The Regional Autonomy Implementation Monitoring Committee (KPPOD) is an independent monitoring agency with a vision to realize economic development for the welfare of the people by encouraging the creation of a conducive business climate in Indonesia. To realize the vision, this organization which formed in 2000 has a mission to analyze, assess, and provide input for policies and practices of the central and regional governments in implementing regional autonomy for national economic development. The birth of KPPOD was a result of experimental collaboration between business community, academia, and mass media as three important pillars in the social formation of post-reform Indonesia.
KPPOD focuses its monitoring on matters related to public policies and services in the economic, fiscal, and decentralization/regional autonomy policies. Using a multi-perspective approach (economy, politics, law, and public administration), KPPOD conducts studies, advocacy, and provides technical assistance to improve the quality of economic and fiscal governance, and accountable, effective, and democratic governance practices. Following KPPOD’s contribution to the knowledge-to-policy process in Law Number 11 of 2020 regarding Job Creation (Omnibus Law on Job Creation), KPPOD continues its efforts to improve the ease of conducting business through knowledge production and advocacy to influence implementing regulations for the Omnibus Law on Job Creation.
Study on Derivative Regulations
Since the issuance of the Omnibus Law on Job Creation on October 5, 2020, KPPOD has made the effort to oversee the various Government Regulations (PP) as derivatives of the Law. The three draft regulations that are the focus of KPPOD are Government Regulation Number 5 of 2021 regarding Risk-Based Business Licensing (hereinafter PP 5/2021), Government Regulation Number 6 of 2021 regarding Implementation of Business Licensing in the Regions (PP 6/2021), and Government Regulation Number 10 of 2021 regarding Regional Taxes and Regional Levies in Supporting Ease of Business and Regional Services (PP 10/2021). KPPOD conducted a desk study of the three draft regulations since November 2020 by focusing first on PP 6/2021 while overseeing the drafting process for the other two regulations.
From the results of the study, KPPOD found that draft Regulation (RPP) Number 6 of 2021 regarding Implementation of Business Licensing in the Regions has no provisions regarding gender equality, disability, and social inclusion (GEDSI). KPPOD recommends that the RPP shall regulate affirmative provisions for vulnerable groups, especially people with disabilities and the elderly, in business licensing process using the integrated electronic-based system. Although the One-Stop Integrated Service (Pelayanan Terpadu Satu Pintu/PTSP) Unit, which serves the licensing process, has provided the space and assistance for these groups, KPPOD recommends that the RPP should also provide certainty for vulnerable groups when accessing electronic-based service systems.
To maintain quality in the business licensing process, KPPOD recommends that qualifications of State Civil Apparatus (ASN) assigned in management of business licenses shall be certified in this field and have qualification and competency standards referring to Indonesian National Work Competency Standards (Standar Kompetensi Kerja Nasional Indonesia/SKKNI) in the business licensing sector and/or in accordance with provisions of statutory laws. Furthermore, the KPPOD study informs that local governments need standard methods and review tools in the process of drafting, facilitating, and evaluating drafts of regional regulations (Rancangan Peraturan Daerah/ranperda) or drafts of regional head regulations (Rancangan Peraturan Kepala Daerah/ranperkada) by the minister or governor. To accelerate the drafting of regional regulations and regional head regulations, KPPOD recommends that the RPP determines the use of methods (review tools) in the facilitation and evaluation of regional regulations and regional head regulations by the minister or governor.
Regarding risk-based business licensing, KPPOD ensures that Draft Regulation 5/2021 uses a bottom-up approach and that the multi-stakeholder collaboration at local level considers Indonesia’s geographical and socio-cultural diversity. KPPOD recommends that the government involve regional stakeholders, including local governments, certified experts, and affected communities in analyzing and determining the level of risk. KPPOD also recommends clarity on roles of stakeholders involved in determining the risks, including public involvement as affected parties who can provide information on potential risks for business plans and/or activities. For business efficiency, KPPOD encourages regulations to include a period of time in notification of approval or rejection of business licensing applications in the Online Single Submission (OSS) system.
Meanwhile, regarding regional taxes and regional levies, KPPOD found that it was necessary to reaffirm objects of regional taxes and regional levies as regulated in RPP 10 of 2021. In addition, the RPP needs to regulate involvement of local governments in the review process of proposed adjustment to regional tax rates and/or levies. The local government needs to be directly involved considering that the local government is the party that will be affected fiscally. In carrying out this review process, KPPOD provides recommendations so that the Minister of Finance can coordinate with regional governments and relevant ministries/technical institutions as part of efforts to support the acceleration of national strategic programs implementation in the regions.
