President Joko "Jokowi" Widodo has officially issued a regulation that streamlines all business licensing toward the Investment Coordinating Board (BKPM) and grants the agency the authority to review policies deemed as unfavorable for investors.
Presidential Instruction (Inpres) No. 7/2019 on the acceleration of ease of doing business (EODB) was signed on Nov. 22 and became effective immediately, giving greater power for BKPM chairman Bahlil Lahadalia to attract investment to boost the economy and create jobs.
The regulation grants the BKPM the authority to take over business permits from ministries and other government institutions “to ease doing business in the country, to boost investment, support economic growth and create jobs”.
It also makes the BKPM the tip of the spear in evaluating and making recommendations on policies among ministries and government institutions that are deemed as unfavorable for investors.
“[The BKPM will] conduct evaluation of the implementation of business license and investment facilities by ministries/ [government] institutions,” the Inpres reads. “[The BKPM] will convey the result of evaluation […] to ministries/ [government] institutions.”
According to the Inpres, ministries and government institutions are tasked with actively “identifying and assessing” regulations regarded as “disruptive toward the ease of doing business”, and report them to the BKPM. Ministries and government institutions are also tasked with deregulating and debottlenecking business licenses through regulatory revisions or revocation.
“[Ministries and government institutions will] delegate business license and investment facility authorities to the head of the Investment Coordinating Board,” the Inpres reads, also tasking ministries and government institutions with appointing a secretariat to be in charge of BKPM recommendations.
“The President has given the target that, with the authority [to process licensing] fully resting with the BKPM, the BKPM has also been asked to improve [Indonesia’s position] in the [annual World Bank EODB ranking] range between 50th and 40th by 2021,” Cabinet Secretary Pramono Anung said recently.
Indonesia ranked 73rd in the 2018 EODB ranking, lower than that of its regional peers such as Malaysia and Thailand, which ranked 12th and 21st, respectively.
Jokowi’s administration has struggled to attract more investment into the country amid sluggish economic growth. Indonesia’s GDP expanded 5.02 percent in the third quarter this year, the slowest pace in more than two years.
The growth of investment, which accounts for about a third of the country’s GDP, plunged to 4.21 percent from 6.96 percent recorded in the same period last year, Statistics Indonesia (BPS) data show.
The issuance of the Inpres also complemented efforts to relax investment regulations in Indonesia, including the omnibus law that will open up sectors previously restricted to foreign investors by changing the negative investment list (DNI) to a “positive list” of priority sectors for investment.
Jokowi has also pledged that 40 ministerial regulations deemed as hampering the investment climate in Indonesia will be scrapped by December. The policies are part of his efforts to bestow on his coordinating ministers a “veto power” to annul policies made by ministries that are felt to be contrary to his administration’s push to invite investment and create more jobs. (est)