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COMPARING REGULATION FOR DOMESTIC FIRMS IN 20 CITIES AND WITH 183 ECONOMIES

Doing Business in Indonesia 2012

COMPARING REGULATION FOR DOMESTIC FIRMS IN 20 CITIES AND WITH 183 ECONOMIES

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Doing Business in Indonesia 2012 and other subnational and regional Doing Business studies can be downloaded at no charge at www. doingbusiness.org/subnational.

Copies of the Doing Business global reports: Doing Business 2012: Doing Business in a More Transparent World, Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004: Understanding Regulations may be obtained at www.doingbusiness.org. Contents

1 Executive summary 6 About Doing Business and Doing Business in Indonesia 2012 13 Starting a business 20 Dealing with construction permits 26 Registering property

31 Data notes 37 Indonesia city tables 40 Doing Business indicators

List of procedures 42 Starting a business 68 Dealing with construction permits 83 Registering property

98 Acknowledgments

Doing Business in Indonesia 2012 is the second reports published by the World Bank and Interna- subnational report of the Doing Business series tional Finance Corporation. The indicators in Doing in Indonesia. In 2010, quantitative indicators on Business in Indonesia 2012 are also comparable with business regulations were analyzed for 14 cities: 352 cities from 54 economies benchmarked in Balikpapan, Banda Aceh, Bandung, Denpasar, other subnational Doing Business studies. All data Jakarta, Makassar, Manado, Palangka Raya, and reports are available at http://subnational.do- Palembang, Pekanbaru, Semarang, Surabaya, ingbusiness.org and www.doingbusiness.org. Surakarta, and Yogyakarta. This year, Doing Busi- ness in Indonesia 2012 documents improvements Doing Business investigates the regulations that in the 14 cities previously measured and expands enhance business activity and those that constrain the analysis to 6 new cities across the nation: it. Regulations affecting 3 stages of the life of a Batam, Gorontalo, Jambi, Mataram, Medan, and business are measured at the subnational level in Pontianak. The selection criteria include the level Indonesia: starting a business, dealing with con- of urbanization, population, economic activity, struction permits, and registering property. These political and geographical diversity, and other indicators were selected because they cover areas factors in consultation with the State Ministry for of local jurisdiction or practice. The indicators are Administrative Reforms (Menpan), the Ministry used to identify business reforms and the extent of Home Affairs (MoHA) and the Regional Au- to which these have been effective in simplifying tonomy Watch (KPPOD). the procedures, saving time, and lowering the cost of doing business. The data in Doing Business in In- Comparisons with other economies are based donesia 2012 are current as of July 2011. on Doing Business 2012—Doing business in a more transparent world—the ninth in a series of annual

