T

he government has reiterated its commitment to easing the conduct of business in Indonesia to make the country more competitive with other members of ASEAN ahead of the implementation of the ASEAN Economic Community (AEC).

Speaking during the launch of the three-hour investment licensing service at the Investment Coordinating Board (BKPM) office on Monday, Vice President Jusuf Kalla said Indonesia should be able to improve business efficiency if it wanted to be able to compete with other ASEAN members in attracting foreign investment.

He said Indonesia had to prepare for fierce competition from other ASEAN members, particularly this year with the implementation of the AEC and the ongoing decline in commodity prices. With the implementation of the AEC, Indonesia is a part of an increasing regionally-integrated market.

'€œCompetitions are usually won by the most efficient,'€ he said.

BKPM head Franky Sibarani said that he aspired to make Indonesia one of the top 100 countries in terms of ease of doing business next year. '€œWe'€™re targeting that our ease of doing business ranking will be in double-digits in 2017,'€ he said.

According to the World Bank'€™s 2015 ease of doing business ranking, Indonesia ranked 114th out of 189 economies, lagging behind its Southeast Asian peers Singapore (first), Malaysia (18th), Thailand (26th) and Vietnam (78th).

To achieve the required efficiency levels to beat the competition, Indonesia needs to solve problems surrounding interest rates, logistics costs, energy and bureaucracy, according to Kalla.

'€œAs of this January, I think interest rates should be in single digits,'€ he said, implying that most Indonesian banks'€™ interest rates still stood at over 10 percent. Interest rates follow the trend of the Bank Indonesia (BI) benchmark rate.

The BI interest rate has remained unchanged since February last year at 7.5 percent, with the central bank previously stating that it would review the benchmark rate based on economic indicators.

In another development, the Vice President said the government had increased its infrastructure budget by 50 percent this year to Rp 310 trillion (U$22.4 billion) to lower the country'€™s logistics costs.

The government had also signed new contracts for the establishment of 22,000-megawats of new power generation this year, he went on.

In addition, the BKPM started its three-hour licensing service last October for prospective investors with a minimum investment of Rp 100 billion and/or a plan to employ more than 1,000 workers.

The service had shortened the licensing process from 23 days normally to only three hours through the BKPM'€™s one-stop service (PTSP), Franky said.

Seven investors, with investments worth Rp 17.85 trillion, including those in power plants, ports and farming, had availed of the service, he said.

The three-hour service issues permits including principal permits, company deeds, tax identification numbers (NPWP) and land-booking letters issued by the Agrarian and Spatial Planning Ministry.

As of December last year, the BKPM also provides a fast-track permit licensing or '€œgreen route'€ for machinery and equipment imports, which enable companies that are already in the construction stage to obtain permits in around half an hour, from three to five days normally.

BKPM data reveal that 24 companies, with total investments worth Rp 100 trillion, have used the facility so far.
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