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Jakarta Post

Red-tape snafus result in new permit policy

  • Fikri Zaki Muhammadi

    The Jakarta Post

Jakarta   /   Wed, May 15, 2013   /  10:55 am

Jakarta Governor Joko '€œJokowi'€ Widodo says he will establish a special body to handle all investment permit-related processes under one roof, following complaints about the red-tape surrounding the setting up of a business.

Having sliced the procedure from around five months to a mere 26 days during his tenure as mayor in Surakarta, Central Java, Jokowi says he is optimistic the same could be applied here.

'€œWe need bureaucratic reform here. Everything should be done in one office,'€ he told reporters on Tuesday at City Hall after a meeting with Investment Coordinating Board (BKPM) chairman Chatib Basri, adding that he had ordered his team to scrutinize the matter.

'€œThe standard times to issue the permits must be met. If deadlines are not met; we will replace the officers,'€ he said, adding the process would also address bribery.

Despite his plan, Jokowi said the administration would prioritize investments that could help develop the city and reduce unemployment.

The Jakarta Investment and Promotion Agency (BPMP) established a one-roof service center in 2010 during the tenure of then-governor Fauzi Bowo, and claimed investment permits could be issued within 38 days.

However, investors still need at least three months following the submission of documents to get their investment permits; the agency argue that it could only handle 20 applications per day.

Jakarta is among the top five foreign investment targets in Indonesia, along with East Java and West Java, according to the International Finance Corporation (IFC).

The BKPM last year recorded that Jakarta attracted around US$4.1 billion, or more than 16.7 percent of around Rp 221 trillion ($22.69 billion) of foreign investments in Indonesia.

The figures for West Java were slightly higher, with $4.2 billion.

In 2012, domestic investment in Jakarta reached Rp 8.5 trillion, out of Rp 92.2 trillion in Indonesia'€™s
total domestic investments.

Jakarta'€™s domestic investment figure was lower than that of East Java and West Java, which claimed the first and second highest places, with Rp 21.5 trillion and Rp 11.4 trillion respectively.

In comparison, New Zealand and Singapore issue such permits in one and three days respectively.

Chatib said that a number of foreign investors were pending entrance to the city because of the long process but he was optimistic that Jokowi could fix things the way he did in Surakarta, saying that the increase in Jakarta would mean a national increase as well.

'€œJakarta has huge prospects and is a barometer for other cities. We should cut unnecessary barriers for these applications so that more investment will enter Jakarta,'€ Chatib said, adding the new guideline would be in the form of a bylaw.

Investing in Jakarta

Permit process
Until November 2010, investment permit licensing took 196 days.

Currently, the permit procedure under the single window integrated service program (PTSP) is offered in three packages: 10 days, 25 days and 38 days.

According to the Jakarta Investment and Promotion Agency (BPMP), investment is mostly for services, such as transportation or logistics.

Number of procedures to start a business: 8

Cost to start a business: 18 percent of income per capita.

Source: Doing Business in Indonesia 2012

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