1

Overview

Ambitious and fast rising—these words the development of small to medium-size Second, cities that improved their business aptly describe modern Indonesia. Amidst a domestic firms—the backbone of Indonesia’s regulations since they were last measured global economic slowdown, Indonesia was economy. This is also important for women are surpassing their peers and moving closer the third fastest growing economy among entrepreneurs in a country where 60% of to the top performers. Thanks to recent busi- the G-20 for 2009 and it continues to post medium-size firms are owned or operated by ness reforms, Semarang is now one of the strong economic growth, at a projected rate women.5 cities where it is easier to start a business and of 6.4% for 2012. Banda Aceh is now one of the cities where it Doing Business studies business regulations is easier to deal with construction permits, However, despite its strong economic per- from the perspective of a small to medium- compared to 2 years ago. Third, some ranking formance, Indonesia faces challenges that size domestic firm. Jakarta represents the changes can be attributed to the addition of stifle private-sector development. Skilled country in the annual Doing Business report, labor shortages, poor infrastructure and an which compares regulatory practices in 183 TABLE 1.1 Where is it easier to start a onerous regulatory framework are 3 major economies around the world. Yet, within business, deal with construction bottlenecks to business expansion.1 The Indonesia, local regulations and practices permits or register property? World Bank’s Enterprise Surveys show that vary from city to city. Doing Business in Ease of Indonesian firms identify an inadequately Indonesia 2010 was the first report to go Ease of dealing with Ease of starting a construction registering educated workforce and high rates of infor- beyond Jakarta, to capture these differences City business permits property mality as two of the top 10 constraints to in 13 other cities on 3 Doing Business topics: Balikpapan 7 1 12 firm investment.2 One of the key causes of starting a business, dealing with construc- Banda Aceh 5 4 12 this high rate of informality in Indonesia is tion permits and registering property. This Bandung 12 8 1 the heavy regulatory burden borne by firms. report updates the information presented in In fact, nearly 30% of firms in Indonesia 2010 and tracks the progress in implemen- Batam* 15 10 20 start operations without being formally tation of business reforms. It also expands Denpasar 9 17 12 registered.3 the analysis to cover 6 additional cities, to Gorontalo* 6 NO PRACTICE 5 provide a more comprehensive map of busi- Jakarta 8 19 1 Improving economic competitiveness by ness regulation in the country. The summary Jambi* 18 2 7 creating a more salutary business climate is results are presented here (table 1.1). Makassar 17 11 9 one of Indonesia’s national priorities for 2010 Manado 20 18 15 to 2014.4 Making it easier to do business and Across Indonesia, it is easiest to start a busi- Mataram* 10 12 4 invest also helps promote sustainable urban- ness in Yogyakarta, deal with construction ization, another of Indonesia’s key national permits in Balikpapan, and register property Medan* 19 6 7 development objectives. Business reforms in Bandung and Jakarta. It is most difficult Palangka Raya 2 14 16 can facilitate business start-ups, encourage to start a business in Manado and register Palembang 11 3 3 investments and boost employment in cities property in Batam. Dealing with construc- Pekanbaru 16 15 18 across the country. tion permits is most burdensome in Jakarta, Pontianak* 13 7 9 while no building permits for commercial Semarang 4 8 19 There is no single blueprint for how to grow warehouses have been issued in Gorontalo Surabaya 14 16 11 and prosper, yet creating an investment since 2008. climate conducive to starting and running Surakarta 3 12 17 a business, where complying with regula- When comparing the results from 2012 with Yogyakarta 1 5 6 tions brings more benefits than costs, helps. those from 2010, a few trends emerge. First, Note: The ranking on each topic is based on the simple average of the percentile rankings on its This is especially important in a country as consistent performers stay at the top. For component indicators. See Data notes for details. decentralized as Indonesia, where effective example, Yogyakarta maintained its position *Cities not benchmarked in Doing Business in and harmonious policy design and imple- among the top performers in starting a busi- Indonesia 2010 report. mentation at the local level are crucial for ness, and Bandung in registering property. Source: Doing Business database. 2 DOING BUSINESS IN INDONESIA 2012

FIGURE 1.1 Tracking Indonesia’s* progress over time in the areas measured by Doing Business 2006– provided recommendations for improve- 2012: Distance to the frontier ments across 14 cities in Indonesia. Two years later, Doing Business in Indonesia 2012 Distance to the frontier (percentage points) tracks progress over time. 0 HIGHEST PERFORMANCE GLOBALLY DB2012 The findings are encouraging: 22 business 10 DB2006 reforms at the local level have made it 20 easier to do business since 2010. For start-

30 ing a business, all 14 cities measured for the second time show improvements. For deal- 40 ing with construction permits, 10 out of 14 50 cities show improvements (table 1.2). While the economic impact has yet to be measured 60 in Indonesia, this report shows that national 70 and local business reforms have already resulted in time and cost savings for local 80 entrepreneurs. 90 In the area of starting a business, all 100 LOWEST Indonesian cities benefited from the na- Starting a Dealing with Registering Getting Protecting Paying Trading Enforcing Resolving PERFORMANCE 6 GLOBALLY business construction property credit investors taxes across contracts insolvency tionwide reintroduction of a computerized permits borders system for company registration—Sistem

