"This is a big and important package with a wide scope," Chief Economic Minister Darmin Nasution said.
Jakarta (ANTARA News) - After unveiling its 11th economic policy package late last month, the government on Thursday announced again the 12th tranche of the package aiming at increasing the ease of doing business in Indonesia.

"This is a big and important package with a wide scope," Chief Economic Minister Darmin Nasution said at the State Palace following the announcement of the new policy by President Joko Widodo(Jokowi) in Jakarta on Thursday.

President Jokowi announced the twelfth tranche of the economic policy package regarding the ease of starting new small and medium business (SMEs) undertakings.

The policy package is part of the nine-point development program (Nawacita), which mandates the country to become a self-reliant and competitive nation, the president said.

Through this policy package, the government will make every effort to simplify procedures, cut fees and shorten the settlement of several aspects, including the ease of starting new businesses, application for building construction permits, property registration, electricity donation, and access banking loans, he stated.

This policy package may have a more significant impact and improve the ease of doing business, he said.

President Joko Widodo (Jokowi) has stressed on several occasions in limited cabinet meetings the importance of increasing the ease of doing business (EODB) up to 40 percent in Indonesia.

To that end, a number of efforts has been made in terms of regulations, licensing procedures and cost so that the EODB, particularly for micro small and middle-scale enterprises (SMEs), increases.

To follow up the Presidents order, Chief Economic Minister Darmin Nasution formed a special team and coordinated with the Capital Investment Coordinating Board (BKPM) and a number of relevant ministries and state institutions.

The steps for improvement are then formulated in the 12th economic policy package which was announced by President Jokowi at the State Palace Thursday.

The World Bank has determined 10 indicators of EODB, namely starting business, dealing with construction permit, paying taxes, and getting credit, apart from enforcing a contract, getting electricity, trading across borders, resolving insolvency and protecting minority investors.

Of the 10 indicators, the number of procedures which was previously 94, was streamlined into 49. The number of the needed permits which was previously nine was reduced to six only.

Previously, the length of time needed to pass through these processes was 1,566 days, now it has been streamlined to 132 days only. The time and the cost for resolving the insolvency indicator has not yet been calculated because there is not yet a practice specified in the newly issued regulation.

Although the World Banks survey is limited to the Jakarta and Surabaya (East Java) City only, the government wants that this policy would be implemented nationally.

Through this policy package, the government has revised all existing indicators, According to President Jokowi.

Under the old regulation, anybody wishing to start a new business must pass through 13 procedures, which took them 47 days and cost them Rp6.8 to 7.8 million, he said.

The permits to start a new business undertaking include commercial permit, company registration certificate, deed of incorporation, business site permit and a nuance permit.

Through this deregulation, they will only pass through seven procedures, which will take them 10 days and cost Rp2.7 million. To start a small and medium business, they are only required to obtain a commercial permit and company registration certificate, which is to be issued altogether, as well as an article of incorporation.

Other easiness given to SMEs is the authorized capital for the establishment of a company. Based on Law No. 40/2007 on Limited Liability Company, the minimal capital for establishing a limited liability firm is Rp50 million.

With the issuance of Government Regulation No. 7/2016, the authorized capital needed for a limited liability company remains at Rp50 million but for SMEs, the basic capital will be decided based on the agreement of the companys founders. The agreement should be stated in the article of corporation.

Through deregulation, the government has also reduced the procedures for licensing building construction to 14 procedures for 52 days at a cost of Rp70 million from 17 procedures for 210 days at a cost of Rp86 million.

All regional governments in the country will implement this policy package, he said.

Since September last year, the government has issued 12 economic policy packages to facilitate businesses and investment in Indonesia.

The policy packages are also aimed at spurring economic development in regions across the country.

The 12th economic policy package covers a micro-credit program for export-oriented businesses, real estate investment fund and development of pharmaceutical industry and health instrument industry.

According to Edy Putra Irawady, a deputy commercial and industry coordinator in the Chief Economic Ministers Office, the government wanted to carry out structural reforms.

He said permits are either relaxed or eliminated altogether, based on existing standards and the process will be supervised and audited so that it is really effective in driving the economy.(*)

Reporter: Andi Abdussalam
Editor: Heru Purwanto
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