By Helmi Amnijar, Policy and Regulation
Introduction
The expansion of Indonesia’s industrial sector is both a strategic necessity and an economic inevitability. Yet this progress comes with a significant environmental cost, as the sector continues to rely heavily on fossil fuels for its energy needs. In 2023, industrial energy consumption increased by 9%, with coal remaining the dominant source at 56.9% of the energy mix. In contrast, renewable energy contributed only 6.52%. This energy profile resulted in an estimated 460 MtCO₂e (metric tons of carbon dioxide equivalent) in emissions—a unit that captures both carbon dioxide and other greenhouse gases based on their global warming potential. The persistence of fossil fuel subsidies further complicates Indonesia’s decarbonization efforts, making the transition to cleaner energy more challenging.
Beyond contributing to rising carbon emissions, industrial activities can also cause significant harm to local ecosystems in several other ways, including but not limited to:
Water and soil pollution, resulting from improperly managed industrial waste such as chemical by-products and non-organic materials that seep into the environment during production or disposal processes;
Air pollution, where certain industries release smoke, dust, and other airborne particulates that degrade air quality and pose health risks to nearby populations; and
Noise pollution, often generated by heavy machinery and factory operations, which can disrupt both workplace conditions and surrounding communities. When persistent and intense, industrial noise can lead to long-term discomfort and health concerns for workers and residents alike.
Addressing the environmental impacts of industrialization requires joint efforts from the government, industry players, and the public. One of the most effective ways to prevent environmental harm is through strong and consistent enforcement of regulations—especially those governing how industries manage waste, emissions, and land use.
In Indonesia, environmental permits have long served as a key tool to ensure that business activities operate within environmentally acceptable limits. These permits help prevent companies from causing pollution or other negative impacts on surrounding communities and ecosystems.
However, with the introduction of the Job Creation Law (Undang-Undang Cipta Kerja), there has been an important shift: the term “Environmental Permit” (Izin Lingkungan) has been replaced with “Environmental Approval” (Persetujuan Lingkungan). This change is part of a broader effort to simplify the permitting process by integrating environmental approvals directly into business licensing. It also aims to strengthen corporate responsibility and open up more space for public participation in environmental decision-making.
These changes are further outlined in Government Regulation No. 22/2021 on Environmental Protection and Management, which sets the new standards and procedures. While the intent is to streamline regulation and improve compliance, its effectiveness will depend heavily on how well these policies are implemented and monitored on the ground.
Environmental approval for business entities is a critical element in environmental management in order to ensure that all business activities are conducted with prior due consideration of their potential environmental impacts. This instrument also makes certain that industrial activities do not simply give economic benefits, but are also environmentally responsible. This environmental approval also functions as a regulating and monitoring tool towards environmental impacts, safeguarding the implementation of sustainable and responsible industrial development.
Types of Environmental Approval
Every business entity whose activities have an impact on the environment is required to possess one of the following environmental documents:
- Environmental Impact Assessment (AMDAL – Analisis Mengenai Dampak Lingkungan) for activities with a high business risk level, which have significant impacts on the environment;
- Environmental Management and Monitoring Efforts (UKL-UPL – Upaya Pengelolaan Lingkungan dan Upaya Pemantauan Lingkungan) for activities with medium-high or medium-low business risk levels, which do not have significant environmental impacts; or
- Statement of Environmental Management and Monitoring Capability (SPPL – Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup) for activities with low business risk levels that do not have significant environmental impacts and do not fall under the mandatory UKL-UPL criteria.
The process for obtaining Environmental approval is conducted through:
- The AMDAL; or
- The Arrangement and Assessment of the UKL-UPL Form.
Environmental approval becomes a prerequisite for the issuance of a business license for business entities. Every business entity in this case includes industrial park companies as park developers, who are obligated to meet the requirements of environmental approval and prepare a Park Environmental Impact Assessment (AMDAL Kawasan). These business entities are judged to have significant environmental impact with a high business risk, based on the Government Regulation No. 5 of 2021 on Risk-Based Business License and the Regulation of the Ministry of Environment and Forestry No. 4 of 2021 on the List of Businesses and/or Activities Required to Possess AMDAL, UKL-UPL, or SPPL.
Industrial companies within an industrial park are exempted from preparing their own AMDAL and possessing an environmental approval as specified in Article 10 paragraph (1) letter g of Government Regulation No. 22 of 2021. Instead, they are only required to prepare a Detailed Environmental Management and Monitoring Plan (RKL-RPL Rinci – Rencana Pengelolaan Lingkungan Hidup dan Rencana Pemantauan Lingkungan Hidup Rinci) based on the Park Environmental Impact Assessment that has been approved by the industrial park developer, as specified in Article 18 paragraphs (4) and (7) of the Regulation of the Ministry of Industry No. 30 of 2019 about the Amendment of Regulation No. 15 of 2019 on the Issuance of Industrial Business Licenses and Expansion Licenses through the Business License System Service Integrated Electronically. The preparation of the Detailed RKL-RPL serves as an environmental approval for industrial companies within the industrial park that is defined through a statement of environmental management commitment, ratified by the industrial park company or developer, as specified in Article 63 paragraph (5) of Government Regulation No. 20 of 2024 on Industrial Zoning.
