Indonesia's Ministry of Marine Affairs and Fisheries has introduced a mandatory permit for foreign-invested companies (PT PMA) operating on small islands. This guide explains who is affected, what the application process involves, and the key deadlines — including the 10-year window for local share transfer.
On 20 May 2024, Indonesia's Ministry of Marine Affairs and Fisheries issued Ministerial Regulation Number 10 of 2024 (Permen KP No. 10/2024), establishing a mandatory permit system for foreign companies operating on Indonesia's small islands. Every PT PMA currently operating on a small island has until 20 May 2026 to obtain a Small Island Utilization Permit — or face fines, administrative sanctions, and potential license revocation.
Island Definition
Area ≤ 2,000 km²
Who Must Comply
All PT PMA on small islands
Compliance Deadline
20 May 2026
Processing Time
14 working days
Min. Share Transfer
20% within 10 years of permit
Non-Compliance Risk
Fines · Sanctions · Revocation
Background
Indonesia is home to over 17,000 islands, many of which have become hotspots for foreign-backed hospitality, eco-tourism, and aquaculture ventures. Ministerial Regulation No. 10/2024 consolidates the regulatory framework governing how these islands can be commercially developed by foreign entities, drawing on two key instruments:
- Law No. 1 of 2014 — amending Law No. 27 on Coastal and Small Island Management, defining small islands and establishing foreign investment restrictions.
- Presidential Regulation No. 34 of 2019 — mandating share transfer requirements for PT PMA operating on small islands.
A letter from the KKP Supervision Station Kupang (ref. B.993/PSDKPSta.3/PW.230/VI/2025, dated 20 June 2025) confirms the government is actively socialising compliance, particularly in areas like Rote Ndao (NTT), where Pulau Rote — at 1,280 km² — falls squarely within the regulation's scope.
What Is a Small Island?
A small island is any island with an area of 2,000 km² or less, along with its ecological unity. This encompasses hundreds of islands used for tourism, hospitality, agriculture, and marine industries throughout the archipelago. Examples include:
Nusa Penida
Klungkung, Bali
Nusa Lembongan
Klungkung, Bali
Nusa Ceningan
Klungkung, Bali
Pulau Serangan
Denpasar, Bali
Gili Trawangan
Lombok Utara, NTB
Pulau Sipora
Mentawai, W. Sumatra
Pulau Siberut
Mentawai, W. Sumatra
Pulau Rote
Rote Ndao, NTT
A comprehensive list is available at sipulau.big.go.id or through the official Small Island Investment Application (SIAP) portal.
Who Must Comply?
The regulation draws a clear distinction between foreign-invested and domestic companies:
PT PMA — Foreign Investment
Full Utilization Permit Required
A formal Izin Pemanfaatan Pulau-Pulau Kecil is required for any PMA entity conducting business on a small island, regardless of size (provided it is ≤ 2,000 km²).
Stricter requirementsPT PMDN — Domestic Investment
Recommendation Only
Domestic entities only require a Rekomendasi Pemanfaatan Pulau-Pulau Kecil, and only when utilizing islands with an area of less than 100 km².
Lighter requirementsNote: The permit must be obtained by business operators structured as a limited liability company (PT). Applications are submitted to the Minister through the OSS (Online Single Submission) platform.
Key Dates & Timeline
2007 & 2014
Law No. 27/2007 & No. 1/2014
Foundational legislation establishing Indonesia's coastal and small island management framework.
2019
Presidential Regulation No. 34/2019
Established the requirement for PT PMA to transfer at least 20% of shares to Indonesian participants within 10 years of the permit being issued.
20 May 2024
Permen KP No. 10/2024 Comes into Force
The Ministerial Regulation creates the two-year compliance window for existing PT PMA operators.
June 2025
Active Government Socialisation Begins
KKP Supervision Stations begin contacting companies in key island areas, signalling heightened enforcement intent.
⚑ Hard Deadline — 20 May 2026
All PT PMA Must Hold a Valid Permit
Grace period expires. Non-compliant companies face administrative sanctions, fines, and potential license revocation.
Required Documents
Article 14(2) of Permen KP 10/2024 sets out two categories of requirements. All documents must be submitted electronically through oss.go.id.
1
Application Letter to the Minister of Marine Affairs & Fisheries
Submitted via OSS. States applicant identity, island location, and intended purpose of utilization.
2
PKKPR / PKKPRL Spatial Suitability Approval
Issued by Ministry ATR/BPN. PKKPRL required if the activity uses sea space.
3
Land Clearance Certificate
Confirms no disputes with third parties. Includes HGB/HGU, sale deed, deed of release of rights, or lease agreement.
4
Business Plan & Activity Description
Market analysis, business profile, organisational structure, marketing and financial plan, implementation methodology.
5
Location Map with Area & Coordinate Points
Geographic coordinates (latitude/longitude), area in hectares or m², topography, surrounding land use and administrative boundaries.
6
Public Access Provision Plan
Strategy for maintaining community access to coastal areas during and after operations.
7
Technology Transfer Plan
How the company will transfer technology and skills to Indonesian partners and staff.
8
Indonesian Partnership & Share Transfer Plan
Cooperation framework and gradual share transfer roadmap — minimum 20% to eligible Indonesian entities must be completed within 10 years of permit issuance, per Perpres No. 34/2019.
9
Environmental, Socio-Cultural & Security Impact Assessment
Covers ecological impacts, socio-cultural and economic factors, and national defence and security considerations.
Companies may use secondary data sources and may engage third-party consultants to assist with document preparation.
Application Process
The application is submitted via OSS. The Ministry recommends using the SISSY system for initial screening before formal submission.
1
Pre-Screening via SISSY
Visit s.id/sissy to download document requirements and run the simulation tool. Verify island eligibility and relevant KBLI classification.
2
Prepare & Upload Documents to SISSY
Compile all required documents and upload via SISSY for online administrative verification. Feedback provided via link or invitation.
3
Formal Submission via OSS
Log in to oss.go.id → PB-UMKU → New Application. Select relevant KBLI and search "Izin Pemanfaatan Pulau-Pulau Kecil". Upload all documents.
4
Ministerial Verification — 14 Working Days
Status moves to "Awaiting Requirement Verification". The Minister must approve or reject within 14 working days of a complete application.
5
PNBP Payment — 7 Working Days
Upon approval, a Non-Tax State Revenue (PNBP) payment order is issued and must be paid within 7 working days.
6
Permit Issued via OSS
Upon payment confirmation, OSS issues the formal permit. Status changes to "Izin Terbit" (Permit Issued).
Penalties for Non-Compliance
Companies that fail to obtain the permit or comply with the share transfer requirement face a cascading set of penalties once the 20 May 2026 deadline passes.
- Administrative fines — monetary penalties for operating without the required permit.
- Administrative sanctions — formal government warnings and orders to cease specific activities.
- Criminal penalties — in serious cases, criminal liability may apply under the overarching coastal management laws.
- Business license revocation — companies risk having their entire business license cancelled.
Important: The KKP Supervision Station Kupang has already begun actively contacting companies in key island areas. Do not wait until the deadline — begin the application process as early as possible.
Need help with your permit application?
Smart Advisory Solutions can guide you through the entire process — from document preparation to OSS submission. Contact us before the 20 May 2026 deadline.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice. It summarises publicly available regulatory information and internal compliance guidance. Companies should seek independent legal counsel before taking action. Information is current as of January 2025 and may be subject to change.
