D

espite improvements in the provision of permits, the Indonesian Ombudsman has found that the charging of illegal levies is still rampant in a number of district and subdistrict offices, as well as in subagencies, during the process of issuing business permits, with illegal fees totalling an estimated Rp 3.8 billion (US$317,800) a year.

The ombudsman'€™s mitigation department head Muhammad Khoirul Anwar said during a presentation on the city administration'€™s performance on Tuesday that most of the business permits, including the company domicile letter (SKDP), the License for the Operation of Trading Businesses (SIUP), company registration (TDP) and the registration letters for hotels and restaurants (TDUP), were actually free.

'€œHowever, the applicants still had to pay in the range of Rp 500,000 to Rp 6 million in various schemes,'€
he said.

He added that officials in the Gondangdia and Cipinang Cempedak subdistricts, for example, disguised the illegal levies as alms. '€œOne of the officials tagged the alms at Rp 2 million,'€ he said.

He said, however, that such levies were not required at the Menteng Atas and Kelapa Gading Barat subdistrict offices. The officials there also explained the requirements clearly, including that the permit was free of charge.

The ombudsman conducted the investigation in all regional offices of the Small and Medium Enterprises (UMKM) Agency, the Tourism Agency and the One-stop Integrated Service (PTSP) in five municipalities, as well as in the subdistrict offices of Grogol and Tomang in West Jakarta, of Kebon Kacang, Bendungan Hilir, Kebon Sirih and Gondangdia in Central Jakarta, of Mampang Prampatan, Bangka, Bukit Duri and Menteng Atas in South Jakarta, of Kelapa Gading Barat in North Jakarta and of Cipinang Cempedak and Kampung Melayu
in East Jakarta.

The undercover investigation, partially conducted through interviews, took place from April to September.

During his presentation, the ombudsman also showed a documentary video on how the officials in various offices asked for the levies. '€œA number of officials also offered their services to take care of the whole process, although it should be handled individually by the applicant,'€ he said.

Khoirul said those who asked for the officials to handle the permits had to pay some money. '€œThe fee in Tomang subdistrict, for example, was around Rp 2.6 million,'€ he said.

According to Khoirul, the same practice was also found in the regional offices of the UMKM.

The ombudsman found that although asking for the SIUP and TDP was actually a free service, the applicants were charged Rp 6 million in the West Jakarta office of the agency.

He said an official of the Tourism Agency'€™s North Jakarta office also charged Rp 2.5 million per room for TDUP applicants establishing new hotels.

According to Khoirul, the situation was even worse in that the requirements for gaining those permits were different in each subdistrict offices, although all the requirements had been set out in the Gubernatorial Decree No 506/1989.

Khoirul said public services have improved with the more transparent system that came with the implementation of the one-door service.

At least 2,000 new small and medium businesses were established in 2013. If each applicant requiring SKDP was charged Rp 500,000 to Rp 2 million, subdistrict officials received at least Rp 1.2 billion a year, Khoirul went on.

'€œFor SKDP, the illegal levies potentially charged to around 4,000 companies reach up to Rp 2.6 billion,'€ he said.

Ombudsman chairman Danang Girindrawardana said the ombudsman gave the city administration 60 days to show it had made an effort to revamp the system.

City secretary Saefullah said that he was ashamed about the findings, especially after watching the video.

Saefullah said the city was now revamping the public service system, including strengthening the one-door service by making it an agency along with procurement.

'€œAs many as 518 services spread across the agencies and working units will be handled by BPTSP early next year,'€ he said, adding that the PTSP was only handling 18 of the permits.