2012/SOM1/EC/WKSP/007Session 3Starting a Business: Follow Up of the DiagnosticStudySubmitted by: IndonesiaAPEC Ease of Doing Business 2012Stocktake WorkshopMoscow, Russia12-13 February 2012

2/16/2012Starting a Business:Follow up of the Diagnostic StudyHuda BahweresAssistant to the Deputyfor Regional Economic CooperationCoordinating Ministry for Economic Affairs – IndonesiaAPEC Ease of Doing Business 2012 Stocktake WorkshopFebruary 1212--13, 2012Moscow, RussiaEase of Doing Business Action Plan Activities inIndonesia – Starting a Business Phase One ‐ Workshop on Reducing Start‐up andp 2010.Establishment Time off Business, Japan Phase Two ‐ Visit by experts, Mr. John Davis(USA) dan Mr. Justin Hygate (NZ) to Indonesia, on14‐23 July 2010, to collect data and informationfor a diagnostic study. A Diagnostic StStudyd “Making it Easier to Start aBusiness in Indonesia” was launched in August2010.1

2/16/2012Ease of Doing Business Action Plan Activities inIndonesia – Starting a Business. (2) List of Related Officials Visited by Experts :– Deputy for International Economic Cooperation andFinancing, Coordinating Ministries for Economies.– Director General for Legal Administrative Affairs,Ministry of Human Rights– Deputy for Governance and Development Supervisory,Vice President’s Office– Secretary to the Legal Administrative Affairs,Affairs Ministryof Human Rights– Head of Investment and Promotion Board, Jakarta– Head of Copperative, SMES and Trade Office, JakartaProvinceStarting a Business in Indonesia:Ranking, Numbers of Procedures, Days and Cost, 20062006‐20120122DBSB RankingNumbers ofProceduresDaysCost (% pci)Min. Capital(% 7201115694722.353.1201215584517.946.6(Based on the IFC/WB‐ Doing Business Reports 2006‐2012)4 42

2/16/2012Government’s Commitment in Improving Starting a BusinessBased on the Joint Regulation between Minister of Home Affairs, Minister of Trade, Minister of Manpower &Transmigration and Minister of Law & Human Rights and the Chairman of BKPM, there is a commitment toimprove the starting a business.No.Procedure1 Obtaining the standard form of deed ofestablishment of a company and obtaining nameclearance from the Ministry of Law and Human Rights2 Preparation and signing of the Deed of Establishmentof the Company before a notary3 Apply to the Ministry of Law and Human Rights forapproval of the deed of establishment andannouncement in the Supplement to the StateGazette of the Republic of Indonesia4 Obtain a taxpayer registration number (NPWP) and aVAT collector number (NPPKP)5 Apply for the permanent business trading license(Surat Izin Usaha Perdagangan, SIUP)6 Registration with the Company Register (Departmentof Trade) and obtain a registration certificate (TDP)7 Registration with the Ministry of Manpower andTransmigration8 Apply for the Workers Social Security Program (PT.Jamsostek Program)TotalTime toCost to completecomplete2 daysIDR. 200.000,‐ (PNBP)3 daysIDR. 2.526.816,‐5 daysTotal IDR 1.550.000 consist of Rp1,000,000 for deeds approval 550,000 for Publication in theState Gazette (TBNRI)1 ‐ 2 days no charge3 daysno charge for new SIUP3 daysno charge for new TDP2 daysno charge2 daysno charge17 daysIDR. 4.276. 816,‐Remarks1. Procedures 1 –3 can be donein 10 days.2. Procedures 5and 6 can bedone inparallel/simultaneously.3. Procedures 7and 8 can bedone inparallel/simultaneously.Progress on Starting a Business to 2012Procedures,, Fees and TimeProcedures The process of obtaining clearance for the company’s name viag Entityy Administration Systemy((SABH)) and the pprocessthe Legalof preparing the deed of establishment of Limited LiabilityCompanies via notaries could be done simultaneously ; timereduced from 7 days (total) to 4 days. Reduced from 12 Procedures in 2008 to 8 procedures in 2012 Apply for Busines License for Trade (SIUP) and CompanyRegistrationgCertificate ((TDP)) can be done simultaneouslyy inOne Stop Service for 15 days. Notarize company documents before the notary public has beenreduced from 7 days in 2012 to 4 days in 2012 DB Report. Reducing cost to almost 12 percent from 5,442 million rupiahs in2010 to 4,807 million rupiahs in 2012.63

