Manufacturing Compliance in Indonesia: What Factories Must Do After Setup

Manufacturing compliance in Indonesia extends far beyond completing the factory setup. Once operations begin, companies must meet a range of environmental requirements designed to protect surrounding communities and natural resources.  

Understanding these obligations early helps manufacturers avoid legal risks and maintain sustainable operations. This article explains the key steps factories must take after setup, including securing environmental licenses, meeting compliance obligations, and preparing the required documentation for long-term reporting. 

What is Environmental Manufacturing Compliance? 

Environmental manufacturing compliance refers to a factory’s responsibility to comply with environmental laws throughout its operations. This includes managing waste, emissions, and resource use to minimize harm to air, water, soil, and biodiversity. 

In Indonesia, these obligations are based on: 

• Law No. 32 of 2009 on Environmental Protection and Management 
• Law No. 11 of 2020 (Job Creation Law) 
• Government Regulation No. 22 of 2021, which outlines technical requirements 

Manufacturers must demonstrate compliance through environmental permits, ongoing monitoring, and periodic reporting. These requirements apply not only at the start of operations but throughout the business lifecycle.

READ MORE:

• AMDAL, UKL-UPL, or SPPL: Which Permit Do You Need for an IUI License
• Complete Guide to Getting an Industrial Business License in Indonesia
• Understanding The Environmental Sustainability in Business

Do Factories in Indonesia Need Environmental Permits? 

Yes, every factory in Indonesia must hold an environmental permit to operate legally, which reassures factory owners and compliance officers of their legal standing under Law No. 32/2009 and related regulations. 

The type of permit depends on the level of environmental risk associated with the manufacturing activity. These assessments are processed through the OSS (Online Single Submission) system. Without completing them, a factory cannot start, expand, or modify its operations. 

Types of Environmental Permits for Manufacturing Companies 

After factory setup, manufacturers must determine which environmental permit applies to their operations. Indonesia classifies these permits based on ecological risk. 

AMDAL (Analisis Mengenai Dampak Lingkungan) 

Required for high-impact activities, such as large-scale manufacturing or operations that affect sensitive ecosystems. AMDAL includes: 

• Detailed environmental impact studies 
• Management and monitoring plans 
• Community involvement and expert review 

UKL-UPL (Upaya Pengelolaan dan Pemantauan Lingkungan) 

Designed for medium-risk factories. The documentation focuses on: 

• A completed UKL-UPL form 
• Basic business identity and location information 
• Project details 

SPPL (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan) 

Intended for low-risk manufacturing. It requires only: 

• A simple declaration form 
• Basic business and location information 

Each permit ensures the factory operates within acceptable environmental limits and maintains accountability during its operations. 

What Happens After the Environmental Permit is Approved? 

Once a factory obtains its environmental permit, the compliance process is not complete yet. Approval confirms that the planned operations meet Indonesia’s ecological standards at the time of assessment. After this point, manufacturers must continue demonstrating responsible operations through monitoring, reporting, and adherence to regulatory obligations. 

Understanding these post-approval responsibilities is crucial for manufacturers to sustain valid licensing and prevent legal or administrative penalties, ensuring ongoing compliance with Indonesia’s environmental standards. 

Integration with OSS 

Environmental approval is now integrated with the OSS business licensing system. Once AMDAL, UKL-UPL, or SPPL documents are approved and uploaded, the business license can be issued automatically. 

Ongoing Responsibilities 

After approval, factories must continue to: 

• Monitor their environmental performance 
• Submit periodic environmental reports to authorities 

Failure to meet reporting obligations may result in written warnings, a temporary suspension, or the cancellation of the environmental license. 

Penalties for Non-Compliance 

Operating a factory without a valid environmental permit is a serious offense. Under Article 109 of the Environmental Protection and Management Law (UU PPLH), penalties include: 

• Up to 3 years of imprisonment 
• Fines between IDR 1 billion and IDR 3 billion 

Administrative sanctions may also apply, such as business suspension or requirements to restore environmental damage. 

These rules highlight that environmental compliance is a legal foundation for manufacturing operations in Indonesia.

Environmental Reporting Requirements for Factories 

Every manufacturer must hold the appropriate ecological permit based on the business’s risk level. Each permit type comes with its own documentation requirements, which also guide the factory’s ongoing reporting obligations. 

AMDAL (High-Risk Businesses) 

AMDAL is required for large-scale factories with significant environmental impacts. The documentation typically includes: 

• Environmental impact assessments 
• Management and monitoring plans 
• Supporting business and location documents 

This process usually involves expert review and community participation. 

UKL-UPL (Medium-Risk Businesses) 

Most medium-sized industrial operations fall under UKL-UPL. To complete the permit, companies must provide: 

• A completed UKL-UPL form 
• Business identity documents (such as NIB) 
• Basic project and location details 

SPPL (Low-Risk Businesses) 

SPPL applies to small businesses with minimal environmental impact. It only requires: 

• A simple declaration form 
• Business identity and location information

Strengthen Environmental Compliance Process with InCorp 

Managing environmental manufacturing compliance can be demanding, especially when factories must maintain accurate documentation, meet reporting deadlines, and adapt to regulatory updates. 

If you need structured support, InCorp Indonesia (an Ascentium Company) is available to help you navigate these requirements, including: 

• Environmental permit assistance 
• Document preparation and submission through OSS 
• Compliance monitoring and reporting guidance 
• Updates and adjustments for changes in factory operations 
• Advisory support to ensure ongoing alignment with regulations 

Fill out the form below to ensure stable operations while consistently managing environmental obligations.

Frequently Asked Questions