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ONE STOP SHOP SERVICE AGENCY:THE PERSPECTIVES OF INSTITUTION AND

AUTHORITY

Research Report

A Cooperation between:

Indonesia Regional Autonomy Watch (KPPOD) and Foreign and Commonwealth Offi ce (FCO)-British Embassy

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LIST OF CONTENTS

List of Contents ....................................................................................................................................... iList of Tables, Figures, and Boxs .......................................................................................................... ii

I. INTRODUCTION .......................................................................................................................... 1I.1. Background ......................................................................................................................... 1I.2. Problems Identifi cation ..................................................................................................... 2I.3. Purpose ................................................................................................................................ 2

II. LITERATURE REVIEW ................................................................................................................. 3II.1. Reform of the Licensing Bureaucracy ............................................................................. 3II.2. Institutional Reform in the Bureaucracy ........................................................................ 4

II.2.1. OSS According to Minister of Home Aff airs Regulation No.24 Year 2006 ..... 5II.2.2. OSS According to Head of BKPM Regulation No.06 Year 2004 ........................... 6

III. FRAMEWORK OF THINKING ................................................................................................... 8

IV. RESEARCH METHOD ................................................................................................................. 8IV.1. Research Approach ............................................................................................................ 8IV.2. Kinds and Source of Data ................................................................................................. 9IV.3. Data Collection Method .................................................................................................... 9IV.4. Analytical Method ............................................................................................................. 9IV.5. Research Scope ................................................................................................................... 10

V. Analysis Result ............................................................................................................................... 10V.1. Specifi c Characteristcs of DKI Jakarta: The Impact on OSS Structure ........................ 10V.2. Local Government Regulation on OSS conduct as an eff ort for bureaucracy

reform of licensing service in DKI Jakarta ..................................................................... 11V.2.1. Authority Aspect ................................................................................................... 13

V.2.1.1. OSS Degree of Authority in Licensing and Non-Licensing Ser-vice .......................................................................................................... 13

V.2.1.2. Authority on Kinds of License and Non-License Service ............... 16V.2.1.3. Licensing and Non-Licensing Service at PTSP ................................. 19V.2.1.4. Implementation Strategy ...................................................................... 20

V.2.2. Institutional Aspects ............................................................................................. 22V.2.2.1. Institution of the OSS before the Regional Regulation .................... 22V.2.2.2. OSS Institutional Form in the Local Regulation on OSS Imple-

mentation (Perda PPTSP) ..................................................................... 24V.2.2.3. Implementation Strategy ...................................................................... 26

VI. Closure ............................................................................................................................................ 28

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Table 1. Procedures, time and fees of permits to start a business in Jakarta ........................ 2Table 2. Diff erences Between One-Roof Service and One-Stop Service ................................ 5Table 3. Benefi t of an OSS to the Regional Government, Business Sector and General

Public ................................................................................................................................ 6

Figure 1. Procedures to start a business in Jakarta .................................................................... 1Figure 2. The Framework of Bureaucracy Reform for Licensing Implementation in

Jakarta .............................................................................................................................. 9Figure 3. Normative Framework of DKI Jakarta Specifi c Characteristics .............................. 11Figure 4. Institutional Design of OSS DKI Jakarta ..................................................................... 12Figure 5. Steps in OSS Formation ................................................................................................. 13Figure 6. OSS Implementation Process Model in Jakarta ......................................................... 15Figure 7. Grouping of licenses under Local Government Authority ...................................... 19Figure 8. Flow of the Licensing Service at OSS before Issuance of the Local Regulation .... 20Figure 9. Flow of Licensing Service at BPTSP ............................................................................. 21Figure 10. Organisational Structure of OSS Unit on Investment before the Regulation ........ 24Figure 11. Organisational Structure of Administrative City OSS before the Regulation ....... 24Figure 12. Organisational Structure of DKI Jakarta OSS Service Board according to Local

Regulation on OSS Implementing Agency (POSS) .................................................... 26

Box 1. DKI Jakarta Provincial Local Regulation on Implementation of One Gate Integrated Service ........................................................................................................... 15

Box 2. Background and Obstacle faced in Transforming UPTSA to Licensing Agency of Yogyakarta City .......................................................................................................... 16

Box 3. DKI Jakarta Provincial Local Regulation on Implementation of One Gate Integrated Service ........................................................................................................... 17

Box 4. Delegation of Authority of Licensing/Non-Licensing to OSS at other Regions .... 18Box 5. DKI Jakarta Provincial Regulation on the One Stop Shop Service .......................... 27Box 6. DKI Jakarta Provincial Regulation on the One Stop Shop Service .......................... 27

LIST OF TABLES, FIGURES, AND BOXS

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I. INTRODUCTION

I.1 Background

Indonesia’s investment climate is still considered notconducive. Such view can be seen, among others,through the Doing Business 2014 report publishedby the International Finance Cooperation (IFC).In the report, as a city with the biggest economy inIndonesia, Jakarta was made as a representation ofIndonesia and was ranked 120 out of 189 countriesin the general category of ease of doing business.Furthermore, specifi cally on the category of ease of starting a business, it is ranked far lower at 175,decreasing 9 places from last year’s rank of 166.

The low rank in ease of doing business cannot beseparated from the complexity of permit issuanceand bureaucracy in this country. Based on severalmain indicators used by IFC,the starting a business phasewas encumbered by the numberof procedures which must befollowed (10 procedures), theperiod of time that it took (48days) and the relatively largecost that must be disbursed(20.5% of per-capita income)by a would-be investor. In2014, the time period needed tostart a business took a day longer but 2.2% cheapercompared to the previous year. To some extent,this shows the lack of improvement in easing therequirements needed to start a business for the lastyear. Such condition also placed Indonesia far behindthe average of other AsiaPacifi c countries (7 procedures, 37 days) in ease of starting abusiness.

The results of the DoingBusiness 2014 report also showsthat the long period of timeneeded to process permits inIndonesia was caused by thelong procedure required by theJakarta Provincial Government,as it falls under their authority(Figure 1)

Businessmen need 15 days andaround Rp 500,000.00 to obtain aBusiness Trading License (SuratIzin Usaha Perdagangan – SIUP)and a Company RegistrationCertifi cate (��ȱ ��Ğȱ��ȱPerusahaan – TDP). However,

based on national regulation as stipulated in TradeMinister Regulation No.36/M-DAG/PER/9/2007,processing a business trading license and companyregistration should not take more than 3 workingdays and should be free from any fees (zero Rupiah).In addition to those two permits, labor registrationthrough the Manpower Offi ce of the Jakarta Province also need 14 working days.

Even though the Doing Business 2014 report notedthat Jakarta’s ease of doing business is less compared toother countries, yet in practice it can be seen that otherregions has implemented many reforms to simplifyease of doing business, especially in simplifyingpermit requirements. One example of best practice

can be seen in Yogyakartain 2012, where a sub-national Doing Businessstudy placed this city asnumber one in ease ofstarting a business andwhere the presence andperformance of the OSSwas seen as an importantfactor. OSS in Yogyakartahave a wide authority and

adequate institutional capacity to implement licensingand non-licensing non-permit processes. It is alsovery eff ective in avoiding overlaps of permit issuance between various authorities and thereby unifying theservicing of permits as well as ensuring compliance

Figure 1. Procedures to start a business in Jakarta

Source: Doing Business 2014, IFC

The results of the Doing Business2014 report also shows that the long

period of time needed to processpermits in Indonesia was caused bythe long procedure required by the

Jakarta Provincial Government, as itfalls under their authority

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of permit issuance period within the time period, feesand procedures as stipulated in the local regulations.By implementing parallel service in permit issuance,the Licensing Offi ce of Yogyakarta has facilitated the issuance of permits in starting a business. Request forSIUP, TDP, business location license (Surat Izin TempatUsaha – SITU), and Nuisance Permit (Izin Gangguan – � Ǽȱ��ȱ��ȱ�� Ĵȱ��ȱ��ȱ��ȱ��ȱ�� ȱ�� ȱ��ȱ��ȱsame place. It also shortened the time and proceduresneeded in the issuance of permits and license, makingit easier and cheaper forbusinesses.

As Indonesia’s representa-tive to the global world,the Jakarta Province shouldlearn from the best practiceconducted by Yogyakarta.Jakarta has all the requirements and facilites needed��ȱ��ȱ�ȱ��Ĵȱ��ȱ��ȱ��ȱ�� ȱ��ȱ��ȱ��ȱcompared to other regions. Nevertheless, society stillcomplains on the long period and high costs imposedfor requesting permits in Jakarta, especially businessstart-up permits. The long bureaucracy chain in li-censing in Jakarta is mainly caused by the lack of fullauthority and incorrect institutional design of OSSJakarta in processing permits rapidly (procedural),along with clarity (in requirements), ease (time) andcheaply (cost).

BasedontheresponsefromtheProvincialGovernmentand the Regional Parliament of Jakarta, it seems thatsteps are taken to improve the existing conditions. Atthe policy level, in 11 December 2013 the ProvincialGovernment and the Regional Parliament has agreedupon local regulation on the implementation of OSS, ��ȱ ��ȱ��ȱ��ȱ��ȱ��ȱ �£�Ĵȱ�ȱ��ȱLocal Regulation No.12 Year 2013. The public should

welcome the enactment of this local regulation as animportant initiative and a landmark step to reformthe bureaucracy of licensing in Jakarta. In general,the local regulation includes several main clausesof an OSS: regulating the authorities, organizationalstructure, human resources, information technologyand fi nance. Nonetheless, those clauses must be further elaborated further as policy instrumentsthrough regulations and operational preparations tobegin the business process of licensing.

This study is aimed tore-evaluate such coreregulation, with a focuson the authority andinstitutional aspects. It ishoped that this review maybe used as an input to make

operational regulations and further guidance.

I.2. Problems Identifi cation

Several problems that this study aims to answer areas follows:1. Has the content of Jakarta’s local regulation No.12

Year 2013 refl ected the necessary arrangements needed to solve the problem of licensing in Jakarta?

2. On the follow up phase, which aspects and issuesshould be observed in making further regulationsand operational guidance so that the localregulation can be implemented eff ectively?

I.3. Purpose

The purposes of this study are as follows:1. Review the content of Jakarta’s local regulation

No.12 Year 2013, specifi cally from the perspectives of authority and institutions.

No. ProcedureTimes(Days)

Fees

1Acquiring standardised format of company deed certifi cate, obtaining clear-ance and approval for the Indonesian Company’s name (PT) at the Ministryof Law and Human Rights (MLHR)

4 days Inclusive in P4

2 Signing of company establishment certifi cate before a Public Notary 4 days Rp 4.464.464

3 � ��ȱ��ȱ� �� ȱ� �� ȱ��Ĵȱ��ȱ 1 day Free

4 � ��ȱ� �� ¢ȱ� �� ȱ��Ĵȱ��ȱ 2 days Free

5Payment of Non-tax State Revenue fees (PNBP) to the State Treasury throughbank

1 dayRp 200.000 (nameenquiry) + 1.580.000(non-tax fees)

6 Request of agreement from MLHR 7 days Inclusive in P4

7 Acquiring SIUP and TDP 15 days Rp 500.000 (TDP)

8Registration in Ministry of Manpower and Transmigration through localManpower Offi ce

14 days Free

9 Request for Workers Social Security Program (Jamsostek) participation 7 days Free

10Acquiring a Taxpayer Registration Number (NPWP) and a VAT CollectorNumber (NPPKP)

1 day Free

Table 1. Procedures, time and fees of permits to start a business in Jakarta

Source: Doing Business 2014, IFC

Based on the response from theProvincial Government and the

Regional Parliament of Jakarta, itseems that steps are taken to improve

the existing conditions

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2. Formulating recommendations as inputs increating strategies to implement the localregulation No.12 Year 2013, especially in regardto composing further regulations and operationalguidance.

II. LITERATURE REVIEW

As a basis to analyse the problems that has beenidentifi ed for this research, a comprehensive understanding to several concepts, laws and relatedliteratures is needed, especially in regard to theimplementation of licensing service in a region. Thefollowing are such concepts, laws and regulations,and literatures concerning the above issue.

II.1 Reform of the Licensing Bureaucracy

Improvement of servicein the bureaucracy oflicensing done by theProvincial Governmentcannot be separated fromthe context of bureaucraticreform. Bureaucraticinstitutions have roles andfunctions that are verysignifi cant for the conduct of governance whichcannot be replaced by other institutions. Bureaucracyreform is a continuous eff ort where at each stage should contribute some sort of improvements or��ȱ�� ȱ�ȱ��Ĵȱ��ȱ��¢ǯȱ� ��ȱ��ȱto Presidential Regulation No. 81 Year 2010 on theGrand Design of Bureaucratic Reform 2010-2025,bureaucratic reform is defi ned as a major change in the paradigm and management of Indonesia’sgovernance.

Several issues that bureaucratic reform wishes toaddress are the reduction, and eventually elimination,of misuse of power and authority by public offi cials in relevant institutions; building Indonesia as a countrywith the most-improved bureaucracy; increasingthe quality of service to the public; improving thequality of policy-making and policy execution ofan institution; enhancing (cost and time) effi ciency in all aspects of an organisation’s responsibilities;and creating an Indonesian bureaucracy that isanticipative, proactive and eff ective in facing the challenges of globalisation and the dynamics of achanging strategic environment.