Stages in the Environmental Approval Process
a. Industrial Park Companies
The application process for environmental approval through the assessment of the Park Environmental Impact Assessment is carried out via the AMDALNet (Amdalnet – Analisis Mengenai Dampak Lingkungan Net) website, integrated with the Online Single Submission Risk-Based Approach (OSS-RBA) https://amdalnet.menlhk.go.id
- Directly-affected civilian involvement includes:
a. Public Announcement
Suggestions, opinions, and responses from the public shall be conducted within 10 working days from the date of announcement.
b. Public Consultation
Suggestions, opinions, and responses from the public shall be conducted during public consultation.
- Timeframes for the Preparation of ANDAL document (Environmental Impact Analysis Report) and the RKL-RPL are conducted within the timeframe of:
- Category A – no later than 180 (one hundred eighty) days
- Category B – no later than 120 (one hundred twenty) days
- Category C – no later than 60 (sixty) days
- The substantive assessment of the ANDAL document and Detailed RKL-RPL, as well as the Environmental Feasibility Evaluation and any revisions must be completed within a maximum of 50 (fifty) working days from the date the ANDAL document and Detailed Environmental Management and Monitoring Plans documents are declared complete in the administrative review;
- The SKKL/PKPLH (Environmental Feasibility Decision Letter / Statement of Environmental Management and Monitoring Capability) must be issued no later than 10 working days after the recommendation from the feasibility evaluation is given.
c . For industrial companies located within industrial park:
The process for submitting approval for detailed RKL and RPL is further regulated in Minister of Industry Regulation No. 1 of 2020 concerning the Preparation of Detailed Environmental Management Plans and Environmental Monitoring Plans for Industrial Companies Located or to Be Located in Industrial Estates. This process is carried out via the OSS RBA system, integrated with AmdalNET, using the business actor’s account, and is verified by the industrial estate operator’s account.
Common Challenges Encountered During the Environmental Approval Submission Process
a. Lack of public participation in environmental document public consultations
- Communities often lack sufficient understanding of the AMDAL process, their role in it, and the potential environmental impacts, leading to their passive participation.
- Project proponents often fail to clearly convey the invitation and purpose of public consultation, resulting in poor civilian awareness about why they were invited and the benefits of their involvement.
- Conflicting interests between project proponents and affected civilians can lead to disputes, for instance, concerning project impacts or compensation given.
- Complex technical information contained in AMDAL documents is often complex and difficult for the general public to understand.
b. Prolonged submission time
- involves numerous stages and documents that has to be submitted
- extended processing times may hinder investment and business
- delays in the licensing process are often caused by the lack of integration and digitization of the licensing system.
c. Difficulty in meeting technical requirements
- Tight technical criteria—particularly those associated with AMDAL can be a significant challenge for project proponents.
- Frequent regulatory changes further complicate efforts to meet these technical
d. High administrative costs
- The costs involved in preparing environmental documents, including consultancy fees and document preparation services, are often seen expensive by proponents.
- These high costs can present serious obstacles for micro, small, and medium enterprises (MSMEs).
e. Integrity of the environmental monitoring system
- The environmental monitoring system has not been fully integrated with the Online Single Submission (OSS) system used for business licensing.
- This lack of integration can hinder effective monitoring of compliance with environmental regulations.
f. Quality of environmental documentation
- The quality of environmental documents, such as AMDAL, sometimes does not meet
- Poor-quality documentation can result in the delay or denial of environmental
Mitigation Strategies for Addressing These Challenges
a. Streamlining the licensing process to reduce processing time
- By integrating the OSS-RBA system with Amdalnet, the environmental licensing process can be simplified and accelerated.
- The issuance of the Minister of Environment and Forestry Decree No. 22 of 2024 on the Delegation of Environmental Approval Processes under Central Authority to Provinces and Regencies/Cities aims to implement simplification and acceleration measures in accordance with existing regulations.
b. Fulfilling technical requirements
- Having qualified personnel with expertise in their own field to meet technical requirements facilitates better technical requirements needed, more efficient service delivery needed and reduced consultant costs.
c. Applying a risk-based approach
- A risk-based approach allows for simpler licensing, especially for businesses with low risk, at the same time maintaining tight requirements for business entities with high risk
d. Implementing a more flexible approach
- Providing flexibility in document preparation and requirements enables business entities to easily adapt to regulatory and procedural changes.
