JAKARTA (TheInsiderStories) – The Indonesia government is determined to improve of eased of doing business in Indonesia by cutting the number of licenses required, procedures, time and costs of business.
President Joko Widodo the cabinet meeting stressed the importance of raising the level of Ease of Doing Business ranking (EODB) for up to position of 40. To achieve the target, a number of improvements need to be done in term of regulatory and licensing procedures and fees, especially for SMEs.
Following up on order of the President, the Coordinating Minister for Economic Affairs Darmin Nasution has formed a special team, and coordinates with the Investment Coordinating Board (BKPM) and some relevant ministries and institutions.
Some of the remedies are also set forth in the 12th Economic Policy Package, announced by President on Thursday, April 28, 2016, at the Presidential Palace in Jakarta.
“This package is big and important to the coverage,” said Coordinating Minister for the Economy Darmin Nasution.
The World Bank established 10 indicators of level of ease of doing business. Each was SYB (Starting Business), Licensing related Establishment Building (Dealing with Construction Permit), Tax Payment (Paying Taxes), Access Credit (Getting Credit), Enforcement of Contract (Enforcing Contract), Splicing Electric (Getting Electricity), Transnational trading (trading Across Borders), Bankruptcy Case Settlement (Resolving Insolvency), and Minority Investor Protection (Protecting Minority Investors).
Of the 10 indicators, the total number of procedures that previously amounted to 94 procedures, are now trimmed to 49 procedures. Similarly, previous permits totaled 9 permits and now the permits required are cut to 6.
Previously, the time needed (to establish a business) totaled 1,566 days. Now, it is shortened to 132 days.
Although the World Bank survey covers the area of Jakarta and Surabaya, the government wants this policy to be applied nationally.
To improve the ranking of ease of doing this, a number of improvements are being carried out on all existing indicators. For instance, previously a business player requires 13 procedures to get permit, which take 47 days and cost between Rp 6.8 to 7.8 million.
These include permit to get Business License (SIUP), Company Registration (TDP), the Deed of Establishment, location permit, and other related permits.
Now, they only required to get 7 procedures for 10 days at a cost of Rp 2.7 million. Permits are required for SMEs are SIUP and TDP as well as the Deed of Establishment, will be published simultaneously.
The other convenience granted to SMEs is the founding company’s capital requirements. Under Law No. 40 of 2007 on Limited Liability Companies, the minimum capital to establish a limited liability company (PT) is Rp 50 million. With the issuance of Government Regulation No. 7 of 2016 on the Amendment to Authorized Capital for Limited Liability Company, the authorized capital remains at least Rp 50 million, but for SMEs, the authorized capital is determined by agreement of the founders of PT set forth in the Deed of Establishment of PT.
Similarly, the permissions associated with Establishment of Building. Previously, it had to pass 17 procedures that take 210 days at a cost of Rp 86 million to get four permits (IMB, UKL / UPL, SLF, TDG). Now, there are only 14 procedures needed that can be obtained in 52 days at a cost of Rp70 million for three licenses ( IMB, SLF, TDG).
As for tax payment, previously it was done through 54-times payment. Today, it is trimmed to only 10 times and payment is done via online payment system. While registering property, previously business players have to pass 5 procedures within 25 days at a cost of 10.8% of the property value. Today, it is cut to 3 procedures within 7 days and the cost is set at 8.3% of property value/transaction.
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Source: The Insiderstories
Indonesia govt cuts licenses, procedures, time, cost to improve Ease of Doing Business