Eff orts to reform the bureaucracy and laws that regulate businesses are considered as the basisof good governance and a necessary condition tosupport economic growth. One of the eff orts for bureaucratic reform is conducted through reformingthe bureaucracy of licensing. Several endeavours toreform the bureaucracy of licensing are to reduce

the amount and shorten the time period needed forthe administrative process that a business ownershould go through. The reason is due to the numberof regulations burdening a business where it mustallocate a lot of time and manpower to fulfi ll the requirements. In addition, delays and postponementin processing documents and applications to gainapproval and the existence of transactional costs(retributions) became a barrier, which are caused bythe uncertainty caused by the authorities during thelicensing process (Jones, 2007).

Procedures are defi ned as phases that must be passed during the interaction process between businessmenwith external parties, which in the case of licensing isa government institution. The many procedures thatmust be followed in the processing of permits will haveimpacts especially on the added intensity of meetingsbetween businessmen with government institutions

to obtain a permit. Thiscaused ineffi ciency for businessmen since theyneed to allocate largerresources, be it time ormanpower, to followthe many proceduresin various governmentinstitutions. In addition,the existence of so manyprocedures which requires

interaction with many government institutions has thepotential to cause material losses for businessmen inthe form of larger opportunity cost. Such opportunitycost refl ects the large amount that a businessman must sacrifi ce by allocating his resources to take care of the various licensing in each government offi ce. Therefore eff orts to simplify procedures in obtaining permits becomes very important in order to cut costs,time and manpower that a businessman must allocatein his business operations.

The more procedures that a business must go through,the more costs that a business must bear. Cost is animportant factor in the implementation of publicservice. Mardiasmo (2009) stated that in the context ofpublic service sector, cost consists of three followingitems. First, input cost which is the resources neededto be allocated to provide service. Second, output costwhich is cost expended to deliver the products (in theform of permit documents) to the businessman as theapplicant. Third, processing cost which is measuredin consideration to the function of the organisation.In this regard, simplifying licensing procedures isimportant to be done as a part of the eff ort to improve cost effi ciency and reform the licensing bureaucracy, as well as to enhance the effi ciency of service to the community in licensing

Simplifi cation of procedures and easing the permit process through bureaucratic reform is also importantto be done in order to increase the awareness of the

Several endeavours to reform thebureaucracy of licensing are to reduce

the amount and shorten the timeperiod needed for the administrativeprocess that a business owner should

go through

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community so that they will apply for the requiredpermits so that their business can be registeredformally. Hernando de Soto (2005) exemplifi ed that there are fi ve factors that underscores the necessity for a business to be registered formally. First, to ascertainthat all businessactivities conductedis in line withthe existing legalframework. Second,to increase thenumber of taxobjects as a sourceof income. Third, tominimise the riskfor the general public arising from the conduct of arisky business activity (in determining a business’environmental feasibility, the main thing that must beidentifi ed is the type of the new business established). Fourth, to establish a legal business entity that iseasily identifi able with a unique name and with all ��ȱ��ȱ��ȱ��ȱ�Ĵȱ��ȱ��ȱ��ȱǻ��ȱ��ȱ��ȱ��¢ȱ��Ȧ��ȱ��ȱ��Ǽǯȱ��Ğȱ�ǰȱ��ȱ�� ¢ȱdata and information availability to the governmentand to the general public regarding the type, sector,scale, and ownership of a business.

II.2. Institutional Reform in the Bureaucracy ofLicensing

Reform of the licencing bureaucracy, specifi cally in the business start-up phase, is related to three areasnamely institutional reform, enhancing the capacity ofhuman resources and reforming the management withthe support of information technology. Institutionalreform is implemented through the establishmentof a new institution as a one-stop license processing,bringing together the various licensing services whichpreviously mustbe done throughmany institutions.On the other hand,enhancing humanresource capacitycan be done throughcrash courses foroffi cials in order to improve their capacity in the provision of licensingservice to businessmen. In addition, informationtechnology is also needed to support the transparencyof access in terms of requirements and licensingprocedures for the society (Akhmaddian, 2012).

There are several models that can be implementedin the provision of an integrated service of licensing.According to Sadu (2008), an integrated licensing��ȱ� ��ȱ��ȱ��ȱ��ěȱ��ȱ��ȱ� �ȱ��Ĵȱ��ȱnamely a one-roof service and a one-stop service. One-roof service (ORS) is a service system conducted inone location where there are many services provided,which does not have any process correlation and are

served in many doors (independent service units).One-stop service (OSS) is a public service conductedin one location consisting of many type of serviceswith inter-related processes and served through onedoor. There are several aspects which diff erentiates

the concept of ORSand OSS namely interms of authorityand signatories,c o o r d i n a t i o n ,service procedure,s u p e r v i s i o n ,service standards,i n s t i t u t i o n s ,achievement of

targeted retribution income, and employment status.The diff erences between ORS and OSS in the above aspects can be seen below.

Even though it is integrated in one location, theauthority and signatory in an ORS still lies inthe relevant technical SKPD offi ce. On the other hand, an OSS has all the authority needed to grantvarious licensing (licenses, permits, approvals andclearances). With that authority, an OSS as a singleaccess institution can manage all the processes andregulations. Therefore, the OSS can provide allforms of licensing that are required in various levelsof government administration and it will not bedependent on other institutions.

An OSS would also shorthen the time period neededto gain a permit. This is due to, among others, the use��ȱ�� ȱ��¢ȱ��ȱ�� ȱ� �Ĵȱ��ǰȱthe need to input data one time only, and simultaneousprocessing of administrative requirements. With theinstitutionalisation of OSS, all forms of licensing andnon-licensing that lies in the authority of the Region’s

Head can be servedin one institution. Itis hoped that suchimprovement willboost economicgrowth throughinvestment increaseby giving more�Ĵȱ��ȱ��ȱ��ȱ��ȱ

of small and medium scale enterprices, with thepurpose of increasing the quality of public service.

In addition, there are also principles that mustbe observed in running an OSS. According toGovernment Regulation No.27 Year 2009 (Article 2),��ȱ��ȱ��ȱ��ȱęȱ��ȱ��ȱ��ȱ��ȱ��ȱ�Ĵȱ��ǰȱnamely:a. Legal certaintyb. Transparencyc. Accountabilityd. Equal treatment without diff erentiating between

countries of origine. Effi ciency with justice

Institutional reform is implemented through theestablishment of a new institution as a one-stoplicense processing, bringing together the various

licensing services which previously must be donethrough many institutions

Simplifi cation of procedures and easing the permit process through bureaucratic reform isalso important to be done in order to increasethe awareness of the community so that they

will apply for the required permits so that theirbusiness can be registered formally

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In Indonesia, the implementation of OSS has its legalbasis in two regulations namely the Minister of HomeAff airs Regulation No.24 Year 2006 and the Head of the Indonesian Investment Coordinating BoardRegulation No.11 Year 2009.

II.2.1. OSS according to Minister of Home Aff airs Regulation No. 24 Year 2006

Minister of Home Aff airs Regulation No.24 Year 2006 on the Guidance for the Implementation of One StopService (OSS) is based on Presidential InstructionNo.3 Year 2006 on Policy Package to ImproveInvestment Climate. The main idea of the PresidentialInstruction is to encourage several governmentoffi ces to immediately make policies, programs and

actions to improve business and investment climate,among others by simplifying the licensing process.Simplifi cation of this permit process can then be done by placing the implementation of the licensing andnon-licensing processes in one location. This processstarts from the application for the permit until theissuance of the permit itself.

According to the Minister of Home Aff airs Regulation No.24 Year 2006, servicing the application forlicensing and non-licensing is conducted by RegionalImplementing Agency for One Stop Service (PerangkatDaerah Penyelenggara Pelayanan Terpadu Satu Pintu –POSS), which is an agency as a part of the regionalgovernment tasked to manage all forms of licensingand non-licensing services in the region with one-

Table 2. Diff erences Between One-Roof Service and One-Stop Service

ASPECT ONE STOP SERVICE ONE ROOF SERVICE

Authority andSignatory

Authority and signatory is on one partyAuthority and signatory lies withmany parties

Coordination • Easier coordination.• Head of OSS plays a role as coordinator of

various local government agencies (SKPDs)in analysing technical aspects .

Coordination is harder since theauthority and signatory lies in manyother organization

Service Procedure Simplifi cation of procedures is easier since the Head of OSS is authorised to coordinate it

Harder to simplify procedures due tothe sectoral egoes of technical SKPDs

Supervision Supervision is the common responsibility ofthe OSS institution and technical offi ces

Supervision is the responsibility oftechnical offi ces

Service Standards Service quality is maintained at least at aminimum standard

Hard to maintain service quality dueto dependence on policies of SKPDs

Form ofInstitution

Take the form of offi ce or agency Usually only acts as a receivingcounter which takes the form of aworking unit

Achievementof targetedretributionincome

Achievement of targeted retribution incomethat is managed by the OSS becomes theresponsibility of the OSS management

Achievement of targeted income isthe responsibility of technical SKPDoffi ces

EmploymentStatus

Employees have the status of permanent OSSstaff

Most employees status is staff of technical SKPD offi ces

��Ǳȱ��ȱ��ȱ��ȱ�ěȱ��ȱ��ȱ��Ĵȱ��ȱ��ǯśŖŖȦŗŗşŗȦ�Ȧ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱGuidelines of One Stop Service Implementation

Table 3. Benefi t of an OSS to the Regional Government, Business Sector and General Public

BENEFIT OF AN OSS

Regional Government • Reducing administrative burden• Increase number of formal business• Improve regional investment• Improve image of government performance

Business Sector • Avoid high-cost economy• Increased access to various resources

General Public • Receive their right as an Indonesian citizen to get prime service

Source: Minister of Home Aff airs

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stop service (OSS) system. Simplifi cation of service procedures is mandated throuh this POSS, namely:(i) servicing of application for licensing and non-licensing is done by the POSS; (ii) faster processing ofbusiness service, i.e. not exceeding standard of timethat has been determined in the Regional GovernmentHead’s Regulation; (iii) guaranteeing that the cost ofservice will not be more that what is stipulated inthe regional regulation; (iv) transparency of serviceprocedures that can be found out easily and knownby the public at every stage of the licensing andnon-licensing processes, in accordance with whatprocedure is necessary at each stage; (v) skip suchsimilar document required for two or more licensingapplication; (vi) free cost of licensing for micro, small,and medium scale entreprise that wishes to start anew business in accordance with the existing lawsand regulations; (vii) providing the people with theirright to gain information in regard to the provisionof service.

Furthermore, in the Minister of Home Aff airs Regulation it is mentioned that the degree of work ofthe POSS includes the provision of service for all typeof licensing andnon-licensing which becomeauthorityof the Regency/City. In addition, in the administrativemanagement of licensing and non-licensing, POSSshall refer the principles of coordination, integration,synchronisation and security of the documents(Article 7). The purpose of implementing POSS is toincrease the quality of public service and provide awider access to the people in accessing public service.

To support the implementation of OSS, the form ofinstitution that POSS takes should be an Offi ce or Agency. Such Agency or Offi ce will be under the authority of the Local Government Head throughthe Local Government Secretary (Minister of HomeAff airs Regulation No. 20 Year 2008 concerning Organization and Working Procedure of OSS Unit inthe Region). The Offi ce or Agency will be supported by a Secretariat which is led by a person-in-charge,with the title of Agency Head or Offi ce Head. The form chosen should be in line with national regulations, yetalso observing the characteristics and the needs of theregion, the demand for service and also the region’seconomic conditions.

From the aspect of authority, according to theMinistry of Home Aff airs Regulation Number 24 Year 2006, POSS has the authority to sign licensedelegated by the Head of the Local Government.It means that all licensing which is the authority ofthe Local Government Head is delegated to OSSincluding issuance of license. OSS’s authority canbe seen from its role in conducting validation andsigning licenses that are issued. Ideally, OSS has athorough authority upon all licensing that has beendelegated to OSS. Such authority is complete, i.e.includes all the activities from the start until the end:from application for issuance of license until signing

and delivery of the license document.

It implies that the Ministry of Home Aff airs Regulation has also mandated to form an ideal agencyhaving thorough task in performing licensing service.This means that all necessary procedures to processlicense is started, executed, and ended at an agency.Such process which is initiated from applicationstage until license document issuance stage is carriedout in transparent and integrated way through onesingle access. The applicant only needs to meet frontoffi ce staff /customer service, therefore interaction with the person in charge of licensing process and theauthority holder/decision maker is minimized. Withthe presence of the agency, applicant only needs tocome to one place and no need to have interactionwith many government institutions.

The degree of OSS services and number of licenseswhich are delegated to the OSS depend on authoritiesthat are responsibility of the region and availability ofhuman resources to execute the tasks, quantitativelyand qualitatively. In general, OSS services includebasic license which also becomes a requirementbefore starting a business, business license that mustbe obtained in order to operate a business (operatinglicense), non-licensing process that has not beenconducted eff ectively by relevant local government agencyorsubdistrict,andsuchlicensingthatisrelevantto primary economic sector development. While theauthority for such licensing that has been optimallyperformed by regional technical implementing Unit(UPTD) remains with the UPTD. Regional economiccondition also has an impact on number of licensingprocess that is delegated to OSS, such as volume of��ȱ��ǰȱ�� ¡ ��¢ȱ��ȱ� �Ĵȱ��ȱ��ȱ��ȱconsidered/recommended in licensing, whethercaused by complexity of spatial planning documentrequired or level of alertness required; so that criteriaand quantity of licensing process delegated to OSS ingeneral are adjusted with condition of the region.