Policy Change
KPPOD conducted various dialogues to obtain input from local governments and business actors in formulating recommendations and conducting advocacy. In overseeing RPP 6/2012, on November 22, 2020 KPPOD brought recommendation documents informally to senior staff of the Ministry of Home Affairs (MoHA). A week later, KPPOD held a formal discussion with the Director of Deconcentration, Assistance Duties, and Cooperation of the Ministry of Home Affairs, Prabawa Eka Soesanta. On this occasion it was evident that RPP 6/2012 has been updated (25thversion) to accommodate KPPOD’s recommendations regarding the issue of GEDSI and qualifications of State Civil Apparatus (ASN) assigned in licensing administration.
The 25th version of the RPP states “the provision of business licensing services in the regions shall be equipped with special services for vulnerable groups, the elderly, and people with disabilities” in Article 10 point 3. Meanwhile, qualifications of ASN assigned to One Stop Integrated Service (PTSP) unit was also accommodated in Article 24, which reads “State civil apparatus assigned to DPMPTSP (Dinas Penanaman Modal dan Pelayanan Satu Pintu) as stipulated in Article 23 paragraph 1 must meet qualifications and competency standards set by the ministry/non-ministerial government agency.” KPPOD succeeded in advocating the contents of these articles until the regulation was issued by the government on February 2, 2021.
Meanwhile, advocacy on RPP Number 5/2021 started with informal discussions with senior officials at Coordinating Ministry for Economic Affairs. KPPOD began conducting formal advocacy in January 2021 by inviting Expert Staff for Development of Productivity and Competitiveness at the Coordinating Ministry for Economic Affairs to have a dialogue on the recommendations prepared by KPPOD. Communication and interaction between KPPOD and the Coordinating Ministry for Economic Affairs is built on long-standing relationships through previous studies.
In PP Number 5/2021, which also was stipulated on February 2, 2021, KPPOD’s recommendation regarding multi-party collaboration at the local level were adopted in Article 19 point 1e, which reads “Risk analysis shall be done by involving business actors and/or the public.” Meanwhile, recommendation regarding clarity of roles of stakeholders in determining risks were also adopted in Article 19 paragraph 3 which explains the role of business actors and/or public in determining risks. Based on the article, the role of business actors and/or the public can be in the form of providing input, data, and information related to business activities, and increasing understanding of business activities to carry out risk management. KPPOD’s recommendation regarding period of notification delivery in the OSS system was also adopted in Article 192, which states that notification of approval or rejection into the OSS system shall be no later than 20 (twenty) days after application for a Business Identification Number (NIB) is submitted.
Informal discussions also started the advocacy of PP Number 10 of 2021 regarding Regional Taxes and Regional Levies in Supporting Ease of Business and Regional Services. Since November 2020, KPPOD has held informal discussions with senior officials of the Ministry of Finance (MoF) in conjunction with a desk study related to this RPP. In December 2020, draft of problem inventory list (Daftar Inventaris Masalah/DIM) was completed and further discussed with relevant stakeholders. Results of DIM discussion were then sent to the Ministry of Finance and one of the drafters in the Bill on Central and Regional Financial Relations (Hubungan Keuangan antara Pemerintah Pusat dan Daerah/HKPD). In the same month, KPPOD held a formal joint discussion with the Director of Capacity and Transfer Implementation of the Ministry of Finance, Bhimantara Widyajala. KPPOD then formally provided input through Job Creation Law website which allows the public to provide recommendations based on the draft PP that is available to the public.
KPPOD’s recommendation regarding this reaffirmation of PP’s purpose was adopted in a new clause that explains objects of regional taxes and regional levies as stipulated in the Job Creation Law. Meanwhile, involvement of local governments in the process of reviewing regional regulations on taxes, levies, and regional regulations on economy was also adopted in Article 5 paragraph 2 which states that “The Ministry of Finance shall coordinate with the Ministry of Home Affairs, related ministries/technical institutions, and/or relevant Regional Governments.” With the adoption of this clause, it is hoped the strategic programs implementation can be accelerated in the regions.
Knowledge Sector Initiative (KSI) support
Funding support from KSI enables KPPOD to further contribute to the knowledge-to-policy process on implementing regulations for the Omnibus Law on Job Creation. Through KSI’s support, KPPOD is able to provide an evidence base for policy advocacy. KSI’s evaluation and monitoring support also helps KPPOD carry out policy advocacy more systematically. Through program logic sessions, KPPOD could better measure research and advocacy activities and integrate monthly reflective processes in their work so that advocacy with various stakeholders can run more systematically.
