Overcoming Barriers to Domestic Investment with Online Licensing

Based on a US News survey in March 2018, Indonesia became the second best investment destination in the world after the Philippines. This is based on the realization of investments that entered throughout 2017 successfully achieved the target that been set, which is Rp 692.8 trillion. This figure exceeds the target that has been set, which is worth Rp. 678.8 trillion.

However, behind these achievements, the complicated and long-standing licensing process is often the reason which slow down the pace of investment in Indonesia. In the study of the Center for Indonesian Policy Studies, it was revealed that to take care of the initial licensing it would take up to 23 days. This obviously missed far from the government’s target with the licensing process taking less than seven days. The differences in interpretation from the local government regarding the rules issued by the central government has become the biggest obstacles. One effort that has been done is by simplifying regulation to using online licensing to cut licensing time.

The difficulty of regional licensing is basically the concern of BKPM. According to the Head of BKPM, Thomas Lembong this difficulty could hamper the realization of domestic investment. So far, investors have often complained about the issue of managing permits at the local government level. The reason is because of the many procedures and requirements that take a long time and high costs.

President Joko Widodo himself has several times stated that the licensing process for investment needs to be accelerated. According to him, the licensing process that takes a long time will make many investors tend to choose other countries with easier licensing. Utilizing information technology through online licensing is referred to as one way to accelerate the processing of permits. This can specifically cut the licensing chain from the region to the center with online licensing. Thus, it is expected that economic growth in the region can be boosted with the entry of investment.

For this reason, the online licensing process which been developed should use a more modern and faster administration model with an integrated data system. Human resources must also be considered related to their capabilities. Responsive human resources are needed so that it can become a factor for reforming online licensing services in Indonesia.

Online licensing that can reduce the processing time of these permits is very important to be implemented. For this reason, the government has inaugurated the Online Single Submission (OSS) system on July 9, 2018, where business permits can be obtained in less than an hour. As explained by the Coordinating Ministry of Economic Affairs, this online licensing uses a system that can integrate the central PTSP services to the regions. With this system, one company only has to have one holding number that can be used as identification at various PTSP and customs locations.