The Jakarta Post
The Finance Ministry has twice revised upward the estimated fiscal deficit for this year, first from 1.8 percent of the gross domestic product to 1.9 percent and lately up again to between 2 percent and 2.2 percent because of disappointing tax revenue as a result of low economic growth.
At that level, the budget deficit is still below the 3 percent legal limit, but the trend is really alarming, given the weakening global economy and mounting protectionism in international trade. This trend should make the promotion of private investment most imperative to generate economic growth that fits well with President Joko “Jokowi” Widodo’s top goals.
But the first policy measure he launched through a Nov. 22 presidential instruction that gives the chairman of the Investment Coordinating Board (BKPM) a full mandate to issue all business licenses seems poised not only to fail but to cause unnecessary confusion and controversy.
Jokowi has not learned from his failure during his first term in expediting investment licensing. Only one week after his inauguration on Oct. 20, 2014, Jokowi made a surprise visit to the BKPM office, where he pledged to expedite investment and/or business licensing to only a few days.
But five years later, arduous licensing procedures, overlapping and even contradictory laws and regulations remain among the biggest barriers to investment. His high-profile project, the online single submission (OSS) system for applications for all business permits, is still in disarray due to utterly poor coordination and cooperation among the line ministers and between the central government and regional administrations.
His latest instruction that all ministers and other Cabinet members delegate their business-permit issuing authority to the new BKPM chief, Bahlil Lahadalia, will not only fail to strengthen ministerial coordination and cooperation.
The executive order will also cause confusion regarding the job description and scope of responsibility of Coordinating Economic Minister Airlangga Hartarto, tasked with coordinating all ministers related to economic matters, and Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan, who also oversees the BKPM.
Even authoritarian president Soeharto, who set up the BKPM in 1973, had been unable to develop it into a truly one-stop licensing center for investment until his fall in May 1998.
We wonder why Jokowi has not focused on speeding up the drafting of the omnibus bill, which he himself has promised will simultaneously revise more than 72 laws and hundreds of central government regulations considered big obstacles to investment.
Former coordinating economic minister Darmin Nasution had asserted the main barrier to the development of the web-based OSS licensing platform are the thousands of overlapping and even contradictory laws and regulations. An omnibus law covering virtually all barriers to investment, such as excessively arduous licensing procedures, overlapping and contradictory regulations, should also be able to improve interministerial coordination and cooperation.
But of no less importance is that the President provide strong leadership by holding a monthly Cabinet meeting specifically to discuss and resolve all issues related to investment by executive fiat on the spot.