Four ministries and the Investment Coordinating Board on Wednesday signed a joint regulation aimed at slashing the time needed to license a new business from 60 days to just 17.
Vice President Boediono said the new policy was designed to raise the country’s ranking in the annual “Doing Business” survey by the World Bank’s International Finance Corporation.
“Indonesia has been left far behind by other countries in the region in the time it takes to issue business licenses,” he said. “We’re currently ranked 161, while Thailand, at only 32 days, is ranked 12.” In the Philippines, licensing takes only three days and in Malaysia just 11, he added.
In overall ease of doing business, Indonesia ranked 122nd, 12 places higher than the previous year, according to the IFC’s general survey, released in September.
Boediono said it was important to reduce the time needed to license a new business to improve international perceptions.
An IFC survey released on Tuesday found that some of Indonesia’s regulatory practices compared well against international standards. However, the report also said there was a “wide variation” in services across the country and a confusing amount of non-standardized regulations.
As part of the ongoing plan to speed up licensing, the government has opened 315 “one-stop” licensing offices nationwide, including 15 that became operational this month, Home Affairs Minister Gamawan Fauzi said.
Before, people had to go to several ministries to obtain a business license. Other permits, such as export licenses and brand registrations, would go online soon, Gamawan added.
“There will be 70 permits integrated with electronic services in the offices,” he said. “The service will begin on January 15.”
To ensure the program ran properly, Gamawan has sent letters to the country’s district heads reminding them of the importance of the Public Service Law. “Under the new Public Service Law, public servants who do not provide services according to the standard will be sanctioned,” he said.
Gamawan said that if better licensing times were achieved Indonesia could improve its ranking to as high as the 50s next year.
“Before 2014, we want Indonesia to be in the top 20,” he added.
Aldian Taloputra, an economist at PT Mandiri Sekuritas, said he doubted the country could improve its ranking so quickly.
“I’m concerned about the program’s implementation, especially when businesses need speedy licensing approvals from the local governments. The question is, can such coordination happen that fast,” he said.
The four ministries participating in the new regulation are Home Affairs, Trade, Manpower and Transmigration and Justice and Human Rights.