Indonesia president: Speed up investment approvals

Indonesia president: Speed up investment approvals

A worker is seen assembling a Mitsubishi Pajero at the Mitsubishi car factory in Bekasi, West Java province, Indonesia April 25, 2017. (Reuters file photo)
A worker is seen assembling a Mitsubishi Pajero at the Mitsubishi car factory in Bekasi, West Java province, Indonesia April 25, 2017. (Reuters file photo)

JAKARTA -- Indonesia's government said on Thursday it aims to slash the time it takes to process investment applications, which can take up to five years in some sectors, to as little as one day as it tries to boost growth in Southeast Asia's largest economy.

"In 2018, we want to be on par with the most advanced countries in license processing," coordinating minister of economics Darmin Nasution said.

President Joko Widodo, who unveiled measures in a new package of government policies, attacked a lack of progress in tackling red tape to improve the investment climate.

"There's so much we have to improve, so much to fix," Mr Widodo said in a speech at the Indonesia Stock Exchange.

The new measures include setting up task forces in ministries and regional governments, and ensuring that officials share data so no investment applications are held up.

Indonesia's economy has been growing at around 5% in the last few years, but policymakers have been frustrated by an inability to speed up the pace, partly due to sluggish consumption and fairly tepid investment.

Foreign direct investment (FDI) into Indonesia represented less than 2% of all global investment on average in 2012-2016, government data showed, and over that period less than 30% of foreign commitments were eventually realised.

Incoming FDI declined in 2015 and 2016, and is rebounding now, Bank Indonesia's balance of payments data shows. The central bank recorded a nearly 40% increase in the first half of 2017, to $8.82 billion.

Past unsuccessful launch

The goal of the new measures is to create a single submission system for investors so they only have to go one place to get all required licences, said coordinating minister of economics Darmin Nasution.

In January 2015, within months of becoming president, Mr Widodo launched a similar move, setting up what he called "one-stop service" for investment licensing at the Indonesia Investment Coordinating Board (BKPM).

The former furniture exporter has also previously instructed ministers to cut the number of business permits in all sectors.

Despite that, Mr Nasution said it still took up to five years to start a business in some sectors, adding that BKPM could only work on nine out of about 150 permits needed.

"We now know that we can't just tweak the rules," Mr Nasution said. "We have to change things from the basic idea that the licensor is not a ruler, he is there to serve."

This year, Mr Widodo's administration aims to cut the time needed to get a full investment licence from three-five years to a matter of months, and then try a new method of processing from January to cut the time to just a day.

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