EASE OF STARTING A BUSINESS AND BUILDING CONSTRUCTION: A Case Study of East Java and South Sulawesi

This breakthrough was made as an effort to encourage the creation of a more conducive investment climate for businesses. The OSS RBA licensing service uses risk impact as the basis for granting permits, which are divided into four types of risk, namely low risk, medium-low risk, medium-high risk, and high risk. OSS RBA also introduced a Detailed Spatial Plan (RDTR) as a reference for the suitability of business locations. However, the implementation of OSS RBA in the field is still constrained by overlapping regulations, complicated service procedures, and the length of time it takes to process permits. This classic problem makes Indonesia's competitiveness low when compared to neighboring countries. In response to the above problems, USAID Economic Growth Support Activity (USAID EGSA) and the Ministry of Cooperatives and SMEs conducted a study on two indicators of ease of doing business (EODB) in the regions, namely business licensing and building construction, to identify the challenges faced by local governments in issuing these two permits. The study explores the complexity of licensing procedures in the provinces of East Java and South Sulawesi and/or local governments (kabupaten/kota). These two provinces were chosen to represent the regions in Western Indonesia and Eastern Indonesia. Respondents focused on small and medium enterprises (SMEs) in the tourism sector as both the East Java and South Sulawesi local governments want to increase the ease of doing business for the tourism sector to support regional recovery from the decline in business due to the COVID-19 pandemic. The study uses a qualitative method with a descriptive approach and the analysis was carried out from data collected through Focus Group Discussions (FGD) and in-depth interviews with relevant sources, both with government officials and business actors, especially in the tourism sector. The results of this research analysis have been presented at a National Workshop on December 17, 2021, in Bogor, West Java, which was attended by representatives from the Central Government, Local Government and businesses. The study found that the barriers to business licensing services based on the OSS RBA can be divided into technical, institutional, and regulatory barriers. From the technical side, the study found that it was difficult for SME business actors to understand the entries on the OSS page as they were deemed not user-friendly. In addition, there are still obstacles in synchronizing digital maps for determining business locations. Another technical problem is the system implemented by the Central Government such as the Building Construction Management Information System (SIMBG), the Geospatial Spatial Information System (Gistaru), the Clean Environmental Impact Analysis (Amdalnet) and the National Industrial Information System (SIINAs), which are not yet integrated with OSS RBA. From an institutional perspective, the main challenge is the limited number and quality of personnel in providing risk-based licensing services. In Makassar City, for example, only 2 DPMPTSP staff participated in the RBA OSS training. It was also found that many members of the technical team did not understand the OSS RBA licensing model. On the building permit indicator, the study found that Government Regulation (GR) No. 16 of 2021 concerning Buildings also mandates the Regional Government to form a Technical Inspection Team. This makes it difficult for the region to find people with sufficient technical qualifications to be involved in the Technical Examiner Team. Meanwhile, from a regulatory perspective, the main challenge is that the Regional Government is still waiting for the Norms, Standards, Procedures and Criteria (NSPK) from the Central Government for the implementation of the OSS RBA in the regions, therefore the Regional Government has not issued any regional regulations related to this matter. In addition, the Regional Government is not ready to make derivative regulations related to business permits and Spatial Detail Plans (RDTR). OSS which later became OSS RBA, and infrastructure for licensing services, requires strong support from the apparatus. However, there are still regions that are currently reluctant to use the new OSS system and still use an independent system for business licensing services. Despite experiencing several obstacles, the implementation of RBA OSS-based business licensing in East Java and South Sulawesi shows encouraging developments. In East Java, the study found progress in public services related to the ease of doing business. Currently, licensing services in East Java at the provincial, district, and city levels have been carried out online. Each region has also begun to organize and synchronize regional regulations related to licensing services in accordance with the spirit of the Job Creation Law. Licensing services in East Java have started to synchronize with OSS even though some regions continue to use their own systems, for example in Surabaya City which is still implementing services through the Surabaya Single Window (SSW) Alfa. The local government in East Java also assists businesses in obtaining distribution permits and hygiene standards for SMEs engaged in the food and beverage industry. The local government's efforts are welcomed by SMEs as it reduces the