Urip Hudiono, Jakarta – In a bid to attract badly needed foreign investment, the government is aiming to drastically reduce the time needed for investors to obtain their necessary licenses, Coordinating Minister for the Economy Aburizal Bakrie said on Friday.
"If it usually takes 150 days, then we'll make it just 30 days," he said. "We're still working on the necessary regulations and coordinating with related agencies for its implementation, but we hope the results will be seen soon."
In a recent survey, the World Bank found that it took an average of 151 days for an investor to start a business in Indonesia – five times longer than in Malaysia and Thailand. This is seen as one of the factors discouraging new investment in the country.
Aburizal further said that his office was also planning to implement a time limit for the processing of an investor's license application.
"If over a certain period of time there isn't any answer from BKPM, then the application will be considered approved," he said, referring to the Investment Coordinating Board, which processes investment licenses at the central government level.
Aburizal said that to implement such a plan, the government would need to revamp the role of the BKPM to become a one-stop investment service center. "I expect the BKPM to truly become an investment promotion agency as well as a one-stop investment service center, and not just a one-roof center that it is now," he said.
Aburizal explained that under the one-stop service concept, all that the investors would have to do is send a single application to the BKPM, and the agency would later be in charge of processing it with related offices including the investment authorities at the provincial level.
This would be different from the existing one-roof system, Aburizal said, where investors still have to go through a number of cumbersome, bureaucratic steps with related agencies, although they are all coordinated by the BKPM.
The previous government of president Megawati Soekarnoputri set up an interministerial task force – the National Export and Investment Promotion Team – last year to devise formulas to boost exports and investments to the country. Headed by the coordinating minister for the economy, one of its programs was to strengthen BKPM's role as a one-roof investment promotion agency.
Indonesia badly needs more investment if it wants to generate a higher and more sustainable economic growth of at least 6 percent, to accommodate its workforce expansion of some 2.5 million people each year.
Overseas investors, however, have steered clear of the country over the past years because of its adverse investment climate, with security concerns, notorious red tape, labor issues and uncertainty over the implementation of regional autonomy as the main reasons deterring investors.
The Indonesian Chamber of Commerce has also noted the high costs investors have to bear to acquire licenses, besides the long time it takes to process them.
Investment currently accounts for only 10 percent of Indonesia's gross domestic product. With exports still weak as well, the country has had to rely mainly on domestic consumption for its economic growth, at a mere 4 percent during the past couple of years.
The latest data from the BKPM shows that although the number of foreign-funded projects in the country increased by 10 percent, FDI approvals declined by 11 percent.
As of October, foreign-funded projects increased to 969 from 876 during the same period last year, while FDI approvals fell to US$8.85 billion from $9.94 billion.