and enforce after the license is granted.

Both business players and government institutions must adapt. In the future, regulatory refinements are likely, such as:

• Clearer definitions of which permits can be approved automatically, and which still require manual verification,
• Stronger rules on who is accountable if violations occur,
• Better integration between technical sectors and the OSS system to prevent legal loopholes.

The overall goal remains the same: to speed up the licensing process without sacrificing quality or oversight.

Conclusion: Stay Updated and Understand the Rules of the Game The implementation of silent approval through the OSS-RBA system reflects Indonesia’s bold step in cutting bureaucracy and accelerating business licensing. Now, if the government fails to respond within the set timeframe, a permit can be issued automatically — a strong signal that the country is striving to create a more business-friendly and efficient environment. For business actors, this is clearly good news: permits can be obtained faster, and operations can begin sooner. However, it’s important to remember that even if a permit is issued automatically, the responsibility still lies with the applicant. Businesses must ensure that all requirements and regulations are fully met, because the system relies on the honesty and completeness of submitted documents from the start.

For regions like Bali, silent approval can help accelerate economic recovery and investment, but it must still be tailored to local needs so that development does not harm the environment or cultural values. In the future, additional technical regulations may emerge from the central or local governments — such as new rules for environmental permits or special zoning.

What Can Business Actors Do? Stay updated with OSS regulations and those relevant to your business sector. Don’t hesitate to consult your local DPMPTSP (Investment and One-Stop Services Office) or use legal consulting services if needed, to ensure a smooth licensing process without future risks. Remember, silent approval is not a loophole to bypass the rules — it is a tool to ensure permits are issued on time. In short: the system is now faster, but obligations must still be fulfilled. If everything is prepared properly, business owners can take advantage of this momentum to grow faster — with clear permits and fully legal operations.