Sanctions
Violations of responsibilities stated in the environmental approval are subject to the following sanctions:
a. Administrative
Sanctions towards deviations in the implementation of activities from the obligations specified in environmental approval include:
- Written Warning (Article 510 of Government Regulation 22 of 2021);
- Government Enforcement Measures (Articles 511–513 of Government Regulation No. 22 of 2021)
- Administrative Fines (Articles 514–520 of Government Regulation 22 of 2021);
- Suspension of Business License (Article 521of Government Regulation 22 of 2021);
- Revocation of Business License (Article 522 of Government Regulation 22 of 2021);
b. Secondary Administrative (Article 523 of PP 22/2021)
The Minister has the right to apply administrative sanctions towards business entities, in cases where the Minister judges that a Regional Government has purposefully failed to enforce necessary administrative sanctions in the violation of serious cases of the Environmental Protection and Management. This secondary administrative sanction is exercised by the minister based on the findings specified in Article 502 of Government Regulation No. 22 of 2021.
c. Criminal Sanctions and Fines (Article 109 of the Job Creation Law)
“Any individual who undertakes business and/or activities without possessing the following:
- A Business License or formal approval from the Central Government or Regional Government as referred to in Article 24(5), Article 34(3), Article 59(1), or Article 59(4);
- Approval from the Central or Regional Government as specified in Article 20(3)(b); or
- Approval from the Central Government as specified in Article 61(1);
and such actions that result in harm to public health, safety and/or the environment, shall be subject to imprisonment for a minimum of 1 (one) year and a maximum of 3 (three) years, and fined ranging from minimum IDR 1,000,000,000 (one billion rupiah) to maximum IDR 3,000,000,000 (three billion rupiah).
Conclusion
The environmental approval for the formation of Park Environmental Impact Assessment for industrial park companies, and the Detailed RKL-RPL for industrial companies within the industrial park is a critical component to ensure that all business activities operated within a park are conducted with consideration of environmental impacts, and becomes an instrument in the effort of ecological protection and management in Indonesia. With a robust regulatory framework, damage prevention, sustainable resources management, civilian participation, law enforcement, and heightened environmental awareness, environmental approval becomes an effective tool for safeguarding environmental preservation in Indonesia. Although the application process still involves multiple types of activities and stages, challenges must be addressed and mapped out well, particularly by key business entities such as industrial park companies and industrial companies.
In the process of obtaining environmental approval, requirements and timelines have to be given close attention to ensure the effective and efficient application process. In addition, the integration of environmental approval via AMDALNet with current business licenses can emerge as a solution to simplify license regulation that has long been considered complex. Furthermore, the participation of civil society in environmental management is equally essential to increase awareness in the protection and management of the environment and enhance the independence and capacity of civilians.
Legal Basis
- Law Number 32 of 2009 on Environmental Protection and Management;
- Law Number 6 of 2023 on the Enactment of Government Regulation as Replacement of Law Number 2 of 2022 concerning the change of Job Creation into the Job Creation Law (UU Cipta Kerja);
- Government Regulation Number 5 of 2021 on the Implementation of Risk-Based Business Licenses;
- Government Regulation Number 22 of 2021 on the Implementation of Environmental Protection and Management;
- Government Regulation Number 20 of 2024 on Industrial Zoning;
- Regulation of the Minister of Industry Number 30 of 2019 on Amendments to Regulation of the Minister of Industry Number 15 of 2019 concerning the Issuance of Industrial Business Licenses and Expansion Licenses within the Framework of Electronically Integrated Business Licenses Services;
- Regulation of the Minister of Industry Number 1 of 2020 on the Preparation of Detailed Environmental Management and Monitoring Plans for Industrial Companies Located or to be Located within Industrial Parks; and
- Regulation of the Minister of Environment and Forestry Number 4 of 2021 on the List of Business Activities and/or Activities that Require Environmental Impact Assessment, Environmental Management and Monitoring Efforts, or Statement of Environmental Management and Monitoring Capability;
Source:
- Skylight Analytics Hub
- Indonesia Energy Transition Outlook 2025 – Institute for Essential Services Reform (IESR)
- Addressing Environmental Issues in Industrial Estates – Indonesia Environment & Energy Center (IEC)
- Article 4 of Government Regulation No. 22 of 2021
- Article 3 paragraph (4) of Government Regulation 22 of 2021
- Article 28 paragraph (2) of Government Regulation 22 of 2021
- Article 42 of Government Regulation 22 of 2021
- Article 48 of Government Regulation 22 of 2021
- Article 49 paragraph (2) of Government Regulation 22 of 2021