II.2.2. OSS according to Head of BKPM RegulationNo.6 Year 2011

Aside from the Ministry of Home Aff airs Regulation No. 24 Year 2006, another regulation on OSSimplementation has been issued, i.e. Head of theIndonesia Investment Coordinating Board Regulation(Perka BKPM) No. 6 Year 2011. Perka BKPM refers tocertain stipulations mentioned in Law No 25 Year2007 and Presidential Regulation No 27 Year 2009.According to the Perka BKPM, a OSS is an activityto implement licensing as well as non-licensingprocess which has got delegation of authority frominstitutions or agencies having the authority inlicensing and non-licensing, in which the process isstarted from application stage until issuance of thedocument, and all of which are held in one place.

OSS goal in the area of investment is to assist investor

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to obtain an ease in services, fi scal facility, and information on investment, by expediting the process,simplify the service, and omit or cancel the costs forlicensing and non-licensing. To reach the goal, OSSincludes:a. Provide services for all kinds of investment license

that are needed to realize investment activities;b. Provide services for non-licensing which

contains issuance of redommendation includingrecommendation for limited stay permit visa,provision of fi scal and non-fi scal facilities, and information service;

c. Provide service for public complaint due todiffi culties experienced in obtaining OSS service in investment;

d. Provide an ease in implementation of investmentactivities, including provision of assistance orfacilitation in licensing and non-licensing whichare related to implementation of the investment.

There are three kinds of OSS institution according toPerka BKPM, i.e.: BKPM as the agency to conduct OSSin investment for Central level; Division of Investmentof Provincial Local Government agency (PDPPM)to conduct OSS in investment for provincial level.PDPPM, is an element to assist Local GovernmentHead in conducting provincial local governmenttasks, with such institutional form following the needsof the provincial government, which undertakingmain function of investment coordination atprovincial level. The last one is division of investmentof Regency/City Local Government agency (PDKPM)to conduct OSS in investment for regency/city level.

Delegation of licensing and non-licensing authoritiesis divided into several levels. At the Central level,Head of BKPM performs licensing and non-licensingservices through OSS at BKPM. Such services are��ȱ��ȱ�Ğȱ��ȱ��ȱ��ȱ��¢ȱ�� ȱ��ȱminister/head of non-departmental governmentagency (LPND) having licensing authority. Whilefor licensing and non-licensing services that are notdelegated, the Head of BKPM will involve mediatorassigned by the relevant technical minister/LPND.Similarly, at regional level (Province and Regency/City), Head of local BKPM involves mediatorassigned by the Head of the region (Governor andRegent/Mayor).

At provincial level, implementation of licensingand non-licensing services are carried out byPPDPM that has obtained delegation of authorityfrom the Governor. PPDPM is a local governmentagency conducting main function of coordination ininvestment at provincial government. Such delegatedauthority is one of the provincial government aff airs, in this case in investment which has the degree ofcross regencies/cities; other provincial governmentaff airs are those that based on prevailing regulation on distribution of government aff airs between Central, Provincial, and Regency/Municipal become authority

of the provincial government. In order to undertakethe authority, there are several functions of PPDPM:a. Perform coordination of investment policy

implementation at the province;b. Study and propose policy on investment service in

the province;c. Provide regional incentive and/or an ease in

investment in the province;d. Prepare Provincial Investment Map;e. Develop investment opportunity and potency in

the province by empowering business agencies;f. Promote investment in the province;g. Develop investment business sector in the

province through nurturing investment, such asboosting partnership, increasing competitiveness,creating healthy business competitiveness, andspreading information regarding investmentactivities extensively;

While at Regency/City level, local government agencyconducting OSS is PDKPM. Similar with PPDPM, theagency receives authority delegation from Regent/Mayor to perform licensing and non-licensingservices in the region. PDKPM also undertakes itsmain function to coordinate investment for regency/city level. Several functions of PDKPM are:a. Perform coordination of investment policy

implementation at the regency/ city;b. Study and propose policy on investment service in

the regency/city;c. Provide regional incentive and/or an ease in

investment in the regency/city;d. Prepare Regency/Municipal Investment Map;e. Develop foreign investment opportunity and

potency in the regency/city by empoweringbusiness agencies;

f. Promote investment in the regency/city;g. Develop investment business sector in the regency/

city through nurturing investment, such asboosting partnership, increasing competitiveness,creating healthy business competitiveness;

h. Spread information regarding investmentactivities extensively;

i. Assist in fi nding solution for various obstacles, and provide consultation for problems faced byinvestors in foreign investment activities at theregency/city.

Agency assigned to conduct OSS at provincial aswell as regency/city levels is determined by a localregulation. Establishment of an agency shall be��ȱ��ȱ��ȱ�¡ ��ȱŘŚȱ� ��ȱ�Ğȱ��ȱ��ȱBKPM is in eff ect.

In summary, Perka BKPM mandates integrativeOSS from central to regions. This can be seen fromcoordination relationship occurring between OSSagencies, at central as well as at the regions. Suchcoordination relationship is strengthened by mediatorhaving a function to facilitate licensing and non-licensing which are not delegated by each authority

8� �

holder at Ministerial/Non-Departmental GovernmentAgencies and Local Government (Province andRegency/City) levels.

III. FRAMEWORK OF THINKING

Many problems occurring in licensing service inJakarta, such as the absence of authority for OSSto conduct licensing service and licensing process��ȱ��ȱ��ȱ��ȱ��Ĵȱ��ȱ��ȱ� ��¢ȱ��ȱgovernment agencies have resulted in bureaucratic,expensive, and long period of licensing service in DKIJakarta. This situation is ironic since Jakarta is a cityhaving the highest economy in Indonesia and also bethe bench mark for international society in valuingIndonesia.

A reform on licensing bureaucracy throughestablishment of OSS in Jakarta must be done toincrease effi ciency and eff ectivity of licensing service. In its implementation, there are some challenges facedin establishing a special agency to handle licensingservice, whether it comes from internal or externalparties. However, such problem can be solved byhigh commitment of the Local Government Head todelegate all the authorities in licensing service to OSS.

An eff ort that can be carried on by DKI Jakarta local government to represent high commitment toimprove licensing service is to issue a local regulationon the Implementation of OSS. Issuance of such localregulation is very important to provide a legal base tostrengthen OSS as an agency assigned for conducting

licensing service in DKI Jakarta in order to make thelicensing faster, more eff ective and effi cient while still considering aspects of society interest at large.

DKI Jakarta Local Regulation on OSS Implementationas the main legal framework in general arrangesmain aspects of licensing service, i.e. authorityand institutional aspects. To make the regulationimplementable, further operational regulationsshall be prepared, such as Governor Regulation,Governor Decree, Standard Operating Procedure,and so on. The Study is conducted with a focus onimplementation strategy to make local regulationon POSS implementable eff ectively therefore it can overcome problems of licensing in DKI Jakarta.

IV. RESEARCH METHOD

IV.1. Research Approach

The research is carried out using qualitative approach.In this case the research is not aimed to measurestrength and direction of correlations within variables,but it is aimed to describe situation, phenomenon,condition, and process. Such qualitative approach isalso called investigative approach since researchercollects data by direct, face to face interaction withpeople in the research area (McMillan & Schumacher,2003). The qualitative research can also be defi ned as a type of research with such fi ndings not resulted from statistical procedure or other forms of calculation(Strauss & Corbin, 2003). Its analysis is qualitativeand has more focus on the essence rather than

Figure 2. The Framework of Bureaucracy Reform for Licensing Implementation in Jakarta

PROBLEM:

• PTSP has no authority to conduct licensing service• There is no standard form for PTSP agency• ��ȱ��ȱ��ȱ��Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱǻ� �� Ǽ• Resistance of each SKPD in delegating licensing authority to PTSP

Bureaucracy Reform inLicensing Required

External Challenge Internal ChallengeOSS AGENCY

Local Regulationregarding OSS

Implementation

Implementation Strategy onLOCAL REGULATION

9� �

generalization upon a researched object.

IV.2. Kinds and Source of Data

Kinds of data used in the study are primary andsecondary data. Scondary data, consist of kinds ofpermit that are the authority of OSSs at Provincialand Administrative City levels of DKI Jakarta, areobtained from OSS Agency at the Province and OSSImplementation Unit at the Administrative Citylevels. In addition to secondary data, the Study ismainly using primary data for analysis purpose.Such primary data include various informationregarding OSS in Jakarta that are obtained from in-depth interview with several resource persons andalso from Focused Group Discussion (FGD).

IV.3. Data Collection Method

Secondary data such as documents, statistical data,and so on are collected from various authorizedagencies. The instrument in qualitative methodis a person or the researcher him/herself (humaninstrument). To be an instrument the researcher has tohave theoretical knowledge and a wide perspective sohe/she will be able to ask, to analyze, and to constructsocial situation of the researched object and makeit clearer and more meaningful. Therefore, primarydata can be obtained by two ways, i.2. (1) in-depthinterview, and (2) through focus group discussion(FGD) and expert meeting.

An intensive in-depth interview is conducted toexplore resource person’s perspective regarding OSSin Jakarta and the importance to formulate OSS localregulation as a legal umbrella. The method is selectedsince it is considered the most suitable to obtaininformation from each resource person deeply andis also fl exible for implementation. This technique is chosen due to its fl exibility during implementation. Although in-depth interview is carried out with afocus to discuss licensing service in Jakarta throughOSS, however, during implementation it still givessome fl exibility and suffi cient room for researcher and resource person to explore the issue within theframework of determined interview guidelines.The interview is made for three categories ofresource person, i.e. Central Government, RegionalGovernment, and Businessmen.

a. Central Government• Indonesia Investment Coordinating Board• DirectorateGeneralofRegionalDevelopment,

Ministry of Home Aff airs

b. DKI Jakarta Provincial Government• Bureau of Organization and Methods• OSS Unit, Board of Investment and Promotion• Local Government Agency of Building

Control• Local Government Agency of Spatial

Planning

• Local Government Agency of Cooperatives,Micro, Small, and Medium Enterprises andTrade

c. Administrative City Government• Head of OSS of North Jakarta Administrative

City• HeadofOSSofCentral JakartaAdministrative

City• Head of OSS of East Jakarta Administrative

City• Division of Working Management, Setco of

Central Jakarta

d. Businessmens• Chamber of Commercee of DKI Jakarta

Province• Indonesian Businessmen Association of DKI

Jakarta Province• Jakarta Construction Businessmen who is

also the Head of Procurement of Goods andServices Association

e. Experts/OSS Watch• Researchers having knowledge about OSS• Donor agencies, Organization having

experiences in nurturing/providing technicalassistance to the regions in establishing OSS.

Data collection is also conducted using focus groupdiscussion (FGD) method. Interaction amongparticipants is very important in order to obtain validresults. it is important to obtain information fromvarious angles comprehensively look a stakeholder.By using FGD method, an in-depth interview isconducted involving a number of participants asrepresentative of relevant parties, among othersProvincial Government of DKI Jakarta, businessmensociety, and academicians. The FGD is focused todiscuss specifi c topic concerning improvement in licensing service through an institutional reform ofJakarta OSS. Interactions within participants andactivities in presenting opinions are very essentialin order to obtain valid result through such FGDmethod. This is important to obtain comprehensiveinformation from many angles of view of relevant��ǯȱ��ȱ� � ȱ��ȱ�Ĵȱ��ȱ�¢ȱ��ȱ��ȱfrom Central Government (Indonesia InvestmentCoordinating Board and Ministry of Home Aff airs), Regional Government represented by Bureau ofOrganization and Method, OSS Unit of Board ofInvestment and Promotion, Local GovernmentAgency of Spatial Planning, Local GovernmentAgency of Building Control, OSS of AdministrativeCity, Academician (LPEM University of Indonesia),and professionals (IFC and TAF).

IV.4. Analytical Method

In order to answer the aforementioned questions inthis research, analytical technique used is descriptiveanalysis. The descriptive analysis is used to explainand to present data resulted from observation andinterviews with resource persons. The analysis isused with an aim to get a depiction regarding current

10� �

and future one gate licensing services through variousdata and information from key resource persons.The analysis result can provide good informationthat can be used as a base in making decision onimplementation strategy for improvement in licensingservice in DKI Jakarta.

To get deep understanding regarding problem tobe researched, the descriptive analysis will includeSituation Analysis, Literature Review, and RegulationReview.

a. Situation AnalysisA situation analysis is a method of analysis to helpresearcher have clear insight, understand, manage,and respond to the problem. The aim is to collectvarious information regarding kinds and forms ofprogram/policy, involved parties or community,action and strategy selected for implementingthe program/policy. Situation analysis consists ofsome analysis such as:

1. Problem AnalysysA problem analysis is a method to determineproblem root of various problems happeningin the reality. The analysis is made usingexpectation approach and reality approach.

2. Situation AnalysisSituation analysis is an approach used tofi gure out objective condition of an institution or organization.

3. Needs AnalysisNeeds Analysis is an approach used to presentobjective condition regarding the need of aninstitution, whether it is for the institution orfor member of the institution.

In this study, situation analysis is conducted togather various information relevant to the problemoccurring during OSS implementation, objectivecondition of OSS, and the needs to conductlicensing service in the future.

b. Literature ReviewLiterature review is an analysis used to gathertheoretical concepts as well as facts. A literaturereview includes systematic identifi cation, fi ndings and analysis of documents containing informationrelevant to the research. A literature review can bea review on the past research having a topic similarwith the topic being researched, or opinions ofsome experts.

c. Regulatory ReviewThe method of regulatory review in this Study isused to analyze several regulations relevant to OSSat Central level as well as at those in DKI JakartaProvince. Especially, the Study makes a reviewon Local Regulation regarding OSS in Jakartathat is used as the base for establishing OSS inDKI Jakarta in order to see whether regulationscontained in the local regulation can be applied asan instrument to solve the problem of licensing inJakarta.

