The Indonesian Government is attracting foreign investment in infrastructure to support equitable development by simplifying the bureaucratic process for business licensing through Online Single Submission (OSS). However, from the OSS introduction in 2018, it has not yet transformed Indonesia’s investment climate. This paper consists of a normative legal study which uses a statutory, conceptual, and comparative approach with Canada and New Zealand to identify the OSS policy disharmony that negatively impacts the investment climate in the Indonesian infrastructure. The results showed a need to reconstruct systems and policies based on the Government Regulation of the Republic of Indonesia Number 24 of 2018 concerning Online Integrated Business Licensing Services and the Law of the Republic of Indonesia Number 11 of 2020 concerning Job Creation to accelerate and increase investment in the era of the fourth industrial revolution.
OSS aims to increase Indonesia’s EoDB index by facilitating and attracting foreign investors, especially in infrastructure. Nevertheless, since the publication of the OSS in 2018, Indonesia’s EoDB index has not increased optimally. There are three main issues related to the OSS system, including (1) Overlaps between the Investment Law, the Local Government Law, and the OSS system, (2) Derogation of Local Governments’ regional autonomy for business licensing matters, (3) Violation of the precautionary principle arising from the leniency in business licensing, namely through the issuance of business license with commitments.
The OSS system and its regulations (PP OSS) normatively contradict the Investment Law and Local Government Law. The centralization of authority to administer licensing to the OSS Institution derogated regional autonomy. Consequently, each region is obliged to integrate itself into the OSS Institution at the central level. The new mechanism for issuing fdi business licenses in Indonesia permits investors to immediately initiate business activities, including commissioning without fulfilling environmental feasibility. This new mechanism in the OSS bureaucracy injures the precautionary principle to allow for a smoother foreign investment in infrastructure.
Harmonizing OSS through the Job Creation Law would juridically eliminate the pp OSS disharmony and minimize the negative discourse on infrastructure investment in Indonesia. However, the OSS in the Job Creation Law needs to be reconstructed. First, it should be the main entrance or one-stop service that only hosts electronic PTSP platforms in each region, similar to the licensing bureaucracy in Canada. Business actors could explore the permits and licenses required by each province and the procedures for obtaining them by accessing one platform similar to Bizplay in Canada. Second, it is necessary to change the composition of the OSS Institution agencies. These should include representative members of the PTSP in each region to implement regional autonomy, similar to the Overseas Investment Office and Companies Office in New Zealand. Local Governments in Indonesia should be authorized to monitor and review permits in the OSS regime. Third, licensing requirements should be evaluated and strengthened by issuing Business Permits with Commitments. This could harm the precautionary principle that needs consideration in issuing permits. The OSS regulation must be reconstructed within three years to increase investments for national economic recovery. Additionally, this is a concrete obligation due to the Constitutional Court’s decision regarding the Constitution on Job Creation Law.
Corresponding Author: Widhayani Dian Pawestri
Widhayani Dian Pawestri | ORCID: 0000-0001-6340-1096, Vincentius Sutanto, Kukuh Leksono Suminaring Aditya, Qona’aha Noor Maajid, and Khofifah Nura Adila
Universitas Airlangga, Surabaya, Indonesia
Investment in Infrastructure: A Comparative Study of the Regulation of Online Single Submission in Indonesia, Canada, and New Zealand European Journal of Comparative Law and Governance (EJCL) (2024), page 1–36, Published online 21 February 2024, Published with license by Koninklijke Brill nv (Brill Nijhoff), DOI: 10.1163/22134514-bja10068, ISSN: 2213-4506 (print) 2213-4514 (online).
Link:
Investment in Infrastructure: A Comparative Study of the Regulation of Online Single Submission in Indonesia, Canada, and New Zealand in: European Journal of Comparative Law and Governance – Ahead of print (brill.com)
Link Scopus:
Scopus – Document details – Investment in Infrastructure: A Comparative Study of the Regulation of Online Single Submission in Indonesia, Canada, and New Zealand
