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'One-stop service' to go national
In a move to attract investors and boost national development, President Joko âJokowiâ Widodo has instructed all governors, mayors and regents to establish one-stop business services in their respective regions by next year
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n a move to attract investors and boost national development, President Joko 'Jokowi' Widodo has instructed all governors, mayors and regents to establish one-stop business services in their respective regions by next year.
Delivering a speech before kicking off the government's coordination meeting with 34 governors and provincial law-enforcement authorities on Tuesday, Jokowi said the limited state budget authorized by former president Susilo Bambang Yudhoyono had left the government with no choice other than to rely on private investment to speed up development.
Many potential investors, he said, gave up on their ideas about investing in the country due in large part to the time-consuming and complicated procedures to acquire business permits and the absence of supporting infrastructure.
'Next year, we will give [regional administrations] a year [to set up the one-stop service]. After that, there will be no more time,' Jokowi said.
'Those that still have no [one-stop services] will probably see their special allocation funding [DAK] scrapped. This is budget politics. [We] might reduce their General Allocation Fund [DAU] as well.'
Although the country has implemented regional autonomy, the President still authorizes the DAU and the DAK allocations, which are parts of the annual budget for every region.
Both funds are transparently calculated through formulas that take into consideration the population and size of a region, as well as its regional revenues. But annual allocations are still established by a presidential decree.
Indonesia, Southeast Asia's biggest economy, scored 34th in the World Economic Forum's global competitiveness index this year , which measures ease of doing business, with bureaucratic red tape and infrastructure shortcomings, including in electricity supply, cited as lagging factors.
The country currently has a one-stop licensing service system in place, but implementation is still considered ineffective as a number of local administrations have yet to get a handle on most of the licenses and still separate submission and processing offices, according to a study by the Center for Public Policy Analysis (CPPA).
With a background as a successful furniture exporter, Jokowi, who was inaugurated as the country's seventh president on Oct. 20, repeatedly promised during his presidential campaign that he would establish a pro-business government to ease investors' problems in, among other things, business-licensing procedures and land acquisition.
- Jokowi threatens to use budget politics to force through administrative reform in regions
- Development depends on private investment, which is often frustrated by local bureaucracy
During Jokowi's time as mayor of Surakarta, Central Java, he managed to slash the time for similar complicated procedures from about five months to a mere 26 days.
Jokowi first announced his plan to use budget politics to control regions during a debate session in this year's presidential campaign. He said that such a policy tool would force regions to follow instructions from the central government, especially regarding the allocation of funds.
Jokowi said in his campaign that such budget control would discourage the irresponsible disbursement of funds by local bureaucrats as regions with poor budget performances would see adjustments to their DAU and DAK funding.
In his first official gathering with governors as president, Jokowi spent an hour sharing his ideas on national development, including his plan to transfer the spending on fuel subsidies to such sectors as agriculture and fisheries.
Jokowi has also urged governors, mayors and regents to thoroughly review regional spending on administrative affairs so that they can allocate more of the regional budgets to development expenditure.
'When I took office as Surakarta mayor, the city's ratio [between administrative spending and development expenditure] was 74:26. But, in one year, we managed to adjust the ratio to 49:51. We had to work very thoroughly [to review the budget], just like accountants,' he said.
Uchok Sky Khadafi from state-budget watchdog the Indonesian Forum for Budget Transparency (FITRA), however, described Jokowi's plan to freeze the disbursement of DAK and DAU funding as 'overzealous' and suggested he adopt a more persuasive approach with the regions.
'Most of the DAU funding goes on civil servants' salaries while the DAK goes to regional infrastructure projects. Stopping the disbursement of the funds will only spark anger among both the public and civil servants,' he said.