IV.5. Research Scope

The study is focused on analysis of the localregulation concerning OSS implementation as aneff ort to response to various barriers and challenges faced during implementation of licensing service inDKI Jakarta. Both aspects of institution and authorityin licensing service that have been arranged in theDKI Jakarta OSS local regulation are the main focus tobe criticized. From that point, a recommendation onimplementation strategy will be formulated to makethe local regulation implementable.

V. ANALYSIS RESULT

V.1. Specifi c Characteristics of DKI Jakarta: The Impact on OSS Structure

Single Autonomy: Governor as the highest authorityholder.

In Law Number 32 Year 2004 on Regional Governance,DKI Jakarta Province is determined as special capitalregion. At its position as the Capital City, DKI JakartaProvince is given a status as special region. Suchspecifi c characteristic can be clearly recognized at the application of single autonomy, i.e. application ofthe autonomy is only at provincial level. In this case,application of single autonomy gives centralizedauthority of governance conduct on one hand, I.e. theGovernor. Having such full authority of governanceis with the Governor, Heads of Regency/City in DKIJakartaProvinceareregionalapparatusworkingunderthe Governor and have no authority in conductinggovernment aff airs except tasks and aff airs that are delegated by the Governor. At one side, centralizedauthority in Governor’s hand can be used as astrategy for the DKI Jakarta Provincial Government

Figure 3. Normative Framework of DKIJakarta Specifi c Characteristics

Source: KPPOD (processed)

Position as Capital Cityof the State

Specifi c Characteristic Status of DKI Jakarta

Province

Government Format:provincial single

autonomy

SpecialAuthority

Single Authority:Governor

11� �

to gather all the local government agencies in DKIJakarta and “force” them to follow policies made bythe Governor, therefore it may minimize resistanceoccurrence at local government agencies. However, atthe other sides, by having such centralized authoritywith the Governor,some governmentaff airs that should have been handledat local governmentagency level oreven at Sub District/Urban VillageAdministration mustwait for Governor’sapproval, thereforethe process takeslonger time.

Single Autonomy: Impact on government structureat DKI Jakarta Province.

Application of single autonomy at DKI JakartaProvince has its consequence on distinctive positionof the government compared to other regions inIndonesia. Such distinction can be seen from Regency/City position in DKI Jakarta that is not an autonomregion, rather it is part of DKI Jakarta Provincialregional government. Another distinction is that theSub District/Urban Village Administration in DKIJakarta being a local government entity responsibledirectly to the Province and not to the Regency/Citygovernment. Such condition is in line with Article 13sub article (1) Law No.29 Year 2007 on DKI JakartaProvincial Government as Capital City of the Republicof Indonesia:

“DKI Jakarta Provincial Government consists ofRegion Secretariat, Local Parliament Secretariat,Local Government agencies, Local GovernmentTechnical Agencies, Administrative City/Administrative Regency, Subdistrict and UrbanVillage Administration”.

By such centralized authority resides with theGovernor, Regency/City in DKI Jakarta onlyfunction as administration region that has noauthority by its own to arrange and managegovernment aff airs except tasks and authorities delegated by the Province. Similarly, the Subdisrict/Urban Village Administration undertakes part ofregional government aff airs being delegated by the Governor (Governor Regulation No.46 Year2006 regarding Delegation of Authority on Part ofRegional Government Aff airs from the Governor to the Mayor of the Administrative City/Regent of theAdministrative Regency, Head of Subdistrict, andHead of Urban Village Administration). Such specialcharacteristic has an impact on the structure oflicensing service provider in DKI Jakarta. DKI Jakartahas OSS on Investment at Provincial level and OSS atAdministrative City level.

Both OSSs are responsible directly to the GovernorthroughtheRegionalSecretary. In theLocalRegulationNo.10Year2008onRegionalGovernmentOrganisation(OPD), DKI Jakarta Provincial Government is givena mandate to establish Board of Investment and

Promotion (BPMP).The RegionalG o v e r n m e n tR e g u l a t i o nalso regulatesthat RegionalG o v e r n m e n tAgency (SKPD)and WorkingUnit of RegionalG o v e r n m e n t(UKPD) have the

authority to conduct licensing and non-licensingservices. In addition to those stipulated in OPDLocal Regulation, in order to conform to nationalpolicy on OSS formation, DKI Jakarta ProvincialGovernment through a Governor Regulation arrangesestablishment of OSS Unit on Investment at Provinciallevel and Administrative City OSS at AdministrativeCity levels. Such condition resulted in DKI JakartaOSS facing many problems in performing their tasks.

V.2. Local Government Regulation on OSS conductas an eff ort for bureaucracy reform of licensing service in DKI Jakarta.

The former DKI Jakarta OSS agency was not formed asa special SKPD – this was diff erent from that stipulated in Government Work Plan (RKP) of 2013 whichmentioned OSS institution as a regional governmentagency. DKI Jakarta OSS was just a technical agencyunit under Board of Investment and Promotionǻ�� Ǽȱ ��ȱ��ȱ��ȱśȱ� ��ȱ��ȱ��Ĵȱ��ȱ��ȱat each Administrative City. However, these OSSshave no certain legal base for conducting their tasksand function. Delegation of authority on licensingfrom OSS directly working under BPMP to OSSs atAdministrative Cities was not clear too. It happenedbecause the absence of such fi rm regulation having the same level with Local Regulation had resulted inno standard of nomenclature to arrange position ofOSS as a regional government agency. Therefore, itwas required to have a local regulation on licensingservice in Jakarta which was in turn could improveOSS performace in increasing effi ciency of licensing service.

In 2013 there has been a change in the regionalleadership, with a vision of New Jakarta with publicservice orientation. One of the main agenda isbureaucracy reform in licensing service emphasizingon public satisfaction aspect. In order to realize VisionMission of DKI Jakarta, Provincial Governmenttogether with DKI Jakarta Local Parliament approvedDKI Jakarta Local Regulation on Implementation ofOSS (POSS). Through the Local Regulation, status of

Having such full authority of governance is

with the Governor, Heads of Regency/City in

DKI Jakarta Province are regional apparatus

working under the Governor and have no

authority in conducting government aff airs

except tasks and aff airs that are delegated by

the Governor

12� �

the OSS Unit has been increased to be a Board andhas been given larger authority in licensing service inDKI Jakarta.

Main substance arranged in the POSS LocalRegulation includes arrangement related to increasedOSS institutional status, degree of OSS authority, andstipulations relevant to OSS tasks and functions. Frominstitutional aspect, the Local Regulation determinesBoard of One Gate Licensing Service (BPTSP) aslicensing service provider in DKI Jakarta. Licensingand non-licensing service provider is a united,stratifi ed, and integrated service consisting of BPTSP at the provincial level, OSS Offi ce at Administrative City level, implementation unit at Subdistrictlevel, and Implementation unit at Urban VillageAdministration level. The form of OSS agency nowis diff erent from the former one consisting only OSS on Investment at provincial level and AdministrativeCity OSS at Administrative City level. Besides formatof the institution, other signifi cant change arranged in the Local Regulation is an increase in OSS authority,i.e. from formerly as an administration post now it hasthe full authority on the whole process since receivingapplication document until issuing license and non-license documents. Other substances arrangedincludes human resource, facilities and infrastructure,��ȱęȱ��ȱ� �Ĵȱ��ǯȱ��ȱ��ȱ��ȱ��ȱ��ȱis expected that various problems generally occurred

before now can be resolved.

In accordance with Minister of Home Aff airs � ��ȱ ��Ĵȱ��ȱ � �� ȱ śŖŖȦŗŗşŗȦ� Ȧ��ȱ ��ȱImprovement of National Guidelines regardingOSS Implementation Guidelines which refers to theMinister of Home Aff airs Regulation No.24 Year 2006 on OSS Guidelines, there are four phases of OSSformation in the region (Figure 4). The four phases are:1) Preparation Stage: bring to same perception, buildcommitment, design OSS implementation, prepareAPBD funding; 2) Phase of Policy Arrangement,System and Procedure Arrangement, Facilities andInfrastructure Arrangement, and Data Base SystemArrangement; 3) Phase of Spreading Informationregarding OSS Institution: launching, socialization

OSS is unity multilevelservice, the fungctionbased on each degreeof authority. Good co-ordination among OSSAgency, Technical Sec-toral and Central Gov-ernment conducted bythe information tech-nology (IT System).

Figure 4. Institutional Design of OSS DKI Jakarta

Figure 5. Steps in OSS Formation

��Ǳȱ��ȱ��ȱ��ȱ�ěȱ��ȱ��ȱ��Ĵȱ��ȱ��ȱśŖŖȦŗŗşŗȦ�Ȧ��

�џђѝюџюѡіќћ

Bring to Same

Build Commitment

Design OSSImplementation

Prepare Funding

�ѕюѠђȱȱ1

�ѝџђюёȱ

�ћѓќџњюѡіќћȱ

�ђєюџёіћєȱ��

Launching

Socialization

Provision ofBrochures/ Leafl et

�ѕюѠђȱȱ3

� ќћіѡќџіћє

юћёȱ

�ѣюљѢюѡіќћ

�ѕюѠђȱȱ4

�ќљіѐѦȱ�џџюћєђњђћѡ

Prepare Policy that is Relevant toFormation of PTSP Institution

�ѦѠѡђњȱюћёȱ�џќѐђёѢџђ

Prepare Service Standard

Prepare Std.Opr.Proc. (SOP)

Determine ComplaintMechanism

�юѐіљіѡіђѠȱӕȱ�ћѓџюѠѡџѢѐѡѢџђȱ

�џџюћєђњђћѡ

Preparation of OSS building

Procurement of OSS Offi ce Fasiliteis

Procurement of InformationFacilities

�юѡюяюѠђȱ�ѦѠѡђњ

�ѕюѠђȱȱ2

13� �

and education, spreading leafl et/brochures; 4) Phase of Monitoring and Evaluation. In the contextof OSS formation in DKI Jakarta, currently Phase 1,i.e. preparation to form OSS in DKI Jakarta has beencompleted. Having the Local Regulation on OSSapproved, OSS formation is now entering the phaseof policy arrangement.

The main point of Policy Arrangement Phase whichwill be analyzed in this Study are the policy onauthority and institution form. Both policies will beanalyzed deeply considering their signifi cant role as the base to form OSS. If policy arrangement onauthority and institution form is mistaken, it maycause ineffi ciency in its formation which in turn may have an impact on licensing and non-licensingservices effi ciency in general.

� Ğȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ǰȱ��¢ȱProvincial Government of DKI Jakarta is undertakingfollowing Phase, i.e. system and procedure, facilitiesand infrastructure, and database arrangements.The Study is also directed to help preparing theseelements of the Phase.

V.2.1. Authority Aspect

V.2.1.1. OSS Degree of Authority in Licensing andNon-Licensing Service

a. OSS Authority in Licencing and non-Licensingbefore Issuance of the Local Government Regulation

Before the local regulation approved, fi eld study result shows that OSS Unit at provincial level aswell as at Administrative City level only functions toreceive application documents for licensing and non-licensing services and deliver documents that havebeen processed completely to the applicants. Butit has no authority to process and sign license/nonlicense document. Such authority still resides withrelevant technical local government agencies.

The authorities to issue license which are now still��Ĵȱ��ȱ ��ȱ ��ȱ ��ȱ �� ȱ ��ȱhave resulted in licensing/non-licensing servicein OSS being not having standards of time andcost for the service. Although each technical localgovernment agency has made an SOP for its licensingservice, however in fact there are still technical localgovernment agencies conducting licensing servicesthat do not conform to the SOP nor the CentralGovernment regulation. At the other sides, OSS hasno authority to impose sanction to the technical localgovernment agency that does not follow the SOP.Resource persons from OSS Administrative City andfrom the province say that it is diffi cult for them to control and to supervise licensing service that is beinghandled by technical local government agency sinceOSS has no authority for it. It resulted in uncertaintiesin time and cost required for the licensing.

The uncertainty in cost is faced by businessmens inJakarta. Based on the result of fi eld research, resource persons from businessmens believe that ‘OSS’ inJakarta right now brings no signifi cant change on licensing service in DKI Jakarta. There are stilluncertainties in time and cost required for licensing.Moreover, to process big scale permanent businesstrading license (SIUP), businessmens say that theyhave to pay millions rupiah. Whereas, referring tothe Minister of Trade Regulation No 35 Year 2007on Issuance of Permanent Business Trading License(SIUP), article 16 (1), it is mentioned explicitly thateach company applying for new SIUP shall not becharged. The regulation is certainly contrary with itsimplementation in the fi eld.

Findings and evaluation result made by controlagencies also in line with the condition mentionedabove. Several control agencies such as ProvincialInspectorate, State Auditor Board (BPK), CorruptionEradication Commission (KPK), and PresidentialWork Unit for Development Monitoring andControl (UKP4) have some similar fi ndings that OSS performance is not optimum in conducting licensingservice in Jakarta because OSS has no authority inprocessing and signing license/non-license permits.

In addition, another problem arisen, i.e. sometechnical government agencies still open their OSScounters. This is not in compliance with GovernorRegulation Number 14 Year 2010 concerning OSSImplementation on Investment and GovernorRegulation Number 74 Year 2011 regarding OSSImplementation at Administrative City which clearlymention that other than OSS counter offi cial, technical local government agency or other offi cials are not �� Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ǯȱApparently sectoral agencies still refer to the LocalGovernment Regulation No.10 Year 2008 on LocalGovernment Organisation in which it is mentionedthat sectoral agency has a task to provide licensingservice. The result is, many applicants come directlyto sectoral agencies, rather that OSS, to processlicenses.

