Indonesia to introduce new business licensing regime

Indonesia will introduce a new business licensing regime in the omnibus bill on job creation to boost competitiveness and bolster investment, as the country's ranking in the World Bank’s Ease of Doing Business index stagnates at 73rd.

20, Feb. 2020

Photo by Al ghazali on Unsplash
Photo by Al ghazali on Unsplash

JAKARTA, VNA - Indonesia will introduce a new business licensing regime in the omnibus bill on job creation to boost competitiveness and bolster investment, as the country's ranking in the World Bank’s Ease of Doing Business index stagnates at 73rd.

Head of the Indonesian Investment Coordination Board (BKPM) Bahlil Lahadalia said on February 17 that the board had started to handle all licensing issuance from January 31. The new system will cut licensing hurdles as issuance was previously spread across government institutions and regional administrations, causing uncertainty to both investors and businesses.

This is meant to provide certainty as investors will start and finalize their investment through the BKPM and this will prevent a ping pong of investors from one ministry to another, Bahlil said.

Presidential Instruction (Inpres) No. 7/2019 grants the BKPM the authority to take over all business permits and makes the agency the lead in evaluating and making recommendations on policies deemed as unfavourable for investors.

The omnibus bill on job creation simplifies business licenses across almost all business sectors, including maritime and fisheries, agriculture, forestry, energy and mineral resources, electricity and industry.

Trade, standardisation including halal certification, infrastructure and public housing, transportation, health, drugs and food, education and culture, tourism, postal, telecommunications and broadcasting, security and defense are also covered.

The bill amends and revokes many articles in the prevailing laws related to the aforementioned business sectors.

Bahlil said to cut red tape that has hampered investment in the country, all licensing processes issued by regional administrations will be handed over to the Capital Investment and One-Stop Integrated Services Agency (DPMPTSP). The agency, which operates under the BKPM, will serve to avoid regional intervention, he added.

The BKPM have also set up an investment alert task force involving its officials, the National Police and the Attorney General’s Office to oversee and protect investments from being disrupted in regions.

The BKPM will also have the authority to issue tax holidays and tax allowances except for several business types as agreed with the Finance Ministry, said Bahlil.

The omnibus bill also includes changes to the negative investment list as all business sectors will be open to direct investment, except those declared prohibited from such activity or those that can only be handled by the government. - VNA