I was finally given my NPWP card this morning. Amazing. I've only worked here for 8 frigging months. Right. Now time for some Glitter on SE Asian tour action.
Mon, 06 Jul 2009
JP/New regulation ‘favorable but may spark conflicts’
A new regulation which lays down a one-stop service for the processing of investment licenses is a step forward in making Indonesia more attractive, but it also has some potential to spark conflicts.
The Indonesian Chambers of Commerce and Industry (Kadin) said last week the presidential regulation may start rows between state institutions as it requires a handover of some authority from ministries and local government administrations in relation to the processing of investment licenses, unless clear technical auxiliary regulations are made.
The regulation – already signed and having come into effect two weeks ago - enforces the establishment of an integrated one-stop service system to make it easier for local and foreign investors to do business so they will no longer have to go through lengthy, and often costly, procedures in securing their licenses.
It is an auxiliary regulation to the 2007 Law on Investment.
Under the regulation, ministries and state agencies will have to delegate their authority in respect of processing licenses and making available incentives, including in the fiscal sector, to the Capital Investment Coordinating Board (BKPM), while local administrations must also delegate their authority to the appropriate regional body responsible for investment.
Chris Kanter, Kadin deputy chairman on infrastructure and investment, said that while Kadin warmly welcomed the regulation, the government should provide more details on the timeframe and the types of authority to be delegated.
“The key to success for this integrated one-stop service system are: types of authority that need to be delegated and fixed arrangements for the delegation of each [specific] authority,” he said in an interview.
He said he was doubtful that the regulation could be fully implemented by the end of this year as it would take some time for changes to be made in the new government as of October following the presidential election.
However, he said, it would also probably be hard for ministries and state agencies to “let go” of authority.
He said the absence of more detailed explanations could increase the tensions between central government and regional administrations when the BKPM for instance needed to help an investor acquire land controlled by regional administrations.
“Regional administrations may use the Law on Regional Autonomy to argue that they’re authorized to determine prices of land required by an investor, thus impeding the enforcement of the presidential regulation,” Chris said.
Sharing similar sentiments, noted economist Sri Adiningsih of Yogyakarta-based Gadjah Mada University said regional administrations had long had the authority over “industry, investment and trade” in their territories as stipulated in the Regional Autonomy Law.
“The presidential regulation is prone to and may create conflicts between the central government and regional administrations over authority,” she told the Post.
“I doubt that regional [administrations] would willingly accept [the regulation].”
Key points in the regulation
Heads of ministries and state agencies delegate their authority reference licenses and incentives for investment to the BKPM head, while governors delegate their authority in these respects to the provincial investment agencies, while finally heads, regents and mayors delegate their authority to city and regency investment agency heads.
An integrated one-stop service system provides speediness, accuracy, simplicity, transparency and legal certainty and must be supported by a working mechanism that is understandable and accessible by investors, plus an integrated electronic information system.
The BKPM is responsible for serving investors under this investment coordination system including for non-renewable natural resources with a high risk of environmental damage; in industries with high priority at national level; and in businesses that cover more than one province;
Ministers and state agencies have two years at the latest to delegate all of their relevant authority to the BKPM.
A code of conduct on the implementation of the integrated one-stop service system will be issued within one year following the issuing of the presidential regulation.
Supporting facilities required for implementation of the integrated one-stop service system will be are made available within one year after the issuing of the regulation.
An integrated electronic information systems will be fully implemented within three years of the issuing of the regulation.
The BKPM will take over services from provincial and city or regency investment agencies if they are still incapable of providing the integrated one-stop service system as required.
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