Investment licensing realigned<\/p>\n
Stripping the Investment Coordinating Board (BKPM) of its
\nlicensing authority will do little to speed up the process of
\nbusiness start-ups in the country unless the government acts
\nfirmly to realign cumbersome procedures and expedite the issuing
\nof permits by government agencies.<\/p>\n
Inter-ministerial coordination has always been the weakest
\nlink in successive governments, despite the creation of the
\nCoordinating Minister for the Economy position, which has been
\npart of cabinets since the early 1980s. Even the authoritarian,
\ncentralized administration of Soeharto took more than 10 years to
\novercome resistance from its ministries to make the BKPM a truly
\none-stop service center for domestic and investment licenses.<\/p>\n
However, the entire system broke down after Soeharto's ouster
\nin May 1998, and investment licensing has become far more arduous
\nand complex, especially after the institution of local autonomy
\nin 2001.<\/p>\n
Then president Megawati Soekarnoputri tried early last year to
\nrestore the BKPM as a one-stop center for investments but to no
\navail due to the failure of her political leadership. In terms of
\nthis country's public administration, which is perceived
\ncorrectly to be the most corrupt in East Asia, licensing
\nauthority means the power to collect rents.<\/p>\n
No details were immediately available as to how the government
\nwould go about expediting licensing after downgrading the
\noffice's function into that of a promotion and company registry
\noffice.<\/p>\n
Coordinating Minister for Economy Aburizal Bakrie and Minister
\nof Trade Mari Elka Pangestu, who last week disclosed the
\ngovernment's plan to facilitate smoother approvals, only said
\nthat notaries public would play a central role in helping
\nbusinesses obtain permits. It would be notaries public, not
\ninvestors, who would traipse between the different ministries to
\nobtain all the necessary permits.<\/p>\n
On the face of it, this new system would do virtually nothing
\nto speed up investment licensing. The BKPM is not the main
\nimpediment in the country's series of bureaucratic licensing
\nprocedures. Nor is the BKPM the only agency in charge of
\nlicensing. Investments in financial services are still handled
\ndirectly by the Ministry of Finance and Bank Indonesia, while
\nthose in the oil and gas sectors are administered by BP Migas.<\/p>\n
The latest survey by the World Bank, as compiled in its Doing
\nBusiness in 2005 report, shows that it takes an average of about
\nfive months to start up a business in Indonesia.<\/p>\n
If the government is really serious about expediting
\ninvestment licensing, it must first review the cumbersome
\nprocedures and reassess the real purpose or merit of the dozens
\nof permits an entrepreneur is required to obtain when starting a
\nbusiness.<\/p>\n
Experience shows that many of the permits imposed on
\nbusinesses have nothing to do with ensuring compliance with
\ngovernment regulations. Take, for example, permits for plantation
\ninvestments. The more than two dozens permits an investor has to
\nobtain from local administrations and ministries in Jakarta are
\nsupposed to secure sustainable forest management. However,
\nmassive deforestation in the country continues unabated.
\nLikewise, the cumbersome procedures for customs clearance are
\ndesigned to minimize smuggling or under-invoicing -- in theory
\nonly -- rampant goods smuggling has severely damaged the
\nmanufacturing industry.<\/p>\n
The government should decide which of the existing permits can
\nbe simply abolished; which can be delegated to private
\ninstitutions with fiduciary responsibility; which can be issued
\nby ministries in Jakarta and which should be under the
\njurisdiction of local administrations.<\/p>\n
Whatever mechanism is introduced to replace the BKPM as the
\ncenter of investment licensing, it should be designed with two
\nobjectives: To develop a one-stop administration center for all
\npermits under the jurisdiction of the central government and to
\nfurther empower local administrations to better serve businesses
\nand woo new investors.<\/p>\n
This means that Jakarta should eventually delegate most of its
\nbusiness licensing authorities to local administrations to
\nencourage them to compete for investment.<\/p>\n
However, expediting investment and business licensing is only
\none part of the great challenge to reinvigorate the investment
\nhere. The other more demanding task is to further improve the
\ngeneral business climate. Businesspeople decide to apply for
\ninvestment licenses only when they see the situation is
\nconducive.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/investment-licensing-realigned-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}