061113 - Business Licensing and OSS in by qtq21276

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									One Stop Shops in Indonesia
           Dr. Liesbet Steer
     Director, Economic Programs

           November 2006
Investors’ challenges
                                     Bantu aku
                                      dong!!
        Burdensome licensing
              process                   Low quality of
                                        public services

          Corrupt government        No accountability
               officials              for government
                                        performance
                      Few opportunities for
                       public consultation
             Regulations that hurtNo voice for small
              small businesses business owners
                                                                    Improved Business




                          Building Capacity & Pressure for Reform
            One Stop
                                                                         Climate
             Shops
                                                                        Improved
                                                                      Regulatory and
            Regulatory                                                  Licensing
             Impact                                                      Process
 Develop
Capacity    Assessment
   to                                                                                    Increased
                                                                        Increased        Economic
Support
                                                                         Business         Activity
Process:     Policy                                                   Participation in
Resource    Advocacy                                                       Policy
Centres


                                                                       Increased LG
           Information                                                Responsiveness
           Generation &                                                 & Desire to
             Dialogue                                                     Reform
Business Licensing in Indonesia

        Broad Framework
Starting a Business
                                                        Notary and
                  Company formation
                                                          National
                   and legalization
                                                        government



                   Physical permits:
               construction, location, and
                   nuisance permits




                                                          governments
Subdistrict




                                                             Local
                    Sectoral licenses:
Village        trading or industrial license
Neighborhood


                  Business registration




                                                          National,
                  Technical licenses:
                                                        local govts,
               product- or activity-specific
                                                          business
                        licenses                        associations


                  Licensing process

                  Issuing government or other parties
Legal framework – some facts
   Trading license:
                           National reg.   Local reg.
    Time (days)            Max 5           1-15
    Cost (Rp)              0 - 300,000     0 - 1,000,000
    Required Documentation 6               2-10


   Local government regulations:
   • 2000: 2-3 per year
   • 2002: 16 per year, 90% licenses and charges
Institutions Issuing Licenses


                                             16%




                                       78%




                              OSS Center      Local Gov’t Agencies
                              Bupati          Others

Source: KPPOD Survey (2005)
Business Perceptions
  Official fees:
  • Between USD 20-110 for main business licenses
  • Overall official cost insignificant:
       Local taxes & charges only 0.5% of GDP (national)
       Licensing revenue in total less than 1% (17 districts)
  Time:
  • DB: 97 days to register (incl. 29 days for two
      licenses)
  • TAF: up to 80 days for 5 main licenses
  Required documents: district and sub-district
  Illegal charges: 40-60 percent of taxes & charges
                             Use of Intermediaries


                     13%           6%


                                               33%   Commercials agents
                                                     Individuals
                                                     Local government staff
                                                     Other

           48%



TAF, Baseline Survey, 2006
Business Licensing Reform:
     One Stop Shops
   Licensing Process Without One Stop




                     Econ Dept       City Planning              Industry & Trade        Other Depts




                                                                Industry Permit
                   Nuisance Permit                                                  Industry specific: e.g.
                                     Building Permit             Trade Permit
                   Location Permit                                                   tourism, food permit
                                                               Bussn Registration




Licensing Process With One Stop



                                                ONE STOP SERVICE




                                                   Nuisance Permit
                                                   Location Permit
                                                   Building Permit
                                                   Industry Permit
                                                    Trade Permit
                                                Bussiness Registration
                                                  Industry Specifics
OSS Technical Assistance Strategy

                     ASSESSMENT                           OSS training for Local Partner




                                           Policy, Regulation and
                 DESIGN OF LICENSING        Institutional Analysis
                      REFORM                              Series of meetings on Problem
                                                              - Solution - Determine
                                                                     Strategy
MEDIA CAMPAIGN




                 POLITICAL COMMITMENT
                                        Local decrees on OSS
                        BUILDING


                  IMPLEMENTATION of
                                                             Trainings, Comparative Study
                       REFORM


                    LAUNCHING and       Brochure, Information
                    SOCIALIZATION              Board




                  INTRODUCTION to IT
     OSS Impact : Reduction in Time (Days)

Business registration


       Trading permit


     Industrial permit

   Nuisance/location
        permit

                         0             10   20      30       40    50   60

                                            Before OSS After OSS
 Source: TAF – OSS Evaluation (2005)
OSS Impact : Pasuruan Case
                                            Before        After

Authority                               front office   approval

Documents for key licenses                       48         25

% reduction in # documents                                48%
Official time to process key licenses            55         47

% reduction in official time                              15%
Public information available                     no        yes
Complaint mechanism                              no        yes
IT system                                        no        yes
Lesson Learned
  Political support needed from executive & legislative
  Full authority for OSS is hard to achieve
  Local government has to own the program, local
  partners assist
  Local partners need deep understanding of technical
  issues
  OSS needs to be complemented with:
  • Broader regulatory reform at local and national
     level advocacy
  • Streamlining of procedures at sub-district level
Thank You

             The Asia Foundation
             Jl. Adityawarman 40
              Jakarta, Indonesia
              +62-21-727 88424
            www.asiafoundation.org



              With Support From:
         Average Time for Business Licenses (Days)

     Business registration


            Trading permit


          Industrial permit

 Nuisance/location permit


      Construction permit


                              0   5   10   15   20   25   30   35

TAF, Baseline Survey, 2006
   OSS Impact : Reduction in Cost (Rp 1000)

 Business registration


         Trading permit


        Industrial permit

     Nuisance/location
          permit

                            0         50   100    150    200     250       300   350   400

                                                 Before OSS    After OSS
Source: TAF – OSS Evaluation (2005)

								
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