Key Licensing Issues for Large Mixed-Use Developments in Indonesia

Large mixed-use developments in Indonesia involve several layers of licensing and regulatory requirements that need to be addressed at different stages of the project. These generally cover business licensing, spatial conformity, environmental approvals, building requirements, and sector-specific licensing.

The applicable requirements may also differ depending on the location of the project. In particular, developments within the Ibu Kota Nusantara (“IKN”) and its Partner Areas are subject to a specific licensing framework administered by the IKN Authority.

1. Risk-Based Business Licensing Framework

The general framework for risk-based business licensing is governed by Government Regulation No. 28 of 2025. Under this framework, business activities are divided into two principal stages: “starting a business” and “running a business.”

The starting stage includes the establishment of the legal entity, fulfillment of basic requirements such as spatial conformity and applicable environmental requirements, and obtaining the relevant business licensing.

Once these requirements have been fulfilled, the business actor proceeds to the running stage, which consists of preparation and operational and/or commercial activities.

For a large mixed-use development, the licensing process therefore needs to be structured from the outset rather than addressed only when the project is ready to operate.

2. Spatial Conformity and Environmental Requirements

Spatial Conformity

Spatial conformity, or Kesesuaian Kegiatan Pemanfaatan Ruang (KKPR), is one of the basic requirements at the starting stage of a business. For locations at sea, the applicable requirement is KKPRL.

For mixed-use developments, the proposed use of the site should be assessed against the applicable spatial planning framework. This includes determining whether residential, retail, office, hospitality, and other intended uses are compatible with the relevant zoning.

The assessment should also consider whether the proposed intensity and combination of uses require adjustments to the project’s detailed planning, access, or supporting facilities.

Environmental Approval

Environmental requirements also form part of the licensing sequence. For activities that do not require an AMDAL or UKL-UPL, the applicable requirement may be satisfied through an SPPL.

For projects requiring AMDAL or UKL-UPL, the relevant environmental approval forms part of the preparation stage of the business. Accordingly, the applicable environmental instrument should be identified at an early stage of project planning.

3. Building Approval and Building Use

For projects outside IKN, building construction requires a Persetujuan Bangunan Gedung (PBG). The preparation stage also covers the fulfillment of applicable environmental requirements and other requirements associated with construction and the intended business activity.

Once construction has been completed, the building must satisfy the applicable requirements for use, including obtaining an Sertifikat Laik Fungsi (SLF) where required.

This distinction is important for mixed-use developments because a single project may contain several building components with different functions, such as residential towers, retail areas, offices, parking facilities, and supporting buildings. Their respective functions and classifications should therefore be reflected consistently in the relevant building approvals.

A change to the approved function or classification may also require the relevant approval to be amended.

4. Additional Requirements for Projects in IKN

Projects located within IKN and its Partner Areas are subject to a specific licensing framework under Government Regulation No. 12 of 2023 and the implementing regulations of the IKN Authority.

In IKN, basic licensing requirements include spatial conformity, environmental approval, and PBG and SLF requirements.

The spatial assessment is linked to the applicable IKN spatial planning instruments. Accordingly, investors developing a mixed-use complex in IKN should assess the proposed development against the applicable IKN spatial plan and other relevant planning documents.

The IKN framework also contains specific requirements concerning changes to building plans and functions. Where there is a change to the technical plan, function, or classification of a building during construction, the relevant PBG application or amendment may need to be submitted.

Following completion of construction, the building must also be used consistently with its approved function. The IKN framework provides for administrative measures where a building is used contrary to its designated function.

5. Sectoral Business Licensing

Basic requirements are not the only licensing layer applicable to a large mixed-use development. Depending on the activities carried out within the project, additional sectoral business licensing may be required.

For example, the residential component may involve housing and settlement requirements, retail areas may involve trading activities, and hotels or serviced apartments may be subject to tourism-related requirements.

Accordingly, the licensing analysis should not focus solely on the developer or the development itself. Each business activity carried out within the complex should be assessed based on its respective business classification and applicable licensing requirements.

6. Sectoral Licensing in IKN

The IKN framework provides a separate mechanism for sectoral business licensing in IKN and Partner Areas. Licensing is processed through the OSS system but is administered by the IKN Authority in accordance with its specific powers and the applicable IKN regulations.

The sectoral areas covered by the IKN framework include, among others, public works and housing, trade, tourism, transportation, health, industry, energy, manpower, telecommunications, and other sectors designated under the applicable framework.

A mixed-use development may therefore involve several sectoral activities within the same overall project. The applicable licensing requirements should be identified separately for each business activity.

7. Developer and Tenant Licensing

A further consideration arises where the development contains multiple tenants or business operators, such as retailers, office users, hospitality operators, or other service providers.

The developer’s licensing does not necessarily replace the licensing obligations of individual business operators. Each tenant may still be required to have its own NIB and the relevant sectoral licensing for its business activity.

At the same time, certain licensing arrangements may allow tenants operating within a managed commercial building to rely on existing building-level requirements, subject to the applicable conditions and verification by the relevant authorities.

For this reason, project documentation should clearly distinguish between the obligations of the developer or building manager and those of individual tenants.

8. Land and Project Structuring

Land-related matters are closely connected to the licensing sequence of a large development. Land procurement is identified as part of the preparation stage under the risk-based licensing framework.

Investors therefore need to ensure that the land position, proposed development, spatial conformity, environmental requirements, and building approvals are properly sequenced.

For projects in IKN, land rights may also involve specific arrangements involving land under the management rights of the IKN Authority. The IKN framework further provides certain facilities relating to the acquisition of land rights for qualifying business actors.

These matters may affect the overall structuring, timing, and cost of the project and should therefore be considered together with the licensing roadmap.

9. Key Licensing Risks

For large mixed-use developments, the principal licensing risks generally arise from three areas.

First, licensing completeness. Failure to obtain the required basic requirements, building approvals, or sectoral licenses may affect the ability to lawfully carry out the relevant business activities.

Second, change management. Changes to the project design, building function, land use, or business activities may require the relevant approvals or licenses to be reviewed or amended. This is particularly relevant for large developments where the project mix may evolve during construction.

Third, administrative compliance. Operating a building or conducting a business activity without satisfying the applicable requirements may expose the relevant business actor to administrative measures under the applicable regulatory framework.

Conclusion

Large mixed-use developments in Indonesia require a licensing structure that follows the project from land and spatial planning through construction and eventual operation. The applicable requirements may include basic licensing requirements, environmental approvals, PBG and SLF, and sector-specific business licensing.

The analysis becomes more specific for projects located in IKN and Partner Areas, where the IKN Authority has a distinct role in administering licensing and where additional requirements apply to spatial conformity, building use, sectoral licensing, and land arrangements.

For investors, identifying these requirements at the planning stage is essential to ensure that the development, its individual components, and the businesses operating within the complex are appropriately aligned with the applicable licensing framework.

This article provides a general overview of the key licensing considerations for large mixed-use developments in Indonesia and is intended for informational purposes only. Specific licensing requirements may vary depending on the location, business activities, project structure, and applicable regulatory framework.

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