Law No. 11 of 2020 regarding Job Creation (Law 11 2020) was enacted a year ago and it revised many existing regulations and introduced plenty of new ones. One of the revised issues was regarding building permits. Previously you had to acquire a Building Permit or Izin Mendirikan Bangunan (IMB) to build. However, it has now been changed into Building Approval or Persetujuan Bangunan Gedung (PBG). The concept is implemented through Government Regulations No. 16 of 2021 Regarding Implementation Regulation of Law Number 28 of 2002 regarding Building (GR 16 2021), which revoked Government Regulation 36 of 2005 Regarding Implementation Regulation of Law Number 28 of 2002 Regarding Building (GR 36 2005).

According to Article 1 GR 36, 2005, IMB is defined as permission provided by the Regency/City Government to building owners to build new, change, expand, reduce, and/or take care of the building by administrative requirements and technical requirements applicable. According to Article 1 GR 16 2021, PBG is defined as permission granted to building owners to build new, change, expand, reduce, and/or take care of the building according to technical building standards.

A key difference between the two is that PBG emphasizes the technical building standards regarding how a building must be built while IMB emphasizes the permission that must be obtained before building. PBG does not require the building owner to apply for a permit before constructing the building, as was the case with the previous IMB regulations.

However, the building owner must still report the function of the building and adjust it to the spatial layout of the place where they want to build the building.

To obtain IMB and PBG, the owner must also convey the function of the building, for example, for residential, religious, business, social or cultural purposes, to special functions. The difference is that the government provides mixed-function options for PBG.

The next difference is that the IMB provides several building requirements, such as an acknowledgment of the status of land rights, a utilization permit from the rights holder and the status of building ownership to a building permit. Then, there are also technical requirements in the form of building layout and building reliability. Meanwhile, PBG only requires planning and building design according to building layout, reliability and the design of prototypes.

An example of this difference is that Article 253 paragraph 5 GR 16 2021 states that PBG is composed of 2 stages, which are:

1. planning consultation; and
2. issuance

Where the planning consultation consists of:

1. registration;
2. inspection of compliance with Technical Standards; and
3. statement of compliance with Technical Standards.

The planning consultation is free of charge and the registration is done using Building Information Management System or Sistem Informasi Manajemen Bangunan Gedung (SIMBG) where you must submit:

1. data for the Applicant or Owner;
2. building data; and
3. a technical plan document.

If everything is in order, a consultation schedule will be issued through the SIMBG.

Whereas the previous provision was regulated in Article 15 GR 36 2005, which states that everyone that applies for IMB must submit:

1. proof of land rights ownership status or proof of land use agreement as referred;
2. building owner data;
3. building technical plan; and
4. the results of the analysis of the environmental impact for buildings that have an impact on the environment.

Although there were technical requirements that must be fulfilled, it was not emphasized and implemented as much as in the current one and, instead, the more administrative requirements, such as land right status, are simply placed somewhere else in the process in a different certificate, such as the Building Ownership Certificate or Surat Kepemilikan Bangunan Gedung (SKBG)

The many transitions that arise from Law 11 2020 can feel unfamiliar, even though they are there to accommodate and allow you to do business more easily, and you might be lost if you enter the marketplace without a guide to accompany you. We at Schinder Law Firm have years of experience helping foreign investors start and continue trading activities in Indonesia. If you need help or consultation, please contact us via info@schinderlawfirm.com.