JAKARTA (TheInsiderStories) – Indonesia’s ‘Ease Of Doing Business’ (EODB) ranking has jumped 19 points in 2018, to 72, thanks to a number of policy reform packages issued by the Joko Widodo government. However, the improvement was not really enough. More work is needed.
The President wants to see a complete overhaul of the country’s business processes and permits, from central government down to local governments, by implementing the so-called ‘single submission’, a digital-based integrated business permit process. The plan to launch the single submission was initially revealed during the launching of the government’s 16th policy package in August of last year.
On late Tuesday (24/01), President Widodo told governors and regency heads about his determination to implement a single submission system by April this year. The launch of a single submission protocol aims to attract more investment and speed up the realization of investments, both foreign and domestic. This was stated amid slow progress in the realization of investment in regional areas.
The President expressed his concern that in many cases, local governments are still moving slowly, which is not in line with the central government’s deregulation policies.
The President cited the case of investments in power plants. Permits from the central government can be issued within 19 days; however, local governments can take up to 775 days for permits. This lengthy process shows that there are problems at the regional government level.
Indonesia is in fact notorious for its complicated and time-consuming business permit process. Complaints are not only expressed by major business players but also small-to-medium size companies. In addition, business players and investors are often left in the dark as to how long it will take for a business permit to be obtained, and what kind of documents or requirements are needed.
In addition, to launch a project, numerous permits are required, both from central and local governments. Obtaining these permits sometimes take as long as two years. Most often, permits issued by local governments take longer time than permits issued by the central government.
Such complicated permit procedures have caused some investors and business players to call off or delay their investment plans, in what is perceived as an unfriendly business climate.
Coordinating Minister for Economic Affairs Darmin Nasution said the single submission system is a mandate of government Presidential Regulation (Perpres) Number 91, 2017 on Acceleration of Business Process.
The regulation requires all government institutions on central and local levels to monitor existing investments. He said some ministries and government agencies have set up task forces; however, provincial governments have yet to do the same. Minister Nasution therefore called on all local governments, both provincial and regency, to set up a Task Force on investment monitoring, by the end of this month.
The local government Task Force will monitor and guard investments and assist investors in resolving investment-related issues. If the local-level Task Force fails to resolve a given problem, they can report to the national level Task Force. Darmin Nasution said the government will address bottlenecking issues in February, and then launch the single submission system in April.
As of this writing, the government has moderately improved investment service through the establishment of a ‘one-roof’ investment service (PTSP). Minister Nasution said PTSP will be integrated into the single submission system, and will process an early part of a given investment, such as approval, tax ID, company name and export & import ID.
The implementation of a single submission should help improve the business climate and ease of doing business in Indonesia, should the single submission system be executed as plan. President Widodo wants the EODB ranking of Indonesia to rise to 40 this year. The launch of a single submission should help achieve that target. (*)