Analysis of The Impact of Environmental Permit Changes in The Omnibus Law Regulation: Between Ease of Doing Business and Environmental Protection

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FORMOSA NEWS - Medan - Balancing Growth and Ecology: How Indonesia’s Omnibus Law Transforms Environmental Permitting. The overhaul of environmental permit mechanisms through Law No. 11 of 2020 on Job Creation has streamlined business licensing while raising critical concerns over weakened ecological safeguards and diminished public participation. Published in 2026, this vital legal analysis was conducted by researchers Rizky Chairunisya Ramadhani, Romy Affandi Tarigan, and Fernandus Damanik from Universitas Muhammadiyah Sumatera Utara Medan. The study sheds light on how integrating environmental oversight directly into commercial business licenses impacts long-term environmental sustainability and legal protection in Indonesia.

Background and Regulatory Context Enacted to eliminate bureaucratic bottlenecks and accelerate domestic and foreign investment, the Omnibus Law fundamentally restructured Indonesia's regulatory framework. Among the affected statutes is Law No. 32 of 2009 on Environmental Protection and Management (PPLH Law). Prior to the Omnibus Law, obtaining an independent Environmental Impact Assessment (AMDAL) served as a mandatory, standalone prerequisite and an autonomous preventive gatekeeper before any commercial enterprise could secure a business license. Under the new risk-based approach introduced by the Job Creation Law, this independent environmental permit has been formally abolished and replaced by an integrated "environmental approval" subsumed within the broader commercial license. While proponents argue that this integration reduces corrupt practices, cuts redundant administrative steps, and brings legal certainty for investors, critics and legal scholars warn that it undermines the precautionary principle and weakens administrative oversight.

Research Methodology
To evaluate the legal implications of this regulatory shift, the study utilized a normative legal research methodology combined with a comparative statutory approach. The researchers analyzed primary legal sources including the 2009 PPLH Law, the 2020 Job Creation Law, Government Regulation No. 22 of 2021, and Constitutional Court precedents alongside secondary sources such as peer-reviewed journals, legal treatises, and official parliamentary documents. Through qualitative content analysis and deductive legal reasoning, the authors mapped out the structural vulnerabilities emerging from the transition.

Key Research Findings
The legal analysis revealed two major structural changes resulting from the Job Creation Law:

• Narrowed Public Participation: Under the previous regime, crafting an AMDAL required broad public involvement from directly affected citizens, environmental non-governmental organizations (NGOs), and independent academic experts. The amended provisions restrict public consultation almost exclusively to directly affected communities, effectively stripping environmental advocacy groups of their legal standing during the assessment phase.
  
• Altered Administrative Accountability: Environmental compliance documents are no longer treated as independent administrative decisions capable of separate challenge in State Administrative Courts (PTUN). Instead, compliance is tracked as a prerequisite commitment embedded directly within the master business license.

Implications and Real-World Impact
The transition from independent permits to integrated approvals introduces substantial legal risks for environmental enforcement. Because administrative sanctions for non-compliance are tied directly to the revocation of business operational rights, authorities are historically hesitant to enforce penalties due to potential economic backlash. Furthermore, limiting third-party oversight by environmental NGOs and specialists removes a critical counterweight against administrative arbitrariness, increasing the risk of unmitigated ecological degradation and localized environmental conflicts. To safeguard ecological integrity without compromising economic progress, the authors recommend that the government reinforce technical standards and audit procedures within the risk-based licensing system. Furthermore, legislative reforms should reinstate comprehensive public consultation rights and legal standing for environmental organizations to ensure transparent, constitutionally compliant governance.

Author Profile
Rizky Chairunisya Ramadhani — Researcher and academic at the Faculty of Law, Universitas Muhammadiyah Sumatera Utara Medan, specializing in environmental law and business licensing regulations.
Romy Affandi Tarigan — Researcher and lecturer at the Faculty of Law, Universitas Muhammadiyah Sumatera Utara Medan, focusing on constitutional law and public policy.
Fernandus Damanik — Researcher at the Faculty of Law, Universitas Muhammadiyah Sumatera Utara Medan, with expertise in legal protection, agrarian law, and environmental governance.

Source
Rizky Chairunisya Ramadhani, Romy Affandi Tarigan, Fernandus Damanik. Analysis of The Impact of Environmental Permit Changes in Omnibus Law Regulation: Between Ease of Doing Business and Environmental Protection. Formosa Journal of Sustainable Research (FJSR), Vol. 5, No. 8, Tahun 2026, halaman 663-670
DOI: https://doi.org/10.55927/fjsr.v5i8.60
URL: https://journalfjsr.my.id/index.php/fjsr