International Public Service Forum 2018`

1. IMPROVING THE BUSINESS
ENVIRONMENT IN INDONESIA
Public services for business licensing
NOVEMBER 7, 2018

2. Business licensing is one out of many factors
affecting the business environment…
2
0 5 10 15 20 25 30 35
Tax
administra,on
Access
to
land
Crime,
the5
and
disorder
Transport
Electricity
Inadequately
educated
workforce
Business
licensing
and
permits
Corrup,on
Labor
regula,ons
Customs
and
trade
regula,ons
Access
to
finance
Tax
rates
Poli,cal
instability
Informal
sector
%
2009 2015
Percentage
of
firms
iden1fying
each
issue
as
the
biggest
obstacle
• Business licensing is one of many constraints that firms report as their
biggest obstacle.
• Reported ‘objective’ measures of business licensing constraints
negatively affect firm performance, amongst other factors.
• An 1% increase in the amount of time spent dealing with government regulations would lead to a
3.6% decrease in the average Indonesian firm’s TFP.

3. Despite efforts to improve, Indonesia’s licensing
maze remains complex and lacks transparency
• The regulatory environment for businesses is
complex, as illustrated by the number of types of
licenses, the levels of government and number of
agencies that issue licenses, and the amount of
regulatory change in recent years.
12,741 central
regulations issued
(2010-2015)
3,000 subnational
regulations refused
cancellation
561 subnational
license issuing
agencies
Indonesia lacks an up-to-date, comprehensive list of the licensing
and regulatory requirements with which firms need to comply.

4. Several government efforts related to business
licensing.
4
• Subnational one stop shops – an ongoing effort since 2005 by the
Ministry of Home Affairs.
• National and subnational one stop shops – national effort led by BKPM in
2014.
• Public Service Mall – combining civic and business registration, by
Ministry of State Apparatus.
• Ease of Doing Business reforms – some impact on business licensing,
focused on small and medium-sized firms, and on Jakarta and Surabaya.
• Perpres 91/2017 – to review the stock of business licenses and simplify
process through Online Single Submission System (OSS-S).
• Inpres 7/2017 – to minimize the ‘inflow’ of business regulations.
…do they result in more transparent and better
services for businesses?

5. How to improve licensing transparency and
simplicity: a mix of informational and transactional
services
5
• Transparency
• Reduced burden
• Reduce risk premium
Businesses
SMEs, large foreign and
domestic investors, companies
just starting up, those already
conducting operations
• More efficient services
• Basis for regulatory reforms
Government

6. Key success in implementing business licensing
informational services
National governments that have established good practice licensing inventories
have done so through:
1. Governance arrangements for populating the information for licensing and
ensuring it remains up-to-date,
2. Online informational services with a user-centric approach, and
3. An incremental and partnership approach to incorporating subnational
licensing (especially in large federal countries).
Countries have used approaches that suit their governance structures.

7. Canada’s bizpal.ca is AN excellent example of an
inventory that is relevant to INDONESIA
Bizpal.ca
Canada’s BizPaL is an excellent example of a licensing inventory in a large country
with authority delegated to the subnational level of government. Licenses are
included from the national, provincial, and municipal levels.
Strong project and
operational governance
model
User-centric online tool
Incremental partnership
approach with sub
national level
No supporting regulation
No systematic reform at
the national level
Strong governance, operational, and
partnership model; user-centric online
tool; similar government structures to
Indonesia
Lessons Learned

8. Conclusion
INSOLVENCY IN INDONESIA 2016 – OPPORTUNITIES FOR REFORM 8
- Business licensing is only a small part of factors impacting the
business environment in Indonesia. Still, transparency and simplicity
can be improved.
- There have been many initiatives by the government to improve
business licensing but they risk adding to complexity and uncertainty.
- There is an opportunity to improve business licensing
informational services to accompany current initiatives.
- Future initiative should focus on balancing the effort to reduce time and
cost of applying licenses and to increase transparency and certainty

9. Thank You

10. Annex:
Samples of Other Countries’ Practice
10

11. Example of information that can be collected in
the licensing inventory
• Name (title) and identification of the business license, including a unique code
• Justification of the business licensing requirement (the purpose)
• Reference to the governing legislation with chapter number and section, and if
possible the URL
• License period or validity (the period for which the license is valid)
• Application/license fee
• A complete list of requirements – documents and information required from the
business entity applying for a license, including dependencies on other regulatory
requirements
• Maximum processing time, in which the regulatory authority has to respond to the
application for the business activity
• Any form(s), if applicable
• Identification of agency – name of the licensing agency (the regulatory authority),
name of the department or division of the licensing agency, business hours, and
name and contact information of the person who can answer questions about the
license
• Contacts – name, address, telephone and fax numbers, and e-mails of the public
offices where necessary formalities can be submitted, as well as any other
information that allows the submission of consultations, documents and complaints.

12. Singapore’s LicenceOne: Best Practice, but
unique case (city-state)
license1.business.gov.sg
Singapore is a best practice case in identifying and centralizing its licenses which has evolved
for over 10 years.
Comprehensive list of
licenses
User-centric online tool
Central driven, strong
governance structure
Informational and
transactional
Continually enhanced
Unique case
Strong central government with a
simple structure seems to be required
to create such a comprehensive
solution.
Lessons Learned

13. USA small business administration: A Low Government
effort, with limited private sector benefits
sba.gov
The Small Business Administration at the federal level within USA provides links to
national agencies and to the licensing portals of state (subnational) governments.
Starting point for
businesses – and most
regulation is at the state
level
Low investment
No central service or
consistency across states
Involvement is not
regulated or governed
Not based on a
comprehensive inventory
No quality assurance
Low investment and lack of central
coordination leads to inconsistent and
incomplete solution.
Lessons Learned

14. SOME STATES IN THE US HAVE INVESTED IN A
LICENSING INVENTORY SERVICE WITH A USER-
CENTRIC APPROACH…

15. …WHILE OTHERS USE A GOVERNMENT-CENTRIC
APPROACH MAKING INFORMATION DIFFICULT TO
FIND

16. KENYA’s businesslicense.or.ke provides A strong user-
centric interface, but is no longer up to date
businesslicense.or.ke
Kenya’s online inventory was launched in 2009 following a comprehensive regulatory
reform effort and includes national and county level licenses.
User-centric interface
No supporting
regulation
Lack of ongoing
management
Online service does
not provide all licenses
Not kept up to date
Initially very good but quality of
information has since degraded due to
minimal support.
Lessons Learned

17. Canada’s bizpal.ca is AN excellent example of
inventory, very relevant to INDONESIA
Bizpal.ca
Canada’s BizPaL is an excellent example of a licensing inventory in a large country
with authority delegated to the subnational level of government. Licenses are
included from the national, provincial, and municipal levels.
Strong project and
operational governance
model
User-centric online tool
Incremental partnership
approach with sub
national level
No supporting regulation
No systematic reform at
the national level
Strong governance, operational, and
partnership model; user-centric online
tool; similar government structures to
Indonesia
Lessons Learned

18. BIZPAL’S GOVERNANCE AND OPERATIONAL MODEL KEEP THE
INVENTORY UP TO DATE: PEER PRESSURE & QC
18
Teams are
identified
based on
current
requirement
The National
BizPaL Office (fed
gov) has 3-4 full
time staff and acts
as the Secretariat,
in addition to an IT
team
National and
subnational
representation
at all levels of
governance
structure
Mainly federally
funded but
provinces are
also required to
invest financial
resources