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New permit system still allows for graft
Activists find that the one-stop service for issuing a business license, imposed to prevent red tape, still leaves opportunities for corruption
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ctivists find that the one-stop service for issuing a business license, imposed to prevent red tape, still leaves opportunities for corruption.
“The one-stop system for business licensing, which is a solution intended to reform business licensing, still allows room for corruption,” Transparency International Indonesia (TII) advocate Putut Aryo Saputro told The Jakarta Post on Sunday.
TII found at least 11 graft loopholes within the new system, which started in 2006 after the enactment of a 2006 Home Ministry decree on one-stop service for business permits.
At least 14 provinces and 365 regencies and municipalities have already implemented the system.
“We found out that there is no standard time and cost for the one-stop service,” Putut said.
Putut also criticized the absence of external monitoring for the system, which in itself exacerbated corruption. “Not to mention the lack of information about and promotion of the new system. The public is not aware of it,” he said.
The most common methods of corruption included bribery, illegal levies, collusion and abuse of power by officials, the TII report said.
“Moreover, businesspeople still perceive bribery as normal in issuing business licenses,” he said.
According to TII’s 2010 Indonesian Corruption Perception Index survey, which measured perceptions of corruption levels in cities across Indonesia, business people still considered that bribery for smoothing the issuance of permits was common.
Between May and October 2010, TII evaluated 50 cities, including 33 provincial capitals and 17 cities with good economic conditions, surveying 9,237 business people in these cities.
Robert Endi Jaweng from Regional Autonomy Watch (KPPOD) found that the system created new levies instead of making the issuance of a business license easier.
“We found that from 95 regencies and municipalities across Indonesia that have already implemented the one-stop system, 81 require people to pay for business permits,” Robert told the Post.
A 2007 Trade Ministry ordinance on the issuance of business licenses states there is no fee for a trading license (SIUP). Similarly, there is no fee for a company registration (TDP) according to another 2007 Trade Ministry ordinance on company registration.
Robert said 47 regencies and municipalities using the procedure were unable to issue business permits within the government’s expected standard of three days.
Putut said that international actors perceived Indonesia as “not easy for doing business”.
According to a study on the ease of starting a business in a country Doing Business 2011: Making a Difference for Entrepreneurs, conducted by the International Finance Corporation (IFC) and the
World Bank, Indonesia ranked 121 from a total of 183 countries in 2011, a decline of six places from the previous year.
The report shows that it takes nine procedures within 47 days to start a business in Indonesia, while the average of the Organization for Economic Cooperation and Development (OECD) countries is only 5.6 procedures within 13.8 days and in East Asia and Pacific countries only 7.8 steps within 39 days.
