The Investment Coordinating Board (BKPM) is preparing to take over the implementation of web-based business licensing system, known as Online Single Submission (OSS), from the Economic Coordinating Ministry. The preparation includes resolving several constraints that make the system not run optimally.
According to the agreement, BKPM will take over OSS operations at least in early January 2019 or six months after the launch of the system in July 2018. Secretary of the Coordinating Economic Minister Susiwijono Moegiarso said the ministry is preparing a strategy to make the transition run smoothly so as not to disrupt licensing services for entrepreneurs.
Meanwhile, BKPM’s Investment Cooperation Deputy Wisnu Wijaya said the takeover plan continues to be discussed in internal meetings, and BKPM is committed to consolidate and improve the system. “We will do our best,” he told Katadata.co.id recently.
Online System Constraints
The government implemented the OSS system nationally in early July, but it has not yet run optimally due to several constraints. The system that is expected to facilitate business licensing is instead touted to have the potential to cause the opposite thing.
An industrial equipment investor complained about the length of the bureaucracy to change data on the system. He was listed as an individual investor rather than an institutional investor because he entered data incorrectly. In order to correct the data, he was required to send a letter directly to the OSS service office.
“They promised to inform me in two days [2x24 hours], but there was no update,” he told Katadata.co.id at the OSS service office in the Economic Coordinating Ministry building, last September. This made the investor confused.
The investor also found out that the OSS officers did not have the same understanding to one another. Although all he wanted was to change the status from individual investor to business entity, the entire data that had been included was eventually deleted. “I restarted the process from the beginning. I came here again and changed everything again,” he said.
Their different understandings are also related to which data is required and unrequired. “So the officers [branch office] told me the data is not required to be included, while other officers said the data is required,” the investor said. In fact, a confirmation to fill in the data of the investment goods was received after coming back to the OSS service office.
An OSS official said the data changes could actually be done online, so investors do not need to go back and forth to the OSS office. Officers will also clarify issues through e-mail and face-to-face meetings. However, investors must come to the office if they want to consult.
However, the OSS official admitted there were still a number of problems in filing permit through the OSS system. Investors often face problems related to the absence of Citizenship Identity Number (NIK). The solution is that the investor’s NIK must be rechecked at the Population Administration (Adminduk). This happens usually because the NIK has not been officially recorded in the population administration centre, or the NIK was made unofficially.
Incomplete data on General Law Administration (AHU) system is another problem. “The entire data has not been included due to its substantial numbers. In fact, there is a Dutch-language deed,” he said. After investors registering their NIK, the system must publish a complete corporate data from the AHU system.
However, he saw improvements in services at the OSS office. There are 300 investors queuing per day, but the duration of the consultation is getting faster. In addition, the number of incoming e-mails from investors has also decreased from previously three thousand e-mails per day.
According to the OSS Chairman Muwasiq M. Nor, incomplete technical instructions became the main constraint in operating OSS system. This is because some ministries have not included the Norms, Standards, Procedures and Criteria (NSPK) into the instructions.
“This [NSPK] is important as it also regulates the central government's licensing authority and the ones to be delegated to the regional governments. The technical instructions are there,” he said.
On the other hand, Indonesian Chamber of Commerce and Industry (Kadin) Deputy Chairwoman for International Relations Shinta Widjaja Kamdani said the system integration also became a constraint. “Some permits in the central government cannot be easily included,” she said.
She gave an example of licensing at the Ministry of Forestry. The ministry still has to examine land dispute issues and others before processing the permits. Another problem is that regional investors have not been able to use the system.
For the issue of regional investors, Susiwijono said the solution had been obtained. “The input of services can be done through forms uploading. This actually does not interfere with services. It's just considered not ideal,” he said.
Meanwhile, Research Director for the Centre of Reform on Economics (Core) Indonesia Pieter Abdullah Redjalam said the inconsistency in the implementation of the OSS system could hamper licensing as well as investment or business expansion. “Slowing investment has a negative impact on [economic] growth,” he said.
Entrepreneurs actually support the implementation of the system. However, they criticized the absence of a transition period. This decision is considered to hamper the licensing process. In fact, there were rumours about some permits that could not be processed through the new system.
According to Pieter, the licensing challenge is the biggest factor influencing business expansion. Challenges in the form of rising interest rates also have an effect, although not significant, so does the weakening of the rupiah against the US dollar. This is because there are industries that actually benefit from the exchange rate depreciation so that they are encouraged to expand.
Referring to the latest BI survey on business activities, entrepreneurs do consider licensing to be the biggest factor hampering investment plans. This was confirmed by 21.95 percent of respondents from business circles. About 16.41 percent of respondents saw the interest rates as an investment barrier, while 10.20 percent of respondents blamed the infrastructure conditions.