Minister of Forestry Regulation Number 27 of 2025 Governs the Licensing of Environmental Services Businesses within Conservation Areas

1. Introduction

1.1 Regulatory Background

Minister of Forestry Regulation Number 27 of 2025 on the Utilization of Environmental Services in Nature Reserve Areas, Nature Conservation Areas, and Hunting Parks (“Regulation 27/2025”) is promulgated to align investment activities with conservation principles within conservation forest areas. The Government seeks to optimize the potential of environmental services through an integrated licensing mechanism, which includes:

1. the utilization of renewable energy;
2. the development of nature-based tourism; and
3. other forms of environmental services utilization within conservation areas.

In the section Considering letters a–d, Regulation 27/2025 consolidates previous sectoral regulations into a single legal framework for the utilization of environmental services, while maintaining the applicability of existing technical provisions insofar as they do not conflict with the new regulatory regime.

1.2 Scope of Business Activities

Pursuant to Article 2 and Article 3, Regulation 27/2025 stipulates that business activities for the utilization of environmental services may only be carried out within specific conservation areas, namely:

1. Nature Reserve Areas (Kawasan Suaka Alam/KSA);
2. Nature Conservation Areas (Kawasan Pelestarian Alam/KPA); and
3. Hunting Parks (Taman Buru/TB).

Business activities may not be conducted in all zones of such areas. Physical investment is permitted only on a limited basis within Utilization Blocks as designated in the management plan documents of each respective area.

1.3 Objectives

The objectives of Regulation 27/2025 are reflected in the section Considering letter c, while Article 4 governs the subjects eligible to receive Business Licenses for the Utilization of Environmental Services.

Through Regulation 27/2025, the Government promotes the participation of business entities in the management of conservation areas through a risk-based business licensing mechanism integrated with the national business licensing system.

 

2. Business Subjects and Legal Standing of Businesses

2.1 Businesses and Business Entities

Based on Article 1 points 3 and 4, Regulation 27/2025 classifies legal subjects involved in the utilization of environmental services into two main categories:

1. Individuals: Individuals constitute businesses primarily intended for micro-scale business activities and activities based on individual expertise.
2. Business Entities: Business entities include legal entities and non-legal entities established under Indonesian law, including but not limited to limited liability companies (Perseroan Terbatas/PT), cooperatives, State-Owned Enterprises (BUMN), Regional-Owned Enterprises (BUMD), Village-Owned Enterprises (BUMDes), as well as limited partnerships (CV) or firms.

2.2 Basic Legal Requirements for Business Activities

Under the risk-based business licensing regime, Article 1 point 5 in conjunction with Article 6 requires businesses to possess a Business Identification Number (Nomor Induk Berusaha/NIB). The NIB is issued through the Online Single Submission (OSS) system and serves as the single identity of the businesses within the business licensing system.

Without an NIB, businesses lack the legal capacity to apply for or obtain a Business License for the Utilization of Environmental Services. Accordingly, the NIB constitutes a preliminary requirement before businesses may proceed with approvals and further licenses within conservation areas.

2.3 Legal Standing of Business Entities within Conservation Areas

Pursuant to Article 4 paragraph (1), a Business License for the Utilization of Environmental Services is granted to Businesses that meet the prescribed requirements. Upon issuance of the Business License, the business entity holds the legal status of a license holder authorized to carry out environmental services utilization activities in accordance with the scope, location/zone/block, and duration stipulated in the Business License. Such status does not confer ownership rights over land or forest areas, but rather grants the right to utilize environmental services potential for a specified period as provided under the license.

By virtue of this status, the business entity is entitled to obtain economic benefits from the permitted business activities, provided that all activities remain within the location, type of activity, and duration as set forth in the Business License and the relevant area management plan documents.

 

3. Types and Scope of Environmental Services Business Activities

Regulation 27/2025 governs types of environmental services business activities on a sectoral basis, each with distinct technical characteristics and legal foundations.

3.1 Water Environmental Services and Hydropower

The utilization of Water Environmental Services and Hydropower is regulated under Chapter IV of Regulation 27/2025, including provisions on the commercial use of water (including raw water for regional water utilities, industry, and bottled drinking water) as well as approvals and other technical requirements in accordance with Chapter IV.

1. Water (Water Mass): This activity includes water abstraction for commercial purposes, such as the supply of raw water for regional water utilities, industrial use, and bottled drinking water. Business entities are required to ensure that water abstraction is conducted while maintaining river ecosystem balance and does not exceed the environmental carrying capacity of the area.
2. Hydropower (Electricity): This activity includes the utilization of water flow for micro-hydropower electricity generation. Hydropower utilization is carried out in the form of Micro Hydropower Plants (PLTMH) and/or Mini Hydropower Plants (PLTM), with PLTMH capacity not exceeding 1 MW and PLTM capacity exceeding 1 MW up to a maximum of 10 MW, in accordance with Chapter IV of Regulation 27/2025.

3.2 Nature-Based Tourism Environmental Services

The regulation of nature-based tourism environmental services is divided into two types of licensing with distinct scopes and limitations:

1. Provision of Nature Tourism Facilities (PB-PSWA): The provisions on PB-PSWA are regulated under Chapter V of Regulation 27/2025 (Nature Tourism), commencing from Article 181. Article 248 specifically regulates the obligation to submit an Annual Work Plan by PB-PSWA license holders.
2. Provision of Nature Tourism Services (PB-PJWA): This activity is service- and expertise-based, including tour guide services, tour operators, and other supporting tourism services. Holders of nature tourism services licenses are not permitted to construct permanent facilities and may only utilize public facilities or cooperate with holders of nature tourism facilities licenses.

3.3 Utilization of Renewable Energy

Renewable energy utilization within conservation areas includes geothermal energy, wind energy, and solar energy.

3.3.1 Geothermal Environmental Services (PJL-PB)

Geothermal environmental services utilization involves the extraction of heat energy through a closed-loop system, whereby energy is extracted and returned to the earth, with no material removed other than heat energy. Geothermal utilization is regulated under Article 49 and subsequent provisions, covering the stages of preliminary survey, exploration, and exploitation of geothermal steam. Business entities are required to limit land clearing for well pads and pipelines and to comply with applicable environmental protection requirements. The regulated stages include:

1. Preliminary Survey: Activities for collecting, analyzing, and presenting initial data on geological, geophysical, and geochemical conditions to estimate geothermal location and potential.
2. Exploration Stage: Activities including geological, geophysical, and geochemical investigations, test well drilling, and exploration well drilling to obtain subsurface geological information to identify and estimate geothermal reserves.
3. Exploitation and Utilization Stage: Activities including development well and reinjection well drilling, construction of field and supporting facilities, and geothermal production operations through the conversion of heat energy into electrical energy.

3.3.2 Wind (PJL Wind) and Solar (PJL Solar) Environmental Services

The utilization of wind and solar energy is regulated under dedicated chapters in Regulation 27/2025 according to the characteristics of each sector. The regulation includes provisions on business areas, activity stages (exploration and operation), business licensing procedures, and technical obligations concerning wildlife protection and landscape compatibility within conservation areas. Activities include the construction of wind turbines or solar panel installations, which are required to consider landscape suitability and wildlife movement corridors.

Wind environmental services utilization involves the use of wind as an energy source to generate electricity, comprising:

1. Preliminary Survey: Activities to measure wind data and collect supporting data to assess wind energy potential.
2. Exploration Stage: Investigation and measurement of wind potential within a designated area.
3. Utilization Stage: Commercial utilization of wind energy to meet electricity needs, with a maximum installed capacity of 50 MW.

Solar environmental services utilization involves the use of solar energy to generate electricity through photovoltaic systems, comprising:

1. Preliminary Survey: Activities to obtain data and information on solar energy potential and to determine suitable locations, conducted within National Parks, Grand Forest Parks, and Nature Tourism Parks (excluding core zones and protection blocks).
2. Electricity Generation: Business activities utilizing solar energy specifically for electricity generation purposes.

3.4 Carbon Environmental Services

Carbon Environmental Services utilization is regulated under Chapter IX of Regulation 27/2025 commencing from Article 490. Provisions concerning the rights of holders of Business Licenses for Carbon Environmental Services Utilization are set forth in Article 513. Such activities include:

1. carbon sequestration through rehabilitation or reforestation; and
2. carbon storage through the protection and management of existing carbon stocks.

Business entities are required to conduct measurement, reporting, and verification of activity results to generate carbon units tradable under the Carbon Economic Value scheme in accordance with applicable laws and regulations.

3.5 Hunting Park Management

Hunting Park management is regulated under Chapter VI of Regulation 27/2025 commencing from Article 285 and includes provisions on licensing, implementation of activities, as well as the rights, obligations, prohibitions, and administrative sanctions applicable to holders of Hunting Park Business Licenses. Such provisions regulate limited hunting activities that may only be conducted within Hunting Park areas. Business activities include:

1. provision of hunting accommodation;
2. provision of hunting equipment;
3. hunting guide services; and
4. management of huntable wildlife populations.

Business entities are required to comply with hunting quotas established based on wildlife population inventories to ensure the sustainability of wildlife populations within Hunting Parks.

 

4. Stages and Scale of Business Activities

Regulation 27/2025 differentiates the stages and scale of environmental services utilization business activities to control business risks within conservation areas and to ensure environmental carrying capacity compliance.

4.1 Stages of Business Activities

For certain types of business activities, particularly in the energy sector, the regulation divides implementation into several stages:

1. Exploration Stage: Under geothermal and wind energy provisions, the exploration stage is intended for survey activities, data collection, and preliminary feasibility studies. At this stage, business activities are limited to activities with minimal environmental impact and do not permit large-scale construction.
2. Utilization or Operation Stage: Upon confirmation of technical and environmental feasibility, businesses may proceed to the utilization or operation stage, which includes the construction of facilities and infrastructure, production activities, and commercial operations in accordance with the permitted business type.

The division of stages is intended to provide legal certainty while limiting environmental risks from the early stages of business activities.

4.2 Limitations on Scale and Area of Business Activities

Article 4 affirms that environmental services utilization business activities may only be conducted within utilization zones or blocks designated in conservation area management plans. The determination of location and area size takes into account:

1. conformity with conservation area management plans;
2. characteristics and type of business activities; and
3. environmental carrying and capacity considerations.

Such limitations effectively prevent the expansion of business activities that may exert excessive pressure on conservation areas.

4.3 Duration of Business Activities

The validity period of Business Licenses for Environmental Services Utilization varies according to the type of business activity. The regulation stipulates sector-specific license durations, including:

1. wind energy and solar energy utilization, as regulated under Articles 412–414 and Articles 470–489; and
2. other business types with specific duration arrangements in accordance with their respective characteristics and business cycles.

The regulation of license durations aims to balance business certainty for businesses with long-term conservation area management control.

 

5. Business Licensing for Environmental Services

5.1 Risk-Based Business Licensing Framework

Regulation 27/2025 places environmental services utilization business licensing within a Risk-Based Business Licensing regime integrated with the Online Single Submission (OSS) system. This is affirmed in Article 6 paragraph (1), which provides that all business licensing processes are conducted through OSS using the Business Identification Number as the basic identity of the businesses.

Under this framework, the Business License for Environmental Services Utilization functions as a single, cross-sector licensing instrument, replacing various sectoral licenses previously regulated separately.

5.2 In-Principle Approval

Articles 41–47 regulate In-Principle Approval as the initial stage in the environmental services utilization business licensing process. In-Principle Approval functions as preliminary approval of the proposed business activity plan, both in terms of location and activity type. In-Principle Approval has the following characteristics:

1. it is granted prior to the issuance of a Business License for Environmental Services Utilization;
2. it is valid for a specified period in accordance with sectoral provisions; and
3. it may lapse by operation of law if the businesses fail to fulfil the required obligations and commitments, including environmental documentation requirements.

Through this mechanism, In-Principle Approval serves as an initial screening instrument to ensure alignment of proposed business activities with conservation area management plans.

5.3 Duration of Business Licenses

Regulation 27/2025 regulates the duration of Business Licenses for Environmental Services Utilization differently according to business type, reflecting the technical characteristics, business cycles, and investment levels of each sector.

 

6. Rights, Obligations, and Prohibitions of Business Entities

6.1 Rights of Business Entities

Pursuant to Regulation 27/2025 on Business Licenses for Environmental Services Utilization, licensed business entities are entitled to conduct business activities in accordance with the approved license type and location. Such rights include:

1. conducting environmental services utilization activities within conservation areas in accordance with designated blocks or zones;
2. constructing supporting facilities and infrastructure in accordance with licensing provisions and conservation area management plans, specifically for business types permitting physical development;
3. obtaining economic benefits from permitted business activities during the license term; and
4. receiving guidance and services from the Government during the validity period of the Business License.

These rights may be exercised only insofar as the business entity complies with all licensing provisions and applicable forestry and environmental laws and regulations.

6.2 Obligations of Business Entities

Regulation 27/2025 imposes obligations on business entities as a consequence of the granting of environmental services utilization rights, encompassing administrative, financial, environmental, and social aspects.

a. Administrative Obligations

Business entities are required to:

1. prepare and implement Work Plans in accordance with the permitted business sector provisions;
2. submit periodic reports on business activity implementation to the competent authorities; and
3. comply with all requirements stipulated in the Business License and In-Principle Approval.

b. Financial Obligations

In accordance with provisions on Non-Tax State Revenue, business entities are required to:

1. pay fees or levies stipulated in the Business License; and
2. remit business proceeds levy in accordance with applicable laws and regulations.

c. Environmental Obligations

Business entities are required to:

1. preserve conservation area functions and prevent environmental damage;
2. implement environmental management and monitoring in accordance with approved environmental documents; and
3. carry out environmental restoration in the event of damage resulting from business activities.

d. Social Obligations

Regulation 27/2025 also requires business entities to involve local communities in business activities, including through:

1. community empowerment initiatives; and
2. provision of employment or partnership opportunities consistent with the characteristics of the business activities.

6.3 Prohibitions Applicable to Business Entities

In addition to rights and obligations, Regulation 27/2025 establishes prohibitions that must be observed by business entities in conducting environmental services utilization activities, including prohibitions against:

1. transferring Business Licenses to other parties without Ministerial approval;
2. using Business Licenses, forest areas, or state assets therein as collateral;
3. conducting business activities outside the approved location, block, or zone;
4. engaging in activities inconsistent with the permitted business type; and
5. causing damage to conservation areas, including unauthorized logging or land clearing.

Violations of such prohibitions may result in administrative sanctions in accordance with Regulation 27/2025.

 

7. Supervision, Evaluation, and Sanctions

7.1 Supervision Mechanisms

Pursuant to Articles 560–566 of Regulation 27/2025, environmental services utilization business activities are subject to Government supervision conducted by:

1. the Minister;
2. the Director General responsible for conservation area management; and
3. Technical Implementation Units at the site level, including National Park Offices and Natural Resources Conservation Offices.

Authorized officials are empowered to:

1. enter business activity locations;
2. examine licensing documents and activity implementation reports; and
3. verify conformity between reported information and on-site conditions.

7.2 Evaluation of Business Activity Implementation

Provisions on evaluation of environmental services utilization business activities are regulated under Articles 567–572. Evaluations are conducted periodically based on:

1. business activity implementation reports submitted by business entities;
2. field supervision results; and
3. compliance with administrative, financial, environmental, and social obligations.

Evaluation results form the basis for Government actions to:

1. provide guidance;
2. impose corrective measures; or
3. apply administrative sanctions commensurate with the level of violation.

 

8. Legal Risks and Sanctions for Business Entities

8.1 Types of Administrative Sanctions

Article 573 regulates the types of administrative sanctions that may be imposed on business entities violating Regulation 27/2025. Those sanctions are applied progressively and include:

1. written warnings;
2. government coercive measures, including site sealing or temporary suspension of activities;
3. administrative fines;
4. suspension of Business Licenses; and
5. revocation of Business Licenses.

Sanctions are imposed with due consideration to the severity of the violation committed.

8.2 Cancellation and Revocation of Business Licenses

License revocation, as regulated under Articles 583 and 584, constitutes the most severe sanction. Revocation may be imposed where a business entity:

1. submits incorrect data or documents during the licensing process;
2. transfers a Business License without Ministerial approval; or
3. fails to comply with orders or obligations imposed through prior administrative sanctions.

Upon revocation, the business entity loses its right to conduct environmental services utilization activities within conservation areas.

8.3 Implications for Business Sustainability

Revocation of a Business License requires the business entity to cease all operational activities. Article 583 paragraph (3) provides that the expiration or revocation of a business license does not extinguish the obligation of the business entity to restore environmental damage that has occurred. Accordingly, even after license revocation or expiration, environmental restoration obligations remain enforceable and may give rise to further legal liabilities.

 

9. Transitional Provisions

Article 590 sets forth transitional provisions of critical importance for holders of environmental services utilization business licenses issued prior to the enactment of Regulation 27/2025. It provides that:

1. businesses whose licenses have not yet become effective are required to adjust to the provisions of Regulation 27/2025; and
2. holders of nature tourism facilities licenses or water environmental services utilization licenses who have not realized the construction of facilities and infrastructure are required to complete such construction no later than 1 (one) year from the effective date of this regulation.

Article 590 further affirms that failure to fulfil the construction realization obligation within the stipulated one-year period shall result in administrative sanctions in the form of Business License revocation.

 

10. Analysis of Regulatory Changes and Revocation of Previous Regulations

10.1 Revocation of Previous Regulations

Regulation 27/2025 revokes and declares invalid several ministerial regulations previously governing environmental services utilization. This is stipulated in Article 592. Revoked regulations include:

1. Minister of Forestry Regulation Number P.17/Menhut-II/2010 on Applications for, Granting of, and Revocation of Hunting Park Management Licenses;
2. Minister of Environment and Forestry Regulation Number P.4/MENLHK/SETJEN/KUM.1/1/2019 on the Utilization of Geothermal Environmental Services;
3. Minister of Environment and Forestry Regulation Number P.8/MENLHK/SETJEN/KUM.1/3/2019 on Nature Tourism Business Activities in Wildlife Reserves, National Parks, Grand Forest Parks, and Nature Tourism Parks; and
4. Minister of Environment and Forestry Regulation Number P.18/MENLHK/SETJEN/KUM.1/4/2019 on the Utilization of Water and Hydropower in Wildlife Reserves, National Parks, Grand Forest Parks, and Nature Tourism Parks.

Through these provisions, previously fragmented regulations on environmental services utilization are consolidated into a single business licensing framework. With the entry into force of Regulation 27/2025, all environmental services utilization business activities within conservation areas are required to refer to this regulation as the prevailing legal basis.

10.2 Comparative Tables of Revoked Regulations

10.2.1 Nature Tourism Business Activities

 

10.2.2 Water and Hydropower Utilization

 

10.2.3 Geothermal Environmental Services Utilization

 

10.2.4 Hunting Park Management

 

11. Closing

Regulation 27/2025 consolidates the regulation of environmental services utilization within conservation areas into a single, risk-based Business Licensing framework integrated through the Online Single Submission system. Through this framework, the Government establishes clear limitations regarding business locations, business subjects, permissible activity types, and stages and scales of business activities, while affirming that business entities hold utilization rights rather than ownership of conservation areas. Such regulation provides legal certainty for businesses while ensuring that environmental services utilization remains within the bounds of conservation protection.

Regulation 27/2025 opens opportunities for business activities across various environmental services sectors with license durations tailored to the characteristics of each activity, including carbon environmental services and renewable energy utilization, while adjusting the regulatory framework for nature tourism. At the same time, the regulation affirms administrative, financial, environmental, and social obligations for business entities and establishes mechanisms for supervision, evaluation, and administrative sanctions for violations. Key legal risks for businesses arise from transitional provisions, particularly obligations to realize construction for licenses issued prior to the regulation’s entry into force, with revocation consequences for non-compliance. Accordingly, Regulation 27/2025 requires businesses not only to understand available business opportunities but also to ensure full compliance with all licensing provisions to safeguard business sustainability and legal certainty within conservation areas.

 

 

References

Minister of Forestry Regulation Number P.17/Menhut-II/2010 on Applications for, Granting of, and Revocation of Hunting Park Management Licenses.

Minister of Environment and Forestry Regulation Number P.4/MENLHK/SETJEN/KUM.1/1/2019 on the Utilization of Geothermal Environmental Services in National Parks, Grand Forest Parks, and Nature Tourism Parks.

Minister of Environment and Forestry Regulation Number P.8/MENLHK/SETJEN/KUM.1/3/2019 on Nature Tourism Business Activities in Wildlife Reserves, National Parks, Grand Forest Parks, and Nature Tourism Parks.

Minister of Environment and Forestry Regulation Number P.18/MENLHK/SETJEN/KUM.1/4/2019 on the Utilization of Water and Hydropower in Wildlife Reserves, National Parks, Grand Forest Parks, and Nature Tourism Parks.

Minister of Forestry Regulation Number 27 of 2025 on the Utilization of Environmental Services in Nature Reserve Areas, Nature Conservation Areas, and Hunting Parks.