Long licensing procedures remain problem for investors

Long licensing procedures remain problem for investors

JAKARTA (JP): Long licensing procedures in local
administrations remain the main problem for investors, even
though the government has introduced a series of deregulatory
measures, State Minister of Investment Sanyoto Sastrowardoyo
said.

"Procedures for investment licensing still consume much more
time than promised," Sanyoto, who is also chairman of the
Investment Coordinating Board (BKPM), told a three-day
coordination meeting on investment here yesterday.

The meeting, opened yesterday with presentations by a number
of ministers, proceeds today with closed-door sessions to discuss
reports from provincial offices of the board.

Sanyoto said that, in some provinces, licensing procedures
still took a couple of months.

Achmad Sobhana, head of BKPM's West Java office, told The
Jakarta Post that his issuance of licenses needed for investment
projects in his province could take longer than three months due
to arduous procedures in the regency institutions.

"Many local officials do not have the sufficient knowledge or
skill to issue licenses under the new deregulatory measures
introduced by the government," he added.

The deregulatory package issued last October, popularly known
as the Pakto 1993, was designed to reduce the time needed for
obtaining investment licenses from 42 days to 17.

Investors previously had to obtain a number of letters of
recommendation from authorities at the provincial and regency
levels for getting permits for land appropriation and plant
construction. Under the new plan, they are only required to
obtain permits for the construction of their buildings and for
the location of their projects. Location permits should now be
directly issued by local agrarian offices, while building permits
should be issued by the provincial offices of the Ministry of
Public Works.

However, BHL Tobing, head of Irian Jaya's BKPM office, said
that the complicated bureaucracy in his province also remains a
problem for foreign investors.

"Security clearance and approval for foreign direct flights in
the province or 'flag permits', for example, must come from
Jakarta. It clearly takes time and investors have to wait some
weeks for approval," he said, urging that this authority should
have been delegated to local officials.

Infrastructure

Djalante, head of Southeast Sulawesi's BKPM office, said that
in addition to the complicated bureaucracy, the poor
infrastructure of his province have partly discouraged investors
from developing businesses.

"There are, for example, only a few flights serving our
province and investors must wait some days before visiting
there," he said.

Sanyoto said: "We are now trying hard to streamline the
complicated bureaucracy."

Sanyoto said that, according to a recent study, long licensing
procedures contribute between 12 percent and 18 percent to
investment problems in Java, between 11 percent and 26 percent in
Sumatra, between seven percent and 10 percent in Kalimantan,
between six percent and 20 percent in Sulawesi and between 10
between and 19 percent in other provinces.

Arrogance

Minister of Tourism, Post and Telecommunications Joop Ave told
the meeting that lack of coordination among government agencies
is also another major handicap in the country's investment
activities.

"Some government agencies often feel superior to others and
each agency tends to work only on their own programs," Joop said.
He added that "this sectoral arrogance" should be discarded to
achieve a better result in the country's investment activities.

Joop said that the lack of coordination has resulted in a
number of weaknesses both in the implementation of new investment
projects and in the promotion of the country's business
opportunities overseas.

He said that the rate of the implementation of investment
commitments could be higher if BKPM, the ministry of tourism,
post and telecommunications, the ministry of mines and energy,
and the ministry of public works all worked together.

Joop called for special meetings between BKPM, his ministry
and the other two ministries to discuss services for investment
activities. This would include the development of infrastructures
such as telecommunication facilities, power supply and roads.

Sanyoto promised yesterday to improve efforts to improve
services for investors.

Coordinating Minister for Economy and Finance Saleh Afiff said
in his opening address that the government is now preparing
another series of deregulatory measures which will give more
authority to local administrations in dealing with licensing
procedures. (hen/fhp)