Another condition found that there are manyapplicants just come directly to sectoral localgovernment agencies (not to OSS) to take licensethat has been completely processed, although the��ȱ��ȱ�� Ĵȱ��ȱ��ȱ� ��ǯȱ��ȱ��ȱ��ȱgovernment agency can have access to contactapplicants through fi eld visit activities or through contact number of the applicant as shown in thebiodata. The result is, such contact between licenseissuer and applicant is diffi cult to be minimalized, and this causes further problem in administrationrecord such as number of licenses that have beenissued in the region. This situation has been disclosedby a resource person from OSS of North JakartaAdministrative City; further, it is mentioned alsothat total number of license/non-license completely

14� �

processed by OSS is only about 20% of the totalnumber of those issued in North Jakarta.

b. OSS Authority in licensing and non-licensingservice according to the local regulation

To overcome problem faced by former OSS due tolimited authority, in the Local Regulation on OSSimplementation a broader degree of OSS authorityhas been regulated. In the Local Regulation it has beenhighlighted that OSS tasks and function are no longerjust as a post offi ce, rather, it has a complete authority in licensing process, i.e. OSS as the entry gate forlicensing service, OSS processes the document andissue the license.

The authority that is owned by OSS based on thelocal regulation is in compliance with the Minister ofHome Aff airs Regulation (Permendagri) Number 24 Year 2006 concerning Guidelines on Implementatinof One Gate Integrated Service. In the Permendagri(article 7) it is mentioned that: (1) OSS Agency degree

of work consists of provision of service for all formsof licensing and non-licensing which are the authorityof regency/city; (2) OSS Agency manage licensing andnon-licensing administration using the principlesof coordination, integration, synchronization, andsecurity of the documents.

OSS authority as mentioned in the Local Regulation isdirected to a complete and ideal OSS concept, i.e. allthe licensing service aff airs are started, processed, and ended at OSS. This will shorten licensing bureaucracychain in Jakarta since people no longer come to manyplaces for licensing/non-licensing process. Peopleand businessmen only need to come to one place,i.e. OSS, and all the required license/non-licensewill be processed. It is not necessary to bring all thedocuments to other agencies. As the result, licensingand non-licensing processes are shortened, thereforeit gives an ease for the people and businessmens.

In authority delegation process of licensing and non-licensing service, one important factor determining

BOX 1DKI Jakarta Provincial Local Regulation on Implementation of One Gate Integrated Service

Chapter IV Scope of WorkPart One Authority

Article 8

(1) Scope of Work of OSS Authority consists of:a. Receive application documents of licensing and non-licensing;b. Examine/check application documents of licensing and non-licensing;c. Implement technical examination/physical test of licensing and non-licensing application;d. Sign licensing and non-licensing documents;e. Deliver licensing and non-licensing documents to the applicant;f. Manage archives of licenses and non-licenses;g. Determine and impose sanctions on misuse of license and non-license; andh. Undertake coordination with local government agencies/local government work unit in relations

with service delivery, supervision, control, and evaluation on licensing and non-licensingimplementation

Source: Governor Regulation No. 74/2011 and Governor Regulation No.14/2010 Source: Local Regulation of DKI Jakarta regarding OSS

Figure 6. OSS Implementation Process Model in Jakarta

License issu-ance and legali-sation in techicalagencies

License issuanceand legalisation in

techical agencies

“dispersed authority in

technical agencies”

Receive applicationand deliver (Post

offi ce)

OSS Unit

on Investment

and Administrative City OSS

“Full Authority ”

License issuance and legalisation

Technical Team

Reception Table

Ü BPTSP

15� �

the success is the role of the Regional Head. Learningfrom the success of a business ease reform carriedout in Yogyakarta City, the Regional Head has avery important role to ensure support from allthe relevant sectoral local government agencies.Delegation of authority to OSS offi cials to process and issue license/non-license documents is successful.Encouraging commitment to support from sectorallocal government agencies by the Regional Headis certainly an integral part of the eff orts to realize implementation of integrated service of one gate��Ĵȱ��ǯȱ��ȱ��ȱ��ǰȱ� ��ȱ��ȱ��ȱ��ȱlicensing authority from technical local governmentagencies to the Licensing Agency is defi nitely the realization of public service improvement isdeveloped and promoted. This also conforms to theessence of regional autonomy to provide optimumservice to the community.

Such bureaucracy reform in licensing has beensuccessful and resulting expected output, i.e. assuredclear, timely, and reasonable cost of public service

as indicated by standardized operation and serviceprocedure that is accessible for public. It has beenconfi rmed through the study result of Sub National Doing Business conducted in 2012 which mentionsthat time duration to process license in Yogyakarta is3 days ahorter compared to average time needed inother cities surveyed in Indonesia.

Looking at the success of Yogyakarta City, DKI Jakartashould be able to improve its licensing service to beeff ective and effi cient especially considering Jakarta is the Capital City of the State with the largest volumeof economy in Indonesia. Delegation of authority inlicensing to BPTSP mandated by the Local Regulationis the most appropriate decision to increase investmentease in Jakarta. Besides, an ease in licensing servicewill encourage and enable informal sector to processits business license.

At the same time this will be an eff ort of DKI Jakarta Provincial Government in response to the complaintsfrom businessmens experiencing obstacles in

BOX 2Background and Obstacle faced in Transforming UPTSA to

Licensing Agency of Yogyakarta City

Integrated Licensing Service at Yogyakarta City was initiated by formation of One Roof TechnicalService Unit (UPTSA). From evaluation it was recognized that service provided by UPTSA was notsatisfactorily as expected. Some problems occurred such as:- UPTSA was only a non-structural institution having a task to coordinate the tasks of technical local

government agencies.- The status of existing human resources were employees of technical local government agencies

assigned to assist UPTSA.- There were no transparency in time duration, cost, requirements as well as procedure that had to be

followed in licensing process.- UPTSA had no independent operational budget.

To overcome the problem, at the end of 2005 through the Yogyakarta City Local Regulation Number 17Year 2005 on Formation of Organisation and Work Procedure of Licensing Agency, status of UPTSA waschanged to a local government agency and was given the authority in processing and issuing license/non-license.

Such transformation of institutional form was initiated by making an inventory of existing licensing inYogyakarta City. In line with that, preparation of human resources, budget, supporting facilities and legalbase for new institution formation are conducted as a consecutive and integrated process. Encouragingcommitment made by the Regional Head to technical local government agencies is certainly an integralpart of the eff ort to speed up implementation.

The main problem faced when the process of integrated service began at the Licensing Agency are:- Impediment in unifying work culture- Impediment in increasing capacity of the apparatus in handling all kinds of licensing- Impediment in collecting and in understanding all the regulations in licensing- Impediment in making a practical administration system.

To solve the problem, within the fi rst six months internal trainings were conducted 2 times per week to increase employees’ knowledge on kinds of licensing. Trainers were recruited from internal as well asfrom relevant technical local government agencies.

16� �

licensing/non-licensing, in particular in uncertaintiesin cost and time required for the process. Havingsuch integrated licensing service, businessmen andthe society will only meet OSS front offi ce staff and OSS technical team (if needed for fi eld examination). By minimizing meeting between OSS offi cials and applicant, opportunity to scalp or to do other dirtyactions can be minimalized.

V.2.1.2. Authority on Kinds of License and Non-License Service

a. Authority on Kinds of License and Non-LicenseService Before Issuance of Local Regulation

Before local regulation on OSS approved, ProvincialOSS Unit on Investment is mandated by the GovernorRegulation to perform service for 39 kinds of licences/non-licenses. Such licenses are focused on capitalinvestment. OSS at Administrative City level ismandated to perform service for 64 kinds of licensesand non-licenses.

At its practice in the fi eld, from 39 kinds of licenses/non-licenses which authority belongs to ProvincialOSS Unit as stipulated in Governor RegulationNumber 14 Year 2010, only 14 kinds of licenses/non-licenses can be processed at the OSS. Similarly for OSSat Administrative City level, from 64 kinds of licenses/non-licenses mandated in Governor RegulationNumber 74 Year 2011, OSS at Administrative City ofCentral Jakarta can only perform services for 18 kinds

of licenses/non-licenses, while Administrative Cityof East Jakarta performs its service for 57 kinds oflicenses/non-licenses. From indepth interview madeinvolving resource persons from Provincial OSS aswell as from Administrative Cities, this situationhappens because some technical local governmentagencies still open their counter for licensing/non-licensing service (as has been described previously).In addition, incapable human resource in technical� �Ĵȱ��ȱ��ȱ�� ȱ�ȱ��ȱ��ȱ��ȱ��ȱmany applications for licensing/non-licensing can notbe processed at OSS.

b. Authority on Kinds of License and Non-LicenseService According to Local Regulation

In line with increased status of OSS authority,Local Regulation on OSS Impelementation alsoincreases kinds of licenses and non-licenses serviceto be performed by OSS. In the local regulation itis stipulated that kinds of licenses and non-licenseswhich authorities belong to OSS agency includeall licenses and non-licenses in 26 areas of localgovernment aff airs.

From preliminary mapping conducted by ProvincialGovernment of DKI Jakarta, there are 196 kinds oflicenses and 86 kinds of non-licenses to be includedin BPTSP degree of authority. Such amounts certainlyare not small ones to be delegated directly to BPTSP,considering that it will need enormous preparationin terms of quantity and capacity aspects of human

BOX 3DKI Jakarta Provincial Local Regulation on Implementation of One Gate Integrated Service

Chapter IV Scope of WorkPart Two Kinds of Licensing and Non-Licensing

Article 9

(1) Kinds of Licensing and Non-Licensing which authorities belong to PTSP agency consist of licensingand non-licensing in the areas of:

a. Education m. Capital Investmentb. Health n. Culture and Tourismc. Public Works o. Youth and Sportsd. Housing p. National Unity and In-country Politicse. Spatial Management q. Libraryf. Transportation r. Communication and Informaticsg. Environmental Aff airs s. Agriculture and Food Securityh. Land Tenure Aff airs that belong to t. Forestry

Regional Government Authority u. Energy and Mineral Resourcesi. Women Empowerment and Child v. Maritime and Fishery

Protection w. Livestockj. Social Aff airs x. Tradek. Manpower and Transmigration y. Industryl. Cooperatives, Micro, Small, and Medium z. Regional Development

Enterprises

17� �

resources and adequate IT system.

�� ȱ��ȱ��ȱ��ȱ��ȱ��ȱ�Ĵȱ��ȱ��ȱdelegating authority for licensing/non licensing are:OSS readiness to receive delegation of authoritiesfor all kinds of licensing and non-licensing service,preparation of human resources, preparation offacilities and infrastructures, and operating guidelinesfor the service.

< Human ResourcesIn order to perform 196 kinds of licensing and 86kinds of non-licensing services, a large number ofemployees will defi nitely be needed. Not only that, the OSS employees must understand each licensingprocess technically so that delegation of authority toOSS can be run smoothly.

< Facility and InfrastructureFacility and infrastructure supports are veryimportant in expediting the process of authoritydelegation of licensing and non-licensing to OSS inparticular information technology (IT) system. Basedon interviews made involving resource personsfrom sectoral localgovernment agencies,some informationobtained i.e. eachsectoral agency has itsown IT system usedin licensing process.Therefore, if an authority delegation will be madefrom sectoral agency to OSS, a system to integrate ITsystem in OSS and IT system in sectoral agencies shallbe prepared. Having some authorities in supervision,control, and evaluation reside with technical agencies,an online system as part of coordination instrumentbetween OSS and technical agencies will certainly beneeded.

< Operating Guidelines for Performing the ServiceOperating guidelines for performing the service inthe form of Standard Operating Procedure (SOP) orStandard of Service are needed to make licensingservice at OSS operational. Not only that, a clearmechanism related to delegation of authority andcoordination between OSS and sectoral agencies isalso required to speed up delegation of authority.

Ideally, an authority delegation process shall bemade in stages and systematicly. It is worth to learnfrom good practices carried out by some regionsin Indonesia such as Yogyakarta City and Sragen,where delegation of authorities of licensing and non-licensing were conducted in some stages and be basedon the needs of the society. Such licenses which havebeen processed through one gate integrated systemin Yogyakarta City are licenses needed by public ingeneral, and licenses considered able to boost up araise and to develop business in particular small andmedium scale businesses. From 76 kinds of licenses

in Yogyakarta City, 34 kinds have been delegated toOSS, while the remaining 42 kinds of licenses are still��Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱOffi ce, Health Agency, Agriculture and Livestock Offi ce, and Transportation Agency. Continual eff orts to add more licenses into integrated service have beenundertaken by City Government of Yogyakarta inorder to improve licensing service.

It also happens in Sragen Regency. Kinds of license aswell as non-license delegated to OSS are amounting to59 for licenses and 10 for non-licenses. Both kinds oflicense and non-license are those support investmentgrowth in Sragen Regency.

Delegation of authority made in stages is importantconsidering the need to make proper preparation forimplementation of the integrative service. Based onexperiences in other regions in Indonesia, delegationof authority made in stages in fact is successful��ȱ�� ȱ��Ĵȱ��ȱ��¢ȱ��ȱ��ȱ��ǯȱ��ȱ � ��ȱ ��Ĵȱ��ȱ � �� ȱ śŖŖȦŗŗşŗȦ� Ȧ��ȱconcerning Improvement on National Guidelineson OSS Implementation Manual mandates that it is

necessary to identifylicensing to decidewhich licensing canbe delegated directlyor in stages. At thisstage, initial eff orts to simplify procedure and

processing requirements, to deduct costs, and shortentime required for licensing/non-licensing shall bemade.

