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Jakarta Post

53 percent of Indonesians say obtaining SME permit is hard: SMRC survey

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Wed, July 1, 2020   /   06:08 pm
53 percent of Indonesians say obtaining SME permit is hard: SMRC survey A guitar craftsman holds up his latest creation at the Arya Guitar Custom home industry center in Bogor, West Java, on March 28. (Antara/Yulius Satria Wijaya)

Indonesians are finding it hard to secure business permits, especially for small and medium enterprises (SME), with a recent survey showing that the country is lagging behind its regional peers in improving ease of doing business.

According to Saiful Mujani Research & Consulting (SMRC), which surveyed 2,003 people, 53 percent of respondents said it was “hard” or “very hard” to obtain a business permit for an SME.

The figure is higher in rural areas (57 percent) than in urban centers (49 percent), according to the survey, which was conducted by phone on June 24 to 26. Kalimantan showed the largest share of respondents who faced difficulty securing a permit, at 92 percent.

“These findings confirm […] Indonesia’s lack of competitiveness in terms of doing business compared to other countries,” SMRC executive director Sirojudin Abbas said in a virtual presser on Tuesday.

The survey came at a time when President Joko “Jokowi” Widodo administration is pushing the omnibus bill on job creation to simplify the process of starting a business in order to lure investment.

Indonesia’s position in the World Bank’s ease of doing business ranking, which weighs in the ease of starting a business as one of seven indicators, has been stuck at 73rd position between 2018 and 2019. This suggests a slower progress relative to other countries and compared to Jokowi’s target for 40th place this year.

In line with the World Bank’s assessment, 45 percent of Indonesians said obtaining a business permit, in general, was hard, according to the SMRC survey. Only one out of five respondents had experience applying for a permit.

The government is expecting the House of Representatives to pass the omnibus bill on job creation this month. After a series of hearings, the House is set to discuss the investment-related articles of the bill next week, said Legislation Body (Baleg) chairperson Supratman Andi Atgas.

The bill, which will revise at least 79 existing laws, will allow one person to establish a limited liability company, among other things. The current law requires at least two persons to do so.

“We are trying to simplify two aspects of the business permit,” said Supratman, a Gerindra party politician. “First, the permit to start a business. Second, the certification to sell products, including for halal certificates, which will receive a subsidy from the government.”

Indonesian Chamber of Commerce and Industry (Kadin) chairwoman Shinta Kamdani has urged the government to propagate the bill, as it would play an important part in the country’s economic recovery amid the COVID-19 pandemic.