Indonesia's Competitiveness Hindered by Licensing Delays and Logistics Costs, Not Tax Rates, Says UI Professor
Jakarta, CNBC Indonesia - University of Indonesia Faculty of Economics and Business (FEB UI) Professor Telisa Aulia Falianty has explained that the main challenge in improving Indonesia's competitiveness is not about tax rates. The primary challenges lie in fundamental structural aspects such as lengthy licensing processes and high logistics costs.
"When we talk about competitiveness, the components include, besides regulation quality, the length of licensing times, and let us not forget logistics costs and ICOR," said Telisa during CNBC Indonesia's Evening Up programme, quoted on Monday (16/6/2025).
According to Telisa, taxation ranks third on the list of main obstacles to Indonesia's competitiveness. Expensive logistics costs and lengthy licensing times that burden business operators should be the primary focus.
"Tax is actually ranked third among obstacles to business competition or competitiveness. Number one is usually the length of licensing times and logistics costs. So these are two things we must improve, to make licensing times faster," she said.
Although the government has launched an integrated licensing system through Online Single Submission (OSS) since the enactment of the Job Creation Law, several obstacles still frequently occur, particularly in the regions.
"In the regions, there are still integration problems between regional OSS and the central OSS. Sometimes there are still obstacles in determining business KBLI classifications, technical matters like that, which sometimes still hinder our business competitiveness," she said.
Beyond that, complicated export-import procedures at customs are a frequent complaint among business operators.
"In our LPI, our Logistics Performance Index ranking, we have experienced deterioration in tracking and tracing within customs procedures. This is also something we need to improve in our customs system," she said.
"When we talk about competitiveness, the components include, besides regulation quality, the length of licensing times, and let us not forget logistics costs and ICOR," said Telisa during CNBC Indonesia's Evening Up programme, quoted on Monday (16/6/2025).
According to Telisa, taxation ranks third on the list of main obstacles to Indonesia's competitiveness. Expensive logistics costs and lengthy licensing times that burden business operators should be the primary focus.
"Tax is actually ranked third among obstacles to business competition or competitiveness. Number one is usually the length of licensing times and logistics costs. So these are two things we must improve, to make licensing times faster," she said.
Although the government has launched an integrated licensing system through Online Single Submission (OSS) since the enactment of the Job Creation Law, several obstacles still frequently occur, particularly in the regions.
"In the regions, there are still integration problems between regional OSS and the central OSS. Sometimes there are still obstacles in determining business KBLI classifications, technical matters like that, which sometimes still hinder our business competitiveness," she said.
Beyond that, complicated export-import procedures at customs are a frequent complaint among business operators.
"In our LPI, our Logistics Performance Index ranking, we have experienced deterioration in tracking and tracing within customs procedures. This is also something we need to improve in our customs system," she said.