� ��ȱ��ȱ��ȱ� ��ȱ��Ĵȱ��ǰȱ��ȱ��ȱ��ȱshall be made based on:

• General category, means that in licensingprocess special expertise and special tools are notnecessary and therefore service can be conductedby OSS personnel. For this category, licensingauthority can be fully delegated to OSS.

• Human resources with special expertise, meansthat in licensing process human resources withspecial expertise are involved, therefore suchlicensing in this category can be delegated to OSSbut shall be followed by transfer of expert to OSS.

• Sectoral consideration, means that in processinglicense technical agencies will be involved toprovide recommendation or considerationconcerning the license application. Such licensingin this category can be delegated to OSS, butduring licensing process coordination withrelevant technical agencies shall be is required.

• Special tools, means that in processing licensespecial tools such as laboratory, high- technologytools, and so on. Such licensing in this categorycan be delegated to OSS but it must be followed bydelegation of tools and personnel; coordinationwith relevant technical agencies is also required.

Delegation of authority made in stages isimportant considering the need to make

proper preparation for implementation ofthe integrative service

18� �

BOX 4Delegation of Authority of Licensing/Non-Licensing to PTSP at other Regions

Yogyakarta City

When acted as UPTSA, services provided were Civil Registration Certifi cate, Nuisance Permit, Industrial Registration Certifi cate, Warehouse Registration Certifi cate, Trading Business License, Building Construction Permit, Wastewater Discharge (SAL) Permit, Rainwater Discharge (SAH) Permit, in-gang,Land Usage Change Permit (IPPT), Land Usage Permit, Heavy Equipment Rental Permit, and so onuntil advice planning.

As an impact of institutional change to become a local government agency, services provided are widened.From total of 76 kinds of licenses, 34 have been delegated to PTSP. Licenses that are accommodated atPTSP are those required by public, and those considered important for boosting a raise and developingbusiness in particular small and medium scales business sector

Non-licensing service presently conducted at Subdistrict level. Non-licensing service are not includedinto the main tasks of Licensing Agency due to some considerations, i.e. to provide an ease for publicin obtaining non-licensing service. In addition, some licensing have been delegated to Subdistrict level,such as Building Construction Permit (IMBB), Nuisance Permit, Closing Closed Road Permit, StreetVendor Location Permit, and Boarding House Business Permit

Sragen Regency

When built, kinds of licensing/non-licensing services performed by an integrative service institutionwere based on public needs, i.e. 15 kinds of licenses and 8 kinds of non-licenses. When status of theinstitution increased to be an Offi ce, kinds of services was also increased, i.e. 52 licensing and 10 non-��ǯȱ� Ğȱ��ȱ��ǰȱ ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ� Ĝȱȱ��ȱ ��ȱ��ȱ��ȱ��ȱ�ȱ��ǰȱ��ȱ��ȱlicensing/non-licensing services has reached 59 licensing and 10 non-licensing. Kinds of services whichhave been accommodated in BPTSP are focused on such licensing that support investment growth inthe region.

Figure 7. Grouping of licenses under Local Government Authority

��Ǳȱ��ȱ��Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ�ěȱ��ȱ��ǯȱśŖŖȦŗŗşŗȦ�Ȧ��ȱ��ȱ��ȱ��ȱ��ȱGuidelines on OSS Implementation Manual

IDEAL PTSP

Identify License and Analysis ofLocal Regulation on Licensing

Regional Authority in Business-relatedLicensing and Non-Licensing

Administration &Technical Incidental/Direct Supervision

Can not be integrated toPTSP

GeneralHuman Resource

with SpecialExpertise

SectoralConsideration

Special ToolsInstitution/

SpecialPersonnel

Has beeneff ective at Sucdistrict

FullDelegation

Delegation withSpecial Expert

Delegationwith

Coordination

Delegation withTools, Human

Resources,Coordination or

One Roof

19� �

From result of the licensing mapping, it is found thatsuch licensing that could be delegated directly to OSSare:• Basic permit requirement to start business,

��ȱ��ȱ ��ȱ�� Ȧ��Ȭ� ��ȱ��Ĵȱ��ǰȱLand Use Permit, HO/Business Location Permit,Building Construction Permit, and so on.

• Business permits that shall be obtained to operatethe business, such as Industrial RegistrationCertifi cate, Industrial Business License, Business ��ȱ��ǰȱ� �� ¢ȱ��ȱ��Ĵȱ��ǰȱand so on.

• Permits that are related to primary economicsector development, or those related to businesssectors involving many businessmens (micro,small, and medium scale enterprises/UMKM).

V.2.1.3. Licensing and Non-Licensing Service at OSS

a. Licensing and Non-Licensing Service BeforeIssuance of Local Regulation

In general, licensing and non-licensing service atOSS Unit involve OSS and sectoral agency. Flowof the licensing process when OSS status is stilla Unit is shown at Figure 6. At OSS Unit there is acounter that provides information regarding variouslicensing processes required by applicant, includingspatial planning consultation. Applicant who needs alicense shall come to OSS offi ce with the documents as required. The front offi ce personnel receive the �� ȱ��ȱ��ȱ��ȱ��ȱ�� ǯȱ� Ğȱ��ȱthat such application documents are brought torelevant sectoral agencies for further process. If a fi eld inspection is technically required as one of the stagesto be followed and as a considered point for issuance

of the license, the sectoral agency has the authority to��ȱ�ȱęȱ��ȱ��ǯȱ� Ğȱ��ȱ�¡ �� ȱ��ȱ�� ȱ��ȱhaving fi eld inspection (if necessary), sectoral agency determines whether the application is accepted orrejected. If accepted, sectoral agency issues Local��ȱ��Ĵȱ��ȱǻ� �� Ǽǯȱ� Ğȱ��ȱ��ȱ��Ȧ��Ȭlicensing documents be processed completely, thelicense/non-license document is given to OSS to bedelivered to the applicant.

Licensing/non-licensing service at OSS beforeissuance of local regulation is based on GeneralSOP, SOP on SKRD/License/Non-License delivery,SOP on Application Document Submission, SOP onInformation and SOP on Accusation and Complaintthat are belong to each OSS Offi ce. Such SOPs are � ��ȱ��ȱ��ȱ� �¢��ȱ��Ĵȱ��ȱ��ȱ� ��ȱ��ȱ��ȱAdministrative City, while SOP on licensing/non-licensing process is still arranged by each sectoralagency. Due to the various licensing/non-licensingcharacteristics, SOP issued by each sectoral agency isdiff erent from one to another. Having such condition, it is diffi cult for OSS to control on going licensing services. This in turn has an impact in increased riskof licensing/non-licensing delay and uncertainties inimposed cost/charge.

In addition, businessmens perceive such licensingservice process as increasing licensing bureaucracychain. Licensing which could be directly processed��ȱ��ȱ��¢ȱ��ȱ��ȱ��ȱ��ȱ�� Ĵȱ��ȱęȱ��ȱ��ȱ� ��ȱthen passed on to relevant agencies. Certainly suchbureaucracy has a potency to add time required forprocessing the license.

b. Licensing and Non-Licensing Service Accordingto Local Regulation

Figure 8. Flow of the Licensing Service at OSS before Issuance of the Local Regulation

Source: Primary Data (processed)

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Local regulation mandates that alllicensing/non-licensing processes

shall be conducted integratively at oneinstitution

Figure 9. Flow of Licensing Service at BPTSP

Source: Local Regulation of DKI Jakarta regarding OSS Implementation (processed)

Provincial Government of DKIJakarta should prepare an appropriate

implementation strategy in order tosupport authority delegation process so

that it can be applied eff ectively

process. This is in turn has impact on decreasingrisk on delay in processing license/non-license anduncertainty in charged costs

V.2.1.4. Implementation Strategy

Considering stipulation in the local regulationwhich delegates enormous number of licensing/non-licensing services to OSS, Provincial Governmentof DKI Jakarta should prepare an appropriateimplementation strategy in order to support authoritydelegation process so that it can be applied eff ectively.

The implementation strategy and Action Plan to beconducted by DKI Jakarta provincial government inorder to minimize obstacles in licensing/non licensingdelegation process from sectoral agencies to OSS areas follows:

1. Determination of the degree of authoritiesdelegated to OSS shall be made through asystematic mechanism of delegation. Such activitycan be carried out through stage of mappingof prevailing licensing and non-licensing untillocal regulation determined, along with namesof originated local government agencies/localgovernment work units that handling the licensingprocess before the new local regulation approved.

Resulted output is that DKI Jakarta ProvincialGovernment will have a list of existing licensingand non-licensing kinds in DKI Jakarta. Such list is

In order to respond to the complaint experienced byOSS as well as by public, local regulation mandatesthat all licensing/non-licensing processes shall beconducted integratively at one institution. Flow

of licensing process at BPTSP based on the localregulation can be seen at Figure 9. Basic distinction��ȱ��ȱ��ȱ��ȱ��ȱĚȱ� ȱȱ��ȱ��ȱ�Ğȱ��ȱlegalization of the local regulation is upon licensingprocess. Now, licensing process has been fullydelegated to OSS. All the processes at back offi ce are no longer the authority of sectoral agencies, rather��¢ȱ��ȱ��ȱ� ��ǯȱ� Ğȱ��ȱ�� ȱ��ȱ�¢ȱ��ȱoffi ce staff , validation and verifi cation are carried out by back offi ce staff . If a fi eld inspection is technically needed as one of stages that must be followed, and asa consideration before issuing the license, OSS is theone having the authority for fi eld inspection.

� Ğȱ��ȱ �¡ �� ȱ ��ȱ ��ȱ �� ȱ ��ȱ ęȱ��ȱinspection, based on the recommendation fromtechnical team Head of OSS decides whetherapplication for the license is accepted or rejected. If��ǰȱ� ��ȱ��ȱ��ȱ��ȱ��Ĵȱ��ȱǻ� �� Ǽǯȱ��ȱ�Ğȱ��ȱ��Ȧ��Ȭ��ȱ�� ȱhas been completely processed, license will bedelivered to the applicant.

Having fl ow of licensing/non-licensing process fully at OSS, the main benefi t obtained by public in general as well as by businessmen are certainties in processfl ow, time and costs needed. SOP on licensing service which is arranged by OSS makes it easier for OSS toarrange and control licensing/non-licensing service

21� �

a starting document for the new OSS to be used forclassifying licensing and non-licensing processesthat will be delegated to OSS.

2. From result of mapping done in stage 1, thenclassifi cation on collected licensing and non-licensing is carried out. Such classifi cation process is done referring to general Guidelines determinedby Directorate General of Regional Development(Bangda), Ministry of Home Aff airs and certainly takes into consideration the public needs (primarysector development) in DKI Jakarta:

u From mapping of licensing and non-licensingresulted from the abovementioned activity (a),an identifi cation of licensing and non-licensing to be prioritized for improvement of publicservice performance in DKI Jakarta is made.Referring to the result of Doing Businessconducted by IFC every year, and policypackage on ease of business which mandatesDKI Jakarta to improve performance inproviding business ease, it is recommendedthat priority on listed licensing and non-licensing is focused on those related to businessease (basic permits and business start-uppermits) and such permits to develop primary�� ȱ��ǯȱȱȱȱ��ȱ��ȱ� ��ȱ��Ĵȱ��ȱ��ȱBangda, Ministry of Home Aff airs, to ease the process of authority delegation, licensing andnon-licensing delegated at early stage shouldbe those of administrative characteristics.Such delegation process of administrativelicensing/non-licensing in general does notrequire personnel with special expertise skill,therefore the process is simple, fast, and easy.� Ğȱ��ȱ ��ȱ ��ȱ ��ȱ �� ȱlicensing/non-licensing is completed, OSS mayproceed with next stage, i.e. delegation of suchkinds of licensing/non-licensing with technicalc h a r a c t e r i s t i c swhich requirepersonnel withspecial expertise,those requireconsideration fromsectoral agencies,as well as thoserequire special tools/equipment for thelicensing service.

u For such licensing and non-licensing servicesthat have been eff ectively performed at the levels of Subdistrict and Urban VillageAdministration they are not necessarilydelegated but shall remain the authority ofprevious local government units.

3. Identifi cation of the needs and mechanism for placement of human resources and facilities and

infrastructure to support authority delegationprocess. Kinds of licensing and non-licensingauthorities to be delegated to OSS will alsodetermine requirements of human resourcecompetencies and facilities and infrastructureto support licensing and non-licensing servicesdelegation. In this case, identifi cation of facilities and infrastructure contains the needs for specifi c tools and equipment, IT system support, budgetallocation, and other supporting infrastructure.

Output generated:a. List of human resources needed, mechanism

to fulfi l OSS staffi ng, and also the employment status of OSS executive staff . Such staffi ng mechanism can bestrengthened in a Governor’sRegulation which lines out the employment ofthe OSS.

b. List of infrastructures, supporting resourcesand facilities needed to realise the OSS. In orderto guarantee the availability and standards ofresources and facilities at each OSS institution,there should be an implementing arrangementin the form of a Governor Regulation whichat least lines out the standards of resourcesand facilities that must be present in an OSSoffi ce, assurance of budget availability for the operations of the OSS, instructions or standardoperationg procedures (SOP) for the use ofresources and facilities in the OSS etcetera.

4. At the phase of identifi cation of licensing and non-licensing authorities that will be delegated, aregulatory analysis of licensing and non-licensingthat has been done so far in Jakarta was alsoconducted. The results of the analysis showedthat procedures and requirements in obtainingpermits can be simplifi ed (by terminating overlaps of regulations), reducing costs and accelerating

the time needed to processlicensing and non-licensingso that the processesdone in the OSS can beimplemented eff ectively and effi ciently in terms of procedures, cost andperiod.

