President Joko Widodo and Working Cabinet's Ministers on Mako Brimob Riots - Photo by TheInsiderStories

JAKARTA (TheInsiderStories)— The Indonesian government plans to launch an integrated licensing policy or online single submission (OSS) on May 20, 2018, but it must be followed by a push to simplify regulation and provide more fiscal incentives to attract investment.

The government is still preparing the launching of single submission online (OSS), a delay from the initial schedule of April 2018. The policy is part of the second phase of the Presidential Regulation No. 91/2017 which aimed to attract investment.

One of the key output of the regulation is to raise Indonesia’s ease of doing business (EODB) ranking to 40 in 2019 from the current ranking of 72 out of 190 countries. Indonesia’s ranking is still below Singapore which ranks 2nd, Malaysia at 24th, Thailand at 26th, Brunei Darussalam at 56th, and Vietnam at 68th.

President Joko Widodo on Wednesday (16/05) ordered the ministries and regional to prepare the system, human resource, and bureaucratic system. “Once OSS is launched, sector-based ego must be completely disappeared, reduce the complicated and long-time procedures,” he said.

The policy will be followed by the establishment of OSS desks at all government levels, from ministries down to municipalities to help smooth coordination related to the business licensing process and to monitor the process at each bureaucratic level.

According to the Coordinating Ministry for Economic Affairs, 17 provinces completed the task forces desks in the provincial and regency/municipal levels including DKI Jakarta, Central Java, Yogyakarta, Riau, North Sumatra, and South Sulawesi. However, another 17 provinces have not yet completed the task forces booth in the regency/municipal levels including East Java.

Widodo reminded OSS system is not enough to attract investment, therefore, the ministries and regional heads should push the regulation simplification to attract investment. The government already revoked conflicting regulations, 186 in the energy sector alone, but apparently, it is not enough to improve the investment climate.

Furthermore, the government should offer the tax incentives to attract more investors. The government already provides a tax incentive to attract investment. This incentive allows companies which invest Rp500 billion to more than Rp30 trillion to scrap their obligation to pay corporate income tax for 5-20 years.

In addition, the government offered tax deduction up to 100 per cent. Furthermore, the government cut down the tax holiday approval process to 15 days, from the previous 45-day process.

However, this tax holiday is not enough as it is only offered to the 17 sectors including chemical industry and pharmaceutical industry. However, some other priority industries such as upstream oil and gas have not received a tax holiday.