Indonesia Vows Three-Hour Permit for Companies in Business Parks

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Desember 8, 2015

Indonesia vowed to complete permit procedures in three hours for companies setting up in industrial estates, down from more than a year currently, under a second round of economic measures aimed at reversing slowing growth.

The fast-track process would be applicable to companies hiring more than 1,000 people or investing at least 100 billion rupiah ($6.8 million), Franky Sibarani, chairman of Indonesia’s Investment Coordinating Board, told reporters on Tuesday in Jakarta. Other measures included tax incentives to encourage exporters to keep proceeds onshore and a reversal of earlier restrictions on tire imports.

The policies are the latest in a series aimed at attracting investment to prop up an economy hit by a collapse in commodity prices and growing at its slowest pace since 2009. So far the moves have not turned around sentiment among investors, with the rupiah having fallen 16 percent this year to be Asia’s second-worst performing currency.

 “We need to take concrete steps that can be directly felt by the business community,” President Joko Widodo told cabinet ministers meeting at the state palace to discuss the measures. He said the length of time it took to start a business was “embarrassing.”

Widodo, known as Jokowi, brought in new economy and trade ministers in August, seeking to reboot a first year in office characterized by policy U-turns and slow progress on infrastructure. On Sept. 9, he announced a first package of measures including a pledge to revise around 100 regulations seen as detrimental to doing business, as well as plans to speed up stalled government spending.

‘Narrative of Reform’

For the measures to be effective, they must be accompanied by a winding back of trade barriers and new policies to genuinely welcome foreign investment, said Hal Hill, professor of Southeast Asian economies at the Australian National University.

“There has to be a broader narrative of Indonesia needing to reform, and I don’t see it happening it yet,” Hill said. “You have to win the public debate. There is no evidence that Jokowi” or the key economic ministers are doing that, he said.


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