Jakarta – Many regency and municipality administrations have done nothing to improve the investment climate in their regions, a survey says.
The survey, conducted by the Regional Autonomy Monitoring Committee (KPPOD), a body established by Kadin (Indonesian Chamber of Commerce and Industry), shows that 31 percent of the 2,000 ordinances reviewed do nothing to improve the investment climate, with most, in fact, making things worse by further burdening investors.
The 2,000 ordinances are only a small portion of the 7,000 ordinances issued by regency and city administrations since the enactment of the Local Autonomy Law in 2001, which gave local administrations more power to manage their own economic affairs.
"Some ordinances have even resulted in the double taxation of investors," said executive director Agung Pambudhi.
Ordinances introduced in Tangerang and Serang, both in Banten, for example, require companies to provide full-protection insurance for employees both during and outside work hours, he said.
He commented that while the provision of insurance cover during work hours was common, the requirement to provide such cover outside work hours was highly unusual, and small enterprises could not afford it.
Agung said that such burdensome ordinances would have to be revised if Indonesia wanted to attract more investment.
He also said that the long and costly bureaucratic procedures for obtaining business licenses needed to be replaced with one-stop services in every locality in the country.
According to Minister of Home Affairs Decree No. 24/2006, every regency or city was supposed to have established a one-stop service within one year of the issuance of the regulation back in July 2006 so as to simplify the bureaucracy involved in processing business licenses.
Agung said that this year, some 16 months after the decree had been issued, a total of only 180 regions had established one-stop services out of the country's 460 regions.
"The failure of local administrations to provide one-stop services forces investors to go from one agency to another before they can get their licenses, and this means they have to pay more," he said.
Unfortunately, there were no sanctions that could be imposed on local governments that had not complied with the decree, despite the urgent need to improve the country's investment climate, Agung said.
Although many regions were reluctant to establish one-stop services, some progressive regions had established such services long before the regulation was issued. Kendari municipality in Southeast Sulawesi, for example, set up a one-stop service back in 2001.
"With this combined service, it now takes between just two and 12 days to get a business permit from the Kendari municipal administration," said the head of the city's business licensing office, Ferial Bunggasi. (ind)