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Indonesia:  Risk-based Approach for Business Licensing

On 22 November 2019, the newly reelected President launched a massive reform program to accelerate the review, reform and streamlining of the licensing system under the leadership of the Investment Coordinating Board (BKPM) and the Coordinating Ministry for Economic Affairs (CMEA). A central element of this reform consists in the review and reform of licenses and permits considered unfavorable for investors and businesses and more particularly to integrated into all licenses a risk-based approach. The new policy was embedded in the Investment Act (previously known as “Omnibus Act”) presented to Parliament in February 2020.

The Asian Development Bank has hired JC&A to develop executable recommendations and and prepare an implementation action plan to undertake the review of all businesses licenses according to risk-based criteria.

The project will be based on three interrelated activities:

  1. Undertake a general appraisal of government capacities to design and implement good quality licenses and permits based on international good practices
  2. Participate in a series of meetings with key decision makers to design a Policy Concept for risk-based licensing program based on recommendations and policy options adjusted to Indonesia.
  3. Prepare a Policy Proposal and an implementation Action Plan to present and discuss the report and building a political constituency for reform.

Asian Development Bank, 2020.