Outputs generated:a. List of regulationsthat must be amended,

revised or even withdrawn, such as ProvincialRegulation No. 10 Year 2008 on the Organisationof Local Apparatus, several regulations relatedto regional revenues whose contents mustbe adjusted in line with the newest localregulation on OSS executor and also regulationadding the function of OSS executor (SatpelOSS) to the Sub Districts and Urban VillageAdministrations

For such licensing and non-licensingservices that have been eff ectively

performed at the levels of Subdistrictand Urban Village Administrationthey are not necessarily delegatedbut shall remain the authority ofprevious local government units

22� �

The absence of regulation on servicemechanism during the transition periodmay cause confusion for the OSS sideand for the public who will place anapplication for license/non-license

during the transition period

making the Governor Regulation regarding thetransition period are as follows:

1. Arrangement on the role of the head of theregion in promoting common understandingabout the implementation of OSS. Inaddition, the role of the head of the region isvery important in coordinating all relevantSKPD/UKPD to perform their duties andresponsibilities. If instructed by the Governor,it is hoped that the transfer of authority processcan proceed properly and can minimiseimpediments, if any, that may appear duringthe authority transfer process.

2. Arrangement on the duties and responsibilitiesof each relevant SKPD/UKPD in assisting thepreparation for the implementation of thenew OSS. For example, the Board of PersonnelAdministration is tasked to make an analysisof personnel requirements that will be placedin the OSS; the Cooperatives and Small-and-Medium Entreprises Offi ce will be responsible in identifying the service of license and non-license that is within their degree of authority.A coordination mechanism is needed inthe regulation so as to avoid overlaps orcontradictory issues later on.

3. Arrangement on internal socializationfor relevant SKPD/UKPD in regard to theservice of license and non-license. Such isneeded to promote greater understandingon the implementation of the OSS so thatthe relevant SKPD/UKPD truly understandsthe OSS concept that will be done in Jakarta.Further it is hoped that the socialization willmake the transfer of authority of license andnon-license easier. In addition to internalsocialization directly to SKPD/UKPD duringthis transitional period, intensive socializationmust also be done to the people as the directbenefi ciary of such improvement so that the

public will have adequateknowledge of the OSSthat will be implemented.

4. Arrangement on themechanism of service forlicense and non-licensethat are requested duringthe transition period sothat there is no confusion

for the public that are requesting permits orfor the service provider in providing thoseservices during the transition period.

V.2.2 Institutional Aspects

V.2.2.1. Institution of the OSS before the RegionalRegulation

b. Establishing a standard operating procedureon the processing and service of license andnon-license.

5. Arrangements for transitional period and phasesthat must be implemented, In addition tomechanism to transfer authority in granting licenseand non-license, another important issue that mustbe considered at the beginning of establishing anOSS is the arrangement on transition from theprevious OSS into the new OSS. Such transitionalperiod is a time period that will be used to prepare��ȱ� �Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ�� ȱan OSS, including the process of delegation ofauthority from the local government agency/localgovernment working unit (SKPD/UKPD) to theOSS, preparations in making the implementingregulation, preparations to meet the necessarystaffi ngs, facilities and infrastructure and other things needed to support the eff ective implementation of the OSS. Transitional provisionsof the regional regulation on OSS ImplementationArticle 36 (1) mentioned that:

Ketentuan Peralihan, Pasal 36 (1):“At the time that this regulation comes into eff ect, all other regulations related to the authority inservicing license and non-license as mentioned inArticle 8 (1) for all types of license and non-licenseas mentioned in Article 9 (1) in Local RegulationNo. 10 Year 2008 on the Organisation of LocalApparatus, all Local Regulation and/or GovernorRegulation in the areas specifi ed in Article 9 (1) are hereby annulled and declared void”.

With the above stipulation, once the OSS localregulation is enacted, other regulations regardingthe service of license and non-license becomesvoid. Yet the service mechanism during the��ȱ��ȱ��ȱ��ȱ��¢ȱ ��Ĵȱ��ȱ��ȱ��ȱregulation. Ideally, there should be an article thatclearly stipulates the transition, how long it shouldbe and the services provided during the transitionperiod. The absence ofregulation on servicemechanism during thetransition period maycause confusion forthe OSS side and forthe public who willplace an applicationfor license/non-licenseduring the transitionperiod. In the regulation, it was mentioned in oneof the articles that arrangements for the transitionperiod will be set by a Governor Regulation.Therefore the role of the head of the region is veryimportant in gathering the support from all headsof local government agency (SKPD/UKPD) andminimising resistence from the sectoral SKPD/UKPD. Several items that must be considered in

23� �

The form of institution of the OSS at theAdministrativeCity level that is still non-structural have an impacton its temporary/ad-hoc status as an executor unit(Satpel) SKPD whose existence is under the CityManagement Offi ce. Such institution was based on DKI Jakarta Governor Regulation No. 114 Year 2011on the One Stop Shop Implementing Unit. Meanwhile,the investment fi eld of OSS at the provincial level takes the form of a unit under the Board of Investment andPromotion (Badan Promosi dan Penanaman ModalDaerah – BPPMD) which was established based onGovernor Regulation No. 223 Year 2010 dated 30December 2010 on the Establishment of Organisationand Work Procedure of Jakarta’s One Stop Shop Uniton Investment. Structurally, there was no connectionat all between the OSS Unit on Investment and theAdministrative City OSS.

With an ad-hoc institution status, some majorobstacles appear on the fi eld in its implementation. As several resource persons within the OSS mentioned,those obstacles are as follows:

< No authority in the management of humanresourcesThe OSS Unit (Unit satpel OSS) organisationalstructure consists of a unit head, manager,

technical and administrative team. The personnelin those positions are not permanent OSSemployees (organic). OSS personnels are thoseplaced from other technical local governmentagencies to provide assistance, from the SubDistricts and Urban Village Administrations(Kelurahan) or from the public order agency,which are still under the authority of their originalunits.

With such status, the OSS have a hard time inmanaging their personnel and human resources.OSS employees, which are loaned to them,obeys their original unit more than the rulesand standard operating procedures (SOP) of theOSS. In addition, personnel rotations cannot beavoided. This is in spite of the fact that the OSS hasgiven specialised trainings to the employee whichwas then rotated by their original unit, so that theOSS must give new trainings to the replacementemployee. The result is an ineffi ciency in the personnel management.

In addition, the absence of personnel managementauthority in the OSS causes them to have noincentive or disincentive mechanism to improvetheir employees’ performance. The guidelines

Figure 10. Organisational Structure of OSS Unit on Investment before the Regulation

Source: Board of Investment and Promotion DKI Jakarta

Board of Investment and Promotion

InternalSupervision Div.

InvestmentDivision

PromotionDivision

Provincial-OwnedCompanies (BUMD)

Development Div.

Secretariat

OSS Unit onInvestment

Sub-Division ofGeneral Aff airs

AdministrativeTeam

TechnicalTeam

Figure 11. Organisational Structure of Admin-istrative City OSS before the Regulation

Source: Administrative City OSS

Head of OSS Unit

General Aff airs Coord

Technical TeamCoord.

AdministrativeTeam Coord.

to give special support funding for the OSSemployees has been stipulated in the Minister ofHome Aff airs Regulation No. 24 Year 2006 Article 13 (2) on the Guidelines on the Implementationof One-Stop Shop Service. The absence of suchsupport funding makes it hard to increase theperformance of OSS personnels.

< Vague coordination mechanismIn the Governor Regulation that becomes the basisof the establishment of the OSS, it was stated thatan OSS is led by a head who holds a IIIA echelon

24� �

V.2.2.2. OSS Institutional Form in the LocalRegulation on OSS Implementation

ThroughtheLocalRegulationonOSSImplementation,the institutional status of the OSS has been elevatedinto an Agency. Such status elevation also aimsto strengthen the performance of OSS as the onlyinstitution that provides service for license and non-license in Jakarta.

The choice of anAgency is in line withMinistry of HomeAff airs Regulation No. 20 Year 2008 onthe Guidelines ofOrganisation andWork Structure of OSSUnit. In the Regulation,it was stipulated that

the OSS can take the form of an Agency or an Offi ce.

The institutional form of the OSS as a stand-aloneagency is diff erent to that stipulated in Presidential Regulation No. 27 Year 2009 on the One Stop ShopService on Investment (Investment OSS) and theHead of the Indonesian Investment CoordinatingBoard (BKPM) Regulation No. 6 Year 2011 on theImplementation, Development and ReportingProcedures of One-Stop Shop Service on Investmentwhich refer to Law No. 25 Year 2007 on Investment. Inthe regulation it is stated that an OSS on investmentis conducted by a Provincial Government Agency inInvestment Aff airs (Perangkat Daerah Provinsi Bidang Penanaman Modal – PDPPM), where in the contextof the Jakarta Province it would be implemented bythe DKI Jakarta Board of Investment and Promotion(Badan Promosi dan Penanaman Modal Daerah –BPPMD).

Further analysis in the context of the Jakartaadministration, the Governor as the highest authorityin the province have the power over all types of licenseand non-license. If all of those license and non-licenseauthority are given to the BPPMD, whose tasks andresponsibilities are not limited to the servicing oflicense and non-license, then the servicing of thosesaid license and non-license will not be optimizedsince there are so many numbers of license andnon-license that the provincial government issues.Therefore in order to have an institution that is morefocused towards the servicing of license and non-license, it is a logical choice to have an OSS unit as astand-alone agency.

The OSS institutional form as an agency is alsointended to place the head of the OSS at the sameechelon level as other head of technical offi ces. With the same level, it is expected that the transferof authority from the sectoral local governmentagencies to the OSS will be easier and also facilitate

Through the Local Regulation on OSSImplementation, the institutional status

of the OSS has been elevated into anAgency. Such status elevation also aims tostrengthen the performance of OSS as theonly institution that provides service for

license and non-license in Jakarta

status, tasked to coordinate with all the technicaloffi ces and units which are involved in the issuance of a specifi c permit. The head of offi ces that have the authority in the formulation of SOPon licensing have a II echelon status. The diff erence in echelon position became a coordination barrier��ȱ��ȱ� ��ȱ��ȱ��ȱ��ȱ�Ĵȱ�� ȱ��ȱ��ȱ��ȱthe proper servicing of licenses in Jakarta canbe done expediently in line with the existingregulations. Therehas not been aspecial rules-basedmechanism thatis implementedas a coordinationeff ort between the OSS unitwith the sectoraloffi ces in regard to monitoringand evaluating the licensing service in Jakarta.Coordination done so far is limited to personalapproaches made by the OSS head to eachrespective head of technical local governmentagencies who have the authority in issuing aspecifi c permit. This happened because there is no binding SOP that can increase the eff ectiveness of coordination between all related parties in thelicensing service. The absence of such specifi c mechanism on coordination process, whichshould have been stipulated in a regulation,became an obstacle to expediting the licensingservice in Jakarta.

< No authority in budget managementȱ � �ȱ�ȱ��Ȭ��ȱ��¢ȱ�Ĵȱ��ȱ��ȱ��ȱ

institution, theOSSdoesnothavetheirownbudgetwhich can be utilised in the implementation ofvarious programmes to enhance the performanceof service implementation of licensing or non-licensing. The absence of an operational budgetto implement various programmes related tolicensing implementation have an eff ect on the lack of innovation that the OSS should havedone to increase effi ciency, eff ectiveness and performance in their licensing service to thepublic. In addition, the OSS does not have thefl exibility to carry out training activities that are needed in order to enhance the humanresources capabilities that they have and also tofurther develop the necessary facilities to hastenthe licensing service in Jakarta. This is ironicconsidering the fact that, as a main gate for publicservice, the OSS needs a large amount of budgetto improve the implementation of licensingservice. Currently Jakarta’s Regional Revenueand Expenditure Budget (APBD) reaches Rp 50trillion, but there are none allocated to providethe level of service needed in the provision ofsuch public service as required by Law No. 25Year 2009 on Public Service.

25� �

coordination in the implementation of licensing andnon-licensing services between the OSS and otherlocal government agencies.

In the local regulation on OSS Implementation, itwas stipulated that the OSS implementing agency iscomprised of a provincial level OSS Board (BPTSP),OSS Offi ces at the Administrative City/Regency levels, and OSS Implementing units at the SubDistrict level (Satpel Kecamatan) and Urban VillageAdministration level (Satpel Kelurahan) (Figure 10).Such institutional design created a seamless serviceunity (instead of a segmented/leveled service) thatis connected through an combined, integratedinformation management system.

The main purpose of such design for OSS institutionis to get services closer to the public. With thelicensing and non-licensing service provision atUrban Village Administration level, the generalpublic or businesman does not need to travel far tothe OSS offi ce at the city/regency level if they need to apply license/non-license. Nevertheless, it is stillPPTSPible for applicants to come directly to the OSSOffi ce or BPTSP to request license directly since all levels of OSS have the authority to accept licenseand non-license application. Consequently, if the

applications accepted does not fall under its authority,then the receiving OSS unit will conduct internalprocess by sending the application documents to therelevant OSS unit with the authority to process suchdocuments. Therefore this can increase eff ectivity, effi ciency and the quality of service so as to make it easier, faster and cheaper.

