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Job Creation Law said to adopt 'trust but verify' approach in business permits

Jakarta Globe - May 27, 2024

Jakarta – The Job Creation Law adopts a so-called "trust but verify" approach when it comes to the issuance of business permits, according to the policy's task force.

Edy Priyono, the head of the task force's monitoring unit, said that easier issuance of business permits is key to spurring Indonesian economic growth as its way out of the middle-income trap by 2036. A lack of domestic and foreign investments can prevent a developing country from growing its economy. Bureaucratic red tapes also rise as the biggest challenge for Indonesia in getting investors into the country. This prompted the government to make reforms to the Job Creation Law.

"The Job Creation Law has many clusters. One of the most significant changes [to the existing policies] was related to the ease-of-doing-business cluster. With the Job Creation Law, you only need to fulfill the registration for a business permit. Once you have met all the registration requirements, you will certainly get that permit," Edy told a recent meeting with West Java government officials.

Even so, the government still needs to keep an eye on the permits that they issue, including by verifying the facts on the ground; hence, the "trust but verify" approach in the Job Creation Law, according to Edy. He added: "Easier permits do not mean weakened supervision. There are a couple of times when the Job Creation Law task force found cases of businesses falsifying the status of how risky their businesses are. For instance, a business that should have been classified as high-risk claimed to be low-risk."

He then called for better coordination between the central and sub-national governments with the task force acting as an intermediary to identify any problems that may arise on the ground.

"After we identify the problem, the task force will then act on those complaints, whether the regulations need to be revised or if we need to discuss it further with the relevant ministries," Edy said.

Sandria, an official at the Investment Ministry, said that keeping an eye on the sub-national governments was part of this "trust but verify" approach. Sandria added: "It starts from [monitoring the] planning, execution, results, and follow-ups. We need to regularly monitor it as part of the 'trust and verify' approach."

The ministry is also actively coordinating with the local investment agencies when it comes to business permits. Arinal, a representative from West Java's investment body, said that there were 1,582 projects monitored through on-site inspections.

"All supervision in West Java has followed the procedures at the Investment Ministry. We have included all provisions related to the supervisory authority in the Online Single Submission Risk-Based Approach [OSS RBA] system," Arinal said.

However, everyone needs to be on the same page regarding the supervision policies to avoid any overlapping monitoring, according to Arinal.

Source: https://jakartaglobe.id/special-updates/job-creation-law-said-to-adopt-trust-but-verify-approach-in-business-permit