Indonesia to simplify licensing process to encourage investment

Cutting through some of the red tape.

By

Indonesia to simplify licensing process to encourage investment

Two Indonesian authorities, the Investment Coordinating Board (BKPM) and Directorate General of Immigration, are working together to make it easier for companies to attain business and investment licenses, in a bid to buoy investments in the country, Jakarta-based IDNFinancials reports.

While the government entities did not discuss at length how they would be streamlining the process, Husen Maulana, deputy of investment services at BKPM, said the changes would make it more straightforward to run BKPM’s online business and investment licensing system, called Online Single Submission (OSS).

The licensing system was launched in July 2018 and was initially managed by Indonesia’s Coordinating Ministry of Economic Affairs. It is designed to cut through the red tape in obtaining business permits so as to attract direct investments. BKPM took over OSS’s management and launched an upgraded version in March.

Under the current regulations, all companies—except those in the mining and financial sectors—that set up operations in Indonesia are required to obtain a license from BKPM. However, there exists a perpetual licensing issue in the country owing to a labyrinthine bureaucracy. President Joko Widodo (Jokowi) previously called for the platform’s simplification.

In an email previously sent to KrASIA, vice president of investment at MDI Ventures, Joshua Agusta, pointed out the need for simpler licensing processes to attract more new local funds in the country.

The total realization of foreign direct investment in Indonesia fell by 8.8% from IDR 430.5 trillion (approximately USD 30 billion) in 2017 to IDR 392.7 trillion in 2018. According to government insiders and analysts, President Jokowi, who is currently serving his second term, is set to introduce a litany of reforms, particularly to address the trend of falling foreign investments.