Ina Parlina and Tassia Sipahutar, Jakarta – In another attempt to ease doing business in the country, the government is looking to trim more of the environmental and building permits currently required for business premises and industrial zones.
A limited Cabinet meeting on Tuesday decided to simplify various licenses, including those related to Environmental Impact Analysis (Amdal), and mulled scrapping principle permits for small and medium businesses and disturbance ordinance.
President Joko "Jokowi" Widodo reiterated in the meeting his earlier call to improve the country's ranking in the World Bank's ease of doing business survey and review whether policies are effective.
He said Indonesia should continue to seek breakthroughs in improving its business climate. "The President is merely irritated by the fact that there are so many [business] licenses," Investment Coordinating Board (BKPM) chief Franky Sibarani said after the meeting.
Indonesia currently ranks 109th on the World Bank's list, only one notch higher than last year's position. Singapore continues to top the list, while Malaysia sits in 18th position. The President aims for Indonesia to leap to 40th position this year.
Franky said various double permits – which are set based on two different regulations – would be streamlined, like the multiple Amdal permits and building permits required for companies.
As an example, he cited that at present there were two requirements to get a building permit – one related to spatial design conformity and location permit, and the other that a company is required to attain registration certificates (TDP) and business trading licenses (SIUP).
In terms of the building location permits, Franky said Agrarian and Spatial Planning Minister Ferry Baldan had agreed to revoke several regulations.
"The process for building permit issuance related to spatial design conformity and location will only refer to one regulation from the Public Works and Public Housing Ministry," Franky said. Other licenses, including the location permit and business location permit, will be scrapped.
Environment and Forestry Minister Siti Nurbaya Bakar said the government would eliminate Amdal requirements for industrial zone tenants. "At the moment, Amdal permits are required for both tenants and owners of industrial zones. We want to see only one Amdal, which is the one submitted by the owner."
Tenants will only be required to submit a detailed management and monitoring plan to the owner. By scrapping the Amdal requirement for tenants, the government will revert to an earlier regime from 2009, when there was only one Amdal requirement in place.
In addition to the environmental permit, the government is also mulling abolishing the disturbance ordinance, although further study is needed as it could potentially reduce locally derived income (PAD). Disturbance ordinance is currently issued by local administrations and regulated by the Regional Tax and Retribution Law.
The government is expected to issue a regulation that includes such changes, which would be made mandatory for local administrations. Home Minister Tjahjo Kumolo said his office would annul bylaws that would eventually only provide legal hurdles for businesses.