Another eff ort from the provincial government to increase the quality of service for license and non-license is by placing personnels with good publicservice quality in the OSS. In addition, in orderto overcome the many obstacles in the humanresources fi eld, the local regulation also stipulated that personnels assigned to the OSS becomes OSSemployees. This means that the OSS have theauthority to manage those personnels since they arepermanent (organic) employees of the OSS. Thereforethe OSS can optimally manage their own employeesin order to increase the quality of service of licenseand non-license, including by having varioustrainings, providing incentives or disincentives andalso implementing standard operating procedures forOSS personnel.

The OSS budget management system has also beenimproved in the regulation. The budget needed to

Figure 12. Organisational Structure of DKI Jakarta OSS Service Board according toLocal Regulation on OSS Implementing Agency (PPTSP)

Sub Divisionof Planning

and Budgeting

Sub Divi-sion of

GeneralAff airs

Sub Divisionof HumanResource

SubDivision of

Finance

Secretariat

PTSP Offi ce of Administrative City

Division

Sub Division ofGeneral Aff airs

Sub Division ofGeneral Aff airs

Division Division Division Division

PTSP Offi ce ofAdministrative Regency

OSS ImplementingUnit at the Sub District

Administration

OSS Implementing Unitat the Urban Village

administration

OSS ImplementingUnit at the Sub District

Administration

OSS Implementing Unitat the Urban Village

Administration

Division

Group of FunctionaryOffi cials

Adm. Team Technical Team Adm. Team Technical Team

Head of the Board

Deputy Head

Source : Regulation on OSS Implementation

26� �

Taking the form of an integrated board (BPTSP),institutionally it has the same standing as anindependent local government agency which hasfl exibility in implementing the tasks and functions of an OSS. The OSS united structure in providingservice from the provincial level to the Urban VillageAdministration level will make it easier for the publicin applyingfor licenseandnon-license;butontheotherside if the transfer of authority from the previous OSSimplementing unit to the new OSS Agency does nothave good preparations and systematic mechanismthen it may cause future ineffi ciency for the new OSS. Moreover implementation of the new OSS willrequire many personnel and technological supportin building an internal coordination mechanismin each OSS unit and coordination with the centralgovernment and the public as its direct user.

Several clauses related to the status and function ofthe OSS in the local regulation are still too general,therefore a more detailed implementing arrangementis needed in regard to the status and function of eachOSS implementing unit. Some issues that should beconsidered in strengthening the institutional designof the OSS are as follows:1. Clear legal provision regarding the status of the

BOX 5DKI Jakarta Provincial Regulation on the One Stop Shop Service

Chapter VII PersonnelArticle 11

(1) Personnel assigned to the OSS implementing unit becomes the employee of the OSS implementingunit.

(2) Personnel assigned to the OSS implementing unit must have expertise in the fi eld of public service.(3) Expertise as mentioned in clause (2) includes:

a. Knowledge of license and non-license;b. Knowledge in the fi eld of public service;c. Skills in the fi eld of public service; andd. Integrity in public service.

(4) In order to fulfi l the personnel expertise as stipulated in clause (2) and (3), selections and nurturing can be done as required.

BOX 6DKI Jakarta Provincial Regulation on the One Stop Shop Service

Chapter VIII BudgetArticle 12

(1) The budget needed to implement a one stop service will be provided from Regional Revenue andExpenditure Budget (APBD).

(2) Revenues from the implementation of OSS will form a part of the region’s revenue.ǻřǼȱ ��¢� ��ȱ��ȱ��ȱ��ȱ��Ȧ��Ȭ��ȱ ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ ��ȱ��ȱ�� Ĵȱ��ȱ��ȱ��ȱ

account of the Regional Treasury.(4) Management of revenues and expenditures as stipulated in clause (1) and (2) will be done in

accordance with the prevailing national and local rules and regulation on budgeting.

implement an OSS is independent and no longer�Ĵȱ��ȱ��ȱ��ȱ��ǯȱ��ȱ ��ȱ��ȱ�ȱgood spirit for management of the budget. TheOSS implementing unit will have a full authorityin managing their budget. And consequently thiswill promote innovation of many programmes andfacilities that the OSS needed to improve effi ciency, eff ectivity and performance in providing service of license and non-license for the public.

V.2.2.3. Implementation Strategy

�Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱright purpose for the implementation of integratedlicense and non-license service down to the UrbanVillage Administration level. Nevertheless, special�Ĵȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ��ȱauthority in granting license and non-license at theBPTSP (provincial level), OSS Offi ce (City/Regency level), OSS implementing Units of Sub District(Satpel Kecamatan) level and OSS Urban VillageAdministration (Satpel Kelurahan) level. Shouldthere be no clear delineation, then it may deviate fromthe original purpose and confuse the general publicand business sector in their license and non-licenseapplication.

27� �

Sub District Administration and Urban VillageAdministration, in terms of its function as animplementing unit for license and non-licenseservice (OSS Satpel) as well as its function as alocal government apparatus that must performgoverning tasks with authority transfered from a

superior level. In the OSS local regulation (PerdaPPTSP) it was stipulated that Sub District andUrban Village Administration Implementing Units(Pelaksana Satpel Kecamatan dan Kelurahan) arelocal government units who is charged with suchservice while there has been no clear arrangementin regard to its authority in managing and usingpersonnel, budget, facilities and infrastructurewhich are needed. Therefore further arrangementswhich specify the organisational structure of suchOSS units are needed, which at a minimum mustcover:< Arrangements regarding tasks and functions

of each OSS implementing unit, from BPTSPat the provincial level until the implementingUnit at Urban Village Administration level(Satpel Kelurahan);

< Arrangements regarding the division of tasksand functions of each OSS implementingunit, including licensing and non-licensingtasks that become the authority of each OSSimplementing Unit. This should be in linewith the license and non-license mappingand transfer which happen at the authoritytransfer process.

2. Identifi cation of personnel, facilities and infrastructure needed to support the operationsof license and non-license service at the OSS. Thisis done in parallel with the process of transfer oflicensing and non-licensing authority, mappingof personnel, facilities and infrastructure needed.With OSS implementing units at the Sub Districtand the Urban Village Administration levels asthe main gateway in OSS service, then the needfor personnel and other supporting facilitiesand infrastructure should be aligned with whatis available. It will also determine what level ofservice quality can be provided initially. Severalfactors that is needed in order to increase theperformance of the OSS in providing prime serviceare as follows:a) Personnels assigned to the OSS must have

the appropriate capabilities in public service,therefore its provision must be aligned towhat is needed by the OSS (the kinds oflicense and non-license which falls underthe OSS authority, its capacity, quantity and

employment status). Such activity can bedone in parallel with the authority transfer

process. To anticipate PPTSPible resistencecoming from some technical local governmentagencies (SKPD), then a binding regulation isneeded to set the OSS personnel. The JakartaProvincial Government may arrange this� �Ĵȱ��ȱ�¢ȱ��ȱ�ȱ ��ȱ��ȱ��ȱOSS personnel which regulates the following:< The needs for personnel and the

organization structure of the OSSimplementing unit;

< Employment status of the OSS. Ideallypersonnel assigned to the OSS arepermanent staff members so that the OSS will have full authority in managingthem. Nevertheless, it is necessary toinvolve sectoral local government agenciesespecially in regard to technical permits.

< Assignment of personnels must take intoconsideration their skills and capabilities.For example, someone with administrativequalifi cation can be assigned to the front offi ce while the back offi ce is fi lled with personnels with technical skills;

< Arrangements for personnel recruitmentmechanism. Fulfi lling the personnels in the OSS should involve technical localgovernment agencies, especially in regardto technical permits and in considerationof those technical local governmentagencies to transfer their personnel to theBPTSP (OSS at provincial level). To fulfi l the back offi ce and for permits which require particular expertise, DKI Jakarta’sBPTSP Board can recruit staff s from sectoral local government offi ces while for administrative (front offi ce) purposes, it can recruit new personnels;

< Arrangements regarding OSS personneldevelopment, for example through regulartrainings and courses.

< Arrangements on rewards andpunishments in order to motivate OSSpersonnels and increase their performance.

b) Clarity in budget management and supporton facilities and infrastructure.A potential budget ambiguity may appear atOSS implementing units at the Sub Districtand Urban Village Administration levels.Local apparatus at the Sub District andUrban Village Administration levels tasked tobecome an OSS executive unit actually alreadyhave their own responsibilities in addition toproviding license and non-license services.

a more detailed implementingarrangement is needed in regard tothe status and function of each OSS

implementing unit

Personnels assigned to the OSS musthave the appropriate capabilities in

public service

28� �

VI. CLOSURE

Before the enactment of the local regulation onOSS implementation, the OSS unit at the Provincalas well as the Administrative City levels still playthe role as a post offi ce. The OSS does not have the authority to issue license and non-license. Theminimum authority has resulted in OSS unit beingunable to conduct eff ective and effi cient license and non-license services. Several obstacles faced by theOSS unit are uncertainties in terms of time, cost andprocedures in processing license and non-license aswell as applicants going directly to technical localgovernment agencies and not through the OSS. Toovercome those challenges, local regulation on OSSImplementation has given a wider authority to theOSS. The authority of the OSS in the local regulationis in line with an ideal and holistic OSS, where allservices for licensing began, processed and ends atthe OSS. This will shorten the bureaucratic llicensingchain in Jakarta since the public will not need to visitso many places when they want to apply for variouslicense and non-license.

With the enhancement of status of authority of theOSS, the local regulation on OSS Implementationalso stipulates the kinds of permits that are includenin the OSS services. The regulation stipulated thatall kinds of license and non-license that falls underthe authority of the OSS includes all the licenseand non-license in 26 areas of regional governmentaff airs. Yet ideally the transfer of authority process is done gradually and systematically. This gradualtransfer of authority is important to be done since itneeds to be well-prepared in order to implement anintegrated service. Based on experiences from other��ȱ��ȱ��ȱ��ȱ��ȱ��ȱ ��ȱ�ȱ� ��ȱ��Ĵȱ��ȱof the Directorate General of Regional Development(Bangda), such gradual transfer of authority hasproven to be successful in increasing the quality oflicense servicing. Several kinds of permits that canbe directly transfered to the OSS are basic permitsthat are the basic requirements in starting a business,business permits and also permits related to thedevelopment of prime economic sectors.

� Ğȱ��ȱ��ȱ�� ȱ��ȱ��ȱ��ȱ��ȱ��ȱ� ��ǰȱthe Jakarta provincial government naturally shouldestablish an appropriate implementation strategito safeguard the authority transfer process so thatit will be eff ective. The implementation strategy that can be done in regard to the authority aspectsis determination of the degree of authority thatwill be transferred to the OSS, which must be donethrough a systematic, step-by-step mechanism,identifying needs and mechanism for placement ofpersonnel, facilities and infrastructure which supportthe gradual authority transfer process, conducting aregulatory analysis on licensing and non-licensingthat have been conducting so far in DKI Jakarta,arranging an SOP on licensing and non-licensing, as

Clarity in budget management andsupport on facilities and infrastructure

Additional tasks of licensing and non-licensingservices to their responsibility may well add

burden in terms of work load and budgeting.Therefore a clear budget mechanism for thoseOSS implementing units at the Sub Districtand Urban Village Administration levels isneeded so as to avoid overlaps in budgetingauthority.

In addition to budget support, adequatefacilities and infrastructure will alsodetermine the good performance of an OSSunit. Information technology support is animportant factor in increasing the effi ciency of license and non-license services. Applicationof electronic-based OSS licensing and non-licensing services at the Urban VillageAdministration level to the BPTSP (provinciallevel) will accelerate the processing of�� ȱ ��ȱ�ȱ��Ĵȱ��ȱ��ȱ��ȱ��ȱadministration, which also will supportinformation transparency. The public will be atease in accessing procedures and requirementsin permit application, as well as knowingwhich phase their application for permit are.To ensure a standardised provision of facilitiesand infrastructure, including technologicalresources, a Governor Regulation is neededwhich should arrange, at least the following:1) Arrangements for the facilities and

infrastructure that are needed at each OSSimplementing unit (BPTSP, OSS Offi ce, and OSS units at Sub District and Urban VillageAdministration levels). Such facilities andinfrastructure need can be adjusted tothe type/kinds and scale of permits thatbecomes the authority at each level andalso the volume of service.

2) Arrangements for the infrastructurestandards of the license and non-licenseimplementing unit in line with theirrespective tasks and responsibilities;

3) Arrangements for a clear budget allocation;4) Arrangements for the provision of an

integrated information technologysystem, which is synergised internallyand externally in the licensing and non-licensing services. Internally for all levelsof implementing units while externally inrelation to the sectoral local governmentagencies and the general public.

5) Arrangements for the authority transferprocess and synchronisation of all thesystems at each respective sectoral localgovernment agencies into the BPTSP(provincial OSS) system.

29� �

well as making guidelines for the transition periodand the phases that shall be done.

From an institutional perspective, before the localregulation on OSS Implementation is enacted, theOSS is still a non-structural organisation. Suchcondition causes several problems, namely thelack of authority in personnel management, vaguecoordination mechanism and lack of authority inbudget management. To response to those challenges,the local regulation on OSS Implementation increasesthe institutional status of the OSS into a Board. Asan independent institution, it will be easier for theOSS implementing units to coordinate with relevantsectoral local government agencies and to manage

their personnel and budget optimally.

Several other items that must be considered in theprocess to strengthen the institutional design of theOSS are: the need to have a clear, legal base whichstipulates the status of the Sub District (Kecamatan)and Urban Village Administration (Kelurahan),whether its function as implementing unit (Satpel)in conducting license and non-license services or asa local government agency having the responsibilityof performing government aff airs that have been delegated from upper level of GovernmentAdministration, and the need to identify personnel,facilities and infrastructure to support the operations

in licensing and non-licensing services. <

---�●� ---

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