Note: The distance to frontier measure illustrates the distance of an economy to the “frontier”—a synthetic measure based on the most Administrasi Badan Hukum (SABH)—and the efficient practice or highest score achieved by any economy on each of the indicators in 9 Doing Business indicator sets (excluding the creation of standard incorporation forms employing workers and getting electricity indicators). The vertical axis represents the distance to the frontier, and 0 the most efficient regulatory environment (frontier practice). The data refer to the 174 economies included in Doing Business 2006. Additional economies for limited liability companies. In addition, were added in subsequent years. improved efficiency at the local branches of *Represented by Jakarta national agencies reduced the time needed Source: Doing Business database. for tax, labor and social security registrations in several cities. 6 new cities, some of which have business- Doing Business. The results for Indonesia friendly regulatory frameworks. For example, show that the pace of change varies widely The national government also issued legisla- among this year’s top performers in dealing across the areas measured (figure 1.1). tion mandating the simplification of local with construction permits is Jambi—a city licensing requirements in an effort to further that was not measured in Doing Business in In the area of starting a business, im- encourage the development of the formal provements reduced the start up time by Indonesia 2010. sector across the country. This affected the 70%—from 151 days in 2006 to 45 days in required business trading license—Surat 2011—and the number of procedures from INDONESIA IN THE GLOBAL Izin Usaha Perdagangan (SIUP)—and the 12 to 8. In dealing with construction permits PERSPECTIVE company registration certificate—Tanda time was shortened by 15%—from 186 days Indonesia has been active in reforming Daftar Perusahaan (TDP). Although these 2 in 2005 to 158 days in 2011. Borrowers now business regulations in recent years. These licenses are governed at the national level by have the right to inspect their credit data at consistent improvements have been rec- the Ministry of Trade, the issuance of these the Bank of Indonesia, improving the qual- ognized in the annual Doing Business report. licenses is under the authority of the local ity and accuracy of the information financial According to Doing Business 2012, Indonesia, governments. The national government institutions use in assessing the risk profiles represented by Jakarta, is among the top 50 set statutory time limits and eliminated or of borrowers. The total tax rate was reduced economies improving the most to close their reduced fees for these 2 licenses, but imple- from 37.3% of profit in 2006 to 34.5% in gap with the top performers globally, and mentation of the new regulations still varies 2011, while online systems for filing taxes cut among the top 5 within the East Asia and the across the cities. the time it takes to pay taxes by more than Pacific region. half—from 560 hours in 2006 to 266 hours Some local governments have taken ad- Comparing an economy’s performance on in 2011. vantage of the national call to simplify local set indicators at 2 points in time helps as- licensing requirements by merging proce- sess how much the economy’s regulatory CITIES ACROSS INDONESIA dures, introducing statutory time limits and environment, as measured by Doing Business, ARE IMPROVING COMMERCIAL eliminating or reducing fees for local licenses. has changed over time—i.e., how far it has REGULATIONS For example, following a 2007 ministe- moved toward the most efficient practices Doing Business in Indonesia 2010 identified rial decree encouraging the establishment of and regulations seen in areas covered by good practices, pointed out bottlenecks and one-stop shops nationwide, Palangka Raya, OVERVIEW 3

TABLE 1.2 Twenty-two Doing Business reforms at the local level made it easier to do business since to formally register their lands by raising the 2010 report the tax-free limit on properties as their Local reforms National reforms market values increased across Indonesia. 8 Dealing with Specifically, a new national law allows local City Starting a business construction permits Starting a business governments to implement regulations to in- Balikpapan crease the tax-free limit. The old national law Banda Aceh of 2008 imposed a maximum non-taxable Bandung  value at IDR 60 million ($5,767). The 2010 Denpasar sets a floor of IDR 60 million, but allows re- 9 Jakarta gions to grant higher tax exemptions. Eleven Makassar   of the 14 cities previously measured raised the tax-free value, nine10 of these only up to Manado  the minimum. Palangka Raya  Palembang  COMPARING BUSINESS Pekanbaru  REGULATIONS ACROSS 20 CITIES Semarang  Surabaya  Surakarta Starting a Business Yogyakarta Starting a business takes, on average, 9