2/16/2012The Change in Starting a Business Procedures in Indonesiafrom 20102010 & 201201222010Steps123*45678ProceduresObtain the standard form of the company deed ; arrange for anotary electronically; obtain clearance for the Indonesiancompany's name at the Ministry of Law and Human RightsNotarize company documents before the notary publicObtain a taxpayer registration number (NPWP) and a VATcollector number (NPPKP)Pay the State Treasury for the non‐tax state revenue (PNBP) feesfor legal services at a bankApply to the Ministry of Law and Human Rights for approval of thedeed of establishmentRegister with the Agency authorized (DINAS Trade) and obtain aregistration certificate (TDP)Apply for the permanent business trading (SIUP)Apply at the One Stop Service for the permanent business tradinglicense (Surat Izin Usaha Perdagangan, SIUP) and the companyregistration certificate (Tanda Daftar Perusahaan/TDPRegister with the Ministry of Manpower (simultaneous withprocedure 10)Apply for the Workers Social Security Program (JamsostekProgram) ‐ simultaneous with procedure 10)Total days and cost2012DaysCost(Rp. 000)DaysCost(Rp. ame check) IDR 1,580non‐tax state revenue(PNBP) fees for legalservices141,5807‐155005250Eli iagnostic Study Experiments Usingthe EoDB SimulatorEase of DoingBusinessEase of Starting aBusiness2010 Results122161ExperimentEi1:1 EliminateEli itheh minimumi illegall capitali l requirement,ino other change115119Experiment 2: Achieve Joint Regulation from 4 Ministers goals of8 procedures, 17 days for starting a business, but no change inminimum legal capital120131Experiment 3: Achieve Joint Regulation from 4 Ministers goals of8 procedures, 17 days for starting a business, and eliminate therequirement for minimum legal capital11371Experiment 4: Implement recommendation of this diagnosticreport to reduce procedures to 2 with 13 days required to completethem, with no change to minimum legal capital11387Experiment 5: Implement recommendation of this diagnosticreport to reduce procedures to 2 with 13 days required to completethem with elimination of the requirement for minimum legal capital10028Experimenta simulation result only shows how having different scores on the subindicatorswould affect the 2010 rankings if they were redone. Thus, since many economiesbesides Indonesia are trying to improve their rankings, any improvement shown inthe experiments probably overstates the improvement in rankings that can beexpected from any particular change4

2/16/2012RECOMENDATIONS1. Reduce and eliminate some of the obstacles to change someregulations:- Revise Law No. 40 of 2007 on Limited Liability Companies.Propose a reduction or abolished minimum authorized capitalof 50 million dollars to be no minimum capital base.- Revise the implementing Regulation relating to the CompanyLaw.- Revise some regulations in the Ease of Collateral Registrationenrollment in 2012-2013.2012-2013- Revise the Jakarta Provincial Government Rule No. 1/2006concerning Restribution for SIUP and TDP so it will correspondto Minister of Trade Regulation regarding abolishing fee (zerofee charge) for new SIUP and TDP for all kinds of business.RECOMENDATIONS2 Implement the Joint Regulation of Four2.Ministers and Head of Investment Board.3. Implement online-access to find acompany name and to register a newbusiness.4 Delegate/Authorize the One-Stop do all license or non-license services.5. Workers registration can be postponeduntil the business is established.5

2/16/2012Summary of RecommendationRecommendationss1. Publish a Guidebook to Starting a Business inJakarta.Jakarta2. Expand the Use of IT in Registering New Businesses.3. Review Minimum Legal Capital.4. Reforms with Direct Affect on Start a Businessindicator.5 Combine SIUP and TDP into a Single Document.5.Document6. Consolidate Four Initial Steps at Min. of Law andHR).7. Consolidate Labor and Social Insurance Registrationwith SIUP-TDP Issuance at the OSS. Follow up of the recommendations. Implementation of the policy reforms. Coordination - among governmentagencies, notaries, local governmentsand private sectors. Monitoring the reformsreforms. Evaluating the outcomes of the reforms. Communicating with IFC on reformsand the improvement.126

2/16/2012 High-level Political Commitment; Reformsneed to be enforced by high-levels.high-levels No Institutional framework; to reform, monitorand supervise the outcome of reforms. The Status-Quo Perception; certain agenciesstill have the intention to keep the process as Lack of Awareness; on the urgency to reform.13 No comprehensive-approach and targetedoutcomes of the reforms.reforms Reforms mostly are conducted partially andrelied on the respective governmentagencies. No team or task-force set-up to work on theimplementation, monitoring and supervisingof reforms. No specific action plan on doing business.7

2/16/2012 Implementation of the recommendations, monitoringand supervising the reforms and the outcomes. Developing the action-plan to improve starting abusiness. Improving the IT systems related to the process. Preparing the a guideline book for starting a business. Provide training on the methodology of the IFC/WBSurvey.Survey Preparing effective communication with IFC-WB inproviding information of the reforms and theimprovement. Develop outreach activities to help generate buy-in andsupport from domestic stakeholders.In Conclusion The implementation of the recommendations toimprovepStartingg a Business still has a lot ofchallenges. Political will, institutional framework andauthority to lead the reforms are among theprimary challenges. Still,Still having the study and its recommendationsis very helpful and is being utilized for pushingrelated agencies to move forward.8

2/16/2012Thank you9

5. Combine SIUP and TDP into a Single DocumentCombine SIUP and TDP into a Single Document. 6. Consolidate Four Initial Steps at Min. of Law and HR). 7. Consolidate Labor and Social Insurance Registration with SIUP-TDP Issuance at the OSS. Follow up of the recommendations. Implementati