SMEs need one-stop service at regional level: ADB

SMEs need one-stop service at regional level: ADB

Tantri Yuliandini, The Jakarta Post, Jakarta

The Asian Development Bank (ADB) said on Monday that the
government should not establish separate bodies to handle
corporate and investment licensing at the central government
level but instead establish one-stop service agencies to handle
all procedures at the regional level.

Mangara Tambunan from ADB's technical assistance (ADB-TA)
program for small and medium enterprises (SMEs) said that plans
to establish one-stop service units within different institutions
of the central government -- such as by the Investment
Coordinating Board (BKPM) and the Ministry of Industry and Trade
-- would only overlap one another and create more bureaucracy.

"What we need is an independent body at the level of regional
administrations that can bypass all the red tape of other
institutions," he said, citing the Sidoarjo administration in
East Java as one administration that had successfully launched a
one-stop service for its SMEs.

"Those (agencies) of the central government should only give
guidance, but the operational procedures should be coordinated at
the regional level," Mangara said.

The Sidoarjo regent has successfully influenced the various
governmental agencies in its area to allow an SME to process all
licensing needs, including land leases, at a one-stop service
office, he explained.

Mangara said that the government had planned one-stop service
shops within regions since 1993 but only 50 were currently in
existence and "very few are actually operating as they should".

He also criticized the BKPM's intention to centralize
licensing procedures, saying that it was against the spirit of
decentralization.

ADB-TA team leader Peter Bissegger said that the rationale for
one-stop agencies was that SMEs should not be exposed to too many
bureaucratic procedures that would only deter them from applying
for official licenses.

According to the World Bank's 2000/2001 World Development
Report, official and unofficial levies in Indonesia are expected
to raise the costs faced by SMEs by as much as 30 percent.

Therefore, licenses should also be simplified, Bissegger said,
and micro enterprises should not need specific business licenses
unless their activities involve special public interest requiring
safeguards, such as health and safety, he said.

"I do not see why beauty parlors should require specific
business licenses," he said.

Mangara also said that general business licenses such as trade
licensing should also be scrapped and replaced with a formal
notification to a registry office, which only requires basic
details such as the purpose of the business, basic information
about the business and identification documents of the
entrepreneur.