 Doing Business reforms making it easier to do business procedures, 33 days and costs 22% of in- Note: A reform is counted as 1 reform per city per indicator. The reforms occurred between August 2009 and July come per capita. This is 13 days faster and 2011. 8% cheaper than 2 years ago. But overall, Source: Doing Business database. Data for Jakarta are from Doing Business 2012. the country still lags behind the Asia-Pacific Economic Cooperation (APEC)11 average—6 Surakarta and Yogyakarta consolidated all days in 2010 to 77 days in 2012. The average procedures, 23 days and 7.7% of income per local business licenses into a single package. cost dropped from IDR 22,093,645 ($2,123) capita—on this indicator. Indonesians wait In the last 2 years, Semarang, Denpasar, to IDR 19,247,290 ($1,850). about 1 month longer than Malaysians and Jakarta and Balikpapan have followed suit. spend 4 times as much as Thai entrepre- Results have been promising. Similarly, Some cities—such as Banda Aceh, Surabaya neurs to start a business. Within the country, following the enactment of the Law on and Surakarta—completely overhauled their starting a business is easiest in Yogyakarta Regional Tax and User-Charges7, almost half building permit process. Banda Aceh merged and most difficult in Manado. of the cities measured abolished the fees of preconstruction clearances with the pro- several local licenses— including the busi- cedures to obtain the building construction Differences are due to local licensing require- ness trading license (SIUP) and the company permit—Izin Mendirikan Bangunan (IMB). ments. In Yogyakarta and Palangka Raya, registration certificate (TDP). Furthermore, Location and zoning clearances, the architec- where the business licensing process was in line with national regulation, Banda Aceh tural assessment, the planned infrastructure consolidated at one-stop shops, comply- and Surabaya no longer require a certificate cross-check and the border verification are ing with local requirements is fast—just 1 of company domicile from all businesses. now carried out internally by the Civil Work procedure over 5 days to obtain the business These joint efforts by national and local Agency, in charge of the technical aspects, in trading license, the company registration governments have paid off. The average time coordination with the one-stop shop, which certificate and the location permit. By con- and cost to start a business in Indonesian calculates the fees and issues the permits. trast, in Pontianak, an entrepreneur has to cities were reduced by more than 25% since Back in 2010, companies had to go through 9 apply separately for each license and wait the 2010 report. different steps, pay IDR 19,501,063 ($1,874) 15 days. In addition, the local branches of and wait for 103 days before they could national agencies are not equally efficient in 10 out of the 14 cities measured in both start construction. Now construction begins all locations. Labor registration, for example, 2010 and 2012 improved the construction after only 5 procedures that are carried out can be completed in 1 day in Banda Aceh, permitting process. One-stop shops were in 26 days at an expense of IDR 15,851,063 thanks to the one-stop shop operating since created, the administrative efficiency of in- ($1,523). Similarly, improvements in the wa- 2010. The same registration takes 2 weeks volved agencies was improved, requirements ter delivery system and telephone network in Jakarta. for simple commercial buildings were simpli- cut the time required to connect to these fied, fees reduced or eliminated and the utility utilities by 13 days and 55 days, respectively. At 22% of income per capita, the average infrastructure improved. As a result, the av- cost to start a business in Indonesia is al- erage time required to deal with construction In the area of registering property, the govern- most 3 times higher than the APEC average. permits decreased by one month from 106 ment continues to encourage entrepreneurs Public notary fees constitute the biggest 4 DOING BUSINESS IN INDONESIA 2012

