As part of the government’s initiative to simplify the business licensing regime through a risk-based approach, Indonesia has eliminated the location permit and replaced it with a new legal instrument known as the Suitability of Spatial Utilization Activities (Kesesuaian Kegiatan Pemanfaatan Ruang – KKPR). This change plays a significant role in the basic licensing framework, particularly for business actors intending to utilize land or space for commercial activities.
The Abolishment of Location Permits and Introduction of KKPR
Previously, a location permit served as a legal document granting business actors the right to acquire and utilize land to carry out their business activities. The legal basis for this permit was stipulated under Minister of Agrarian Affairs and Spatial Planning/National Land Agency Regulation No. 17 of 2019, as amended by Regulation No. 13 of 2020.
However, with the enactment of Ministerial Regulation No. 13 of 2021, the regulatory framework governing location permits has been revoked, and all spatial utilization activities are now subject to the KKPR framework.
KKPR is a document that demonstrates the alignment of a planned land use activity with the applicable Spatial Plan (Rencana Tata Ruang – RTR). It is a mandatory prerequisite for any party intending to carry out business activities that involve the use of land or space.
There are two mechanisms for obtaining KKPR:
- Confirmation of Suitability of Spatial Utilization Activities (KKKPR) – applicable when the location is covered by a Detailed Spatial Plan (RDTR) that is integrated with the OSS system.
- Approval of Suitability of Spatial Utilization Activities (PKKPR) – applicable when the RDTR is not yet available or not yet integrated into the OSS system.
Both types of KKPR are valid for three (3) years from the date of issuance.
Under the prevailing regulations, location permits and technical recommendations issued before July 21, 2021, remain valid until the expiration of their original term. Accordingly, as long as such permits are still active, there is no obligation to apply for a new KKPR.
However, suppose the existing location permit has expired. In that case, the landowner or business actor is required to apply for a KKPR to obtain legal recognition for the planned land use. The application may follow either the KKKPR or PKKPR mechanism, depending on the availability and integration of the RDTR in the relevant location.
If a business actor already holds land and intends to apply for KKPR, the following additional requirements apply:
- The application must be aligned with land-related information, such as technical land considerations or certification issued by the local land office; and
- The area applied for must not exceed the size of the land lawfully held.
In such cases, the validity period of the KKPR will be adjusted to match the period of land tenure and the total land area approved and stated in the KKPR document.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Budhi Satya Makmur