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Indonesia Aims to Revamp Business Licensing Framework with Risk-Based Approach
Simplifying and Streamlining Business Licensing Processes
The Indonesian government is set to accelerate the reduction of ex-ante licenses towards an ex-post compliance (risk-based approach) to simplify and streamline business licensing processes. This move aims to address obstacles that hinder the adjustment between sectors, including inspection risks and mental barriers for start-ups.
Risk-Based Approach: A Three-Step Process
The Risk-Based Approach (RBA) involves a three-step process:
- Risk Analysis: Identify potential risks associated with each business activity
- Integrated Risk Assessment: Assess the level of risk based on factors such as industry, size, and location
- Inspection Based on Risk Levels: Conduct inspections based on the assessed risk levels
Benefits for Government and Businesses
The RBA is expected to benefit both government and businesses. For government, it will help use resources more effectively and efficiently by focusing on high-risk activities. For businesses, it will reduce compliance costs, allow for faster start-ups, and increase competitiveness.
Online Single Submission (OSS) Platform
Under the new system, businesses will be required to register and obtain licenses online through the Online Single Submission (OSS) platform. The OSS will provide a one-stop-shop for information, integrated license approval, and integrated inspection.
Accelerating Business Environment Development
The government aims to establish a regulatory framework that accelerates the development of a more adaptable and sustainable business environment, capable of responding to shocks such as climate change. The COVID-19 pandemic has highlighted the need for rapid response and adaptability, and the reform efforts will focus on building resilience and creating an enabling environment for businesses to thrive.
Indonesia’s Business Environment Reform Efforts
The RBA is part of Indonesia’s efforts to improve its business environment and attract foreign investment. The country aims to become one of the top 10 most competitive economies in the world by 2030.
KEY POINTS:
- Indonesia to adopt risk-based approach to simplify business licensing processes
- Ex-ante licenses to be reduced towards ex-post compliance
- Licenses categorized into low-risk, medium-risk, and high-risk activities
- Online Single Submission (OSS) platform to provide one-stop-shop for information, integrated license approval, and integrated inspection
- Aim is to improve regulatory efficiency, reduce compliance costs, and increase entrepreneurship
- Reform efforts focus on building resilience and creating an enabling environment for businesses to thrive
CONTACT:
Lestari Indah Senior Advisor for Productivity and Economic Competitiveness Development Coordinating Ministry for Economic Affairs Republic of Indonesia Email: lestari.indah@kemendag.go.id Phone: +62 21 3483 1234