TABLE 1.3 Best practices in Indonesia compared internationally a construction permit could be obtained with only 7 procedures (table 1.3). Following the Global rank (183 economies) example of Banda Aceh could yield a con- Best performing city How Indonesia would struction permit in only 42 days, allowing Indicator within Indonesia Performance compare globally this hypothetical city to rank 5th globally for Number of procedures to its speed. Adopting Jambi’s cost structure deal with construction Medan, Yogyakarta 7 procedures 4 permits for dealing with construction permits would Days to deal with translate into an entrepreneur paying just Banda Aceh 42 days 5 construction permits 32% of income per capita, cheaper than in Days to register property Manado 12 days 27 141 of 183 economies worldwide. Cost to deal with Jambi 32% of income per capita 42 construction permits However, for starting a business, adoption of Number of procedures to the good practices that exist within Indonesia All cities except Batam, Semarang 6 procedures 83 register property would still leave the country lagging behind Balikpapan, Denpasar, Jakarta, Number of procedures to more than 100 other economies globally. The Palangka Raya, Surakarta, 8 procedures 109 start a business Yogyakarta same is true for the cost of registering prop- Cost to start a business Jakarta, Pontianak, Yogyakarta 18% of income per capita 111 erty. Looking beyond its borders to regional and global good practices could help close Days to start a business Gorontalo, Palangka Raya 27 days 117 the gap between cities in Indonesia and the Cost to register property Jakarta 10.81% of property value 151 global leaders on these indicators. Source: Doing Business database. expense—half of the total cost. Across the Registering Property Neighboring countries—Malaysia; Taiwan, China; Thailand and Vietnam—have formed 20 cities surveyed, the total start-up cost Across the 20 cities measured, an Indonesian regulatory reform committees to improve ranges from 17.8% in Pontianak to 30.8% in entrepreneur carries out an average of 6 the regulatory framework for businesses. The Manado. Local licensing fees vary among cit- procedures over 33 days, paying 11% of Malaysian government, for example, has set ies. Obtaining a location permit, for example, property value to transfer a property title. up a regulatory reform committee (Pemudah)12 costs IDR 750,000 ($72) in Pekanbaru but Eighteen of the 20 cities measured require reporting directly to the prime minister, with just IDR 50,000 ($5) in Banda Aceh. In 6 standard procedures, but Semarang and members from the government and the private Manado, a new business has to pay an ad- Batam require 1 additional procedure in the sector. This provides a good example of a ditional billboard tax and a yearly cleanliness process. In Manado, registering property public-private partnership that helped inform fee—IDR 513,281 ($49)—before obtaining takes only 12 days—almost twice as fast as and monitor the implementation of the national the permits needed to start a business. in Mandaluyong, the fastest city in the business climate reform agenda. Philippines, where it takes 22 days. Property Dealing with Construction Permits transfer fees vary according to the tax rates Benchmarking exercises like Doing Business The number of requirements to build a ware- on land and building acquisitions set by inspire governments to improve business house and connect it to utilities ranges from the provincial governments. At 11% of the regulations. They uncover potential challeng- 7 in Medan and Yogyakarta to 14 in Manado. property value, the average cost to register es and identify where policy makers can look Although the average time required to deal property in Indonesia is about triple the cost for good practices. Subnational comparisons with construction permits is 74 days—3.5 of its neighbors—in the East Asia and the between cities within the same country can times faster than Malaysia and twice as fast Pacific region, the average cost is 4.1% of the be even stronger drivers of reform, because as in Thailand—there are considerable varia- property value and in APEC countries, the local governments have a hard time explain- tions among cities. All necessary clearances average is just 3.7%. ing why doing business in their city may be and permits can be obtained in just 42 days harder than in neighboring locations. The in Banda Aceh. In Jakarta, the same process LEARNING FROM EACH OTHER good news is that sharing a national legal takes as long as 158 days. Variations are Cities today have the advantage of learning framework facilitates the implementation of mainly due to the time required to obtain from the experience of others by introducing existing good local practices within a coun- all the municipal clearances and permits. business reforms that have been successfully try. National governments can also use Doing Among the 20 cities measured, it is cheapest implemented by neighbors. In fact, cities in Business data to monitor how efