16th Economic Policy Package: Single Submission System
Indonesian President Joko Widodo unveiled the 16th economic policy package on Thursday morning (31/08) at the Indonesia stock Exchange building in Jakarta. This latest package aims to create an integrated licensing system. It also deals with strict supervision for the transition from the manual licensing system to an online system.
Through a Presidential Regulation on the Acceleration of the Implementation of Business the central government aims to improve the standard of efficient, easy and integrated business licensing services without neglecting good governance. This should lead to an acceleration of the business licenses issuing process, and provide certainty to investors about the length (of time) and costs in the licensing process. Meanwhile, the new package also aims to utilize information technology through the application of a single permission system. Lastly, coordination and cooperation between various ministries and other government agencies, both on the local and central level, need to be improved.
Indonesian Coordinating Minister of Economic Affairs Darmin Nasution said the new package creates a single submission system for investors, implying they only have to go one place to obtain all required licenses. This is much-needed because in some sectors it can take up to five years to arrange all permits.
The Indonesian Chamber of Commerce and Industry (Kadin Indonesia) said it will oversee the implementation of the latest economic policy package, labelled "Acceleration of Entrepreneurship", up to the regions across Indonesia. Rosan Roeslani, Chairman of Kadin Indonesia, said a significant portion of domestic and foreign direct investment goes to the regions. Therefore, the key to more successful investments lies in the regions.
Previously, we reported on various occasions that weak coordination and cooperation between the center and regions is a major bottleneck that undermines the attractiveness of Indonesia's investment climate. Central government officials often complain that the regional authorities are not fully supporting central policies. This can be either because regional officials do not understand the central rules (this can be blamed on weak human resources on the regional government level) or because central policies (for example deregulation) reduces possibilities for regional officials to earn some additional money. Therefore, they are reluctant to implement central policies.
Roeslani emphasized that the harmonizing of central and regional regulations would significantly improve Indonesia's investment climate. Therefore, the 16th economic policy package is an important one. Kadin will closely monitor whether the regions are ready and willing to implement this package.
Indef economist Bhima Yudhistira also emphasized that stricter control in the regions is vital because if investment in the regions grows (on the back of the new policy package) but the human resources at the local government level remain weak, then it can cause various problems (and can lead to the withdrawal of investment).
Thus, Yudhistira says the central government needs to offer training and education in the regions in order to standardize the quality of services across all regions in the country. He also advises the government to inform investors about all required licenses and steps, so investors are also able to monitor developments when local officers are arranging permits for the investor.
Overall, Yudhistira regards the latest policy package as a breakthrough for improving the ease of investing and business in Indonesia. He believes that, provided actual implementation of the package goes smoothly, Indonesia could rise into the top 50 within the World Bank's Ease of Doing Business ranking in 2018. Meanwhile, Indonesia's competitiveness index could increase to the top 30 next year with a more efficient and business-friendly bureaucracy.
Economic Stimulus Packages of the Indonesian Government:
| Package | Unveiled | Main Points |
| 1st | 9 September 2015 |
• Boost industrial competitiveness through deregulation • Curtail red tape • Enhance law enforcement & business certainty |
| 2nd | 30 September 2015 |
• Interest rate tax cuts for exporters • Speed up investment licensing for investment in industrial estates • Relaxation import taxes on capital goods in industrial estates & aviation |
| 3rd | 7 October 2015 |
• Cut energy tariffs for labor-intensive industries |
| 4th | 15 October 2015 |
• Fixed formula to determine increases in labor wages • Soft micro loans for >30 small & medium, export-oriented, labor-intensive businesses |
| 5th | 22 October 2015 |
• Tax incentive for asset revaluation • Scrap double taxation on real estate investment trusts • Deregulation in Islamic banking |
| 6th | 5 November 2015 |
• Tax incentives for investment in special economic zones |
| 7th | 4 December 2015 |
• Waive income tax for workers in the nation's labor-intensive industries • Free leasehold certificates for street vendors operating in 34 state-owned designated areas |
| 8th | 21 December 2015 |
• Scrap income tax for 21 categories of airplane spare parts • Incentives for the development of oil refineries by the private sector • One-map policy to harmonize the utilization of land |
| 9th | 27 January 2016 |
• Single billing system for port services conducted by SOEs • Integrate National Single Window system with 'inaportnet' system • Mandatory use of Indonesian rupiah for payments related to transportation activities • Remove price difference between private commercial and state postal services |
| 10th | 11 February 2016 |
• Removing foreign ownership cap on 35 businesses • Protecting small & medium enterprises as well as cooperatives |
| 11th | 29 March 2016 |
• Lower tax rate on property acquired by local real estate investment trusts • Harmonization of customs checks at ports (to curtail dwell time) • Government subsidizes loans for export-oriented small & medium enterprises • Roadmap for the pharmaceutical industry |
| 12th | 28 April 2016 |
• Enhancing the ease of doing business in Indonesia by cutting procedures, permits and costs |
| 13th | 24 August 2016 |
• Deregulation for residential property projects for low-income families |
| 14th | 10 November 2016 |
• Creating a roadmap for the nation's e-commerce industry: - easing and widening access to funding - offer tax incentives - harmonize regulations and gradually develop a national payment gateway - promote e-commerce awareness campaigns and improve e-commerce education - accelerate the development of high-speed broadband network - improve the e-commerce logistics system |
| 15th | 15 June 2017 | • Improving Indonesia's logistics: - enhance the role of transportation insurance - reduce costs for logistic service providers - strengthen the Indonesia National Single Window (INSW) authority - reduce the number of prohibited and restricted goods |
| 16th | 31 August 2017 | • Single submission system: - integrate business licensing services - utilize information technology - enhance cooperation/coordination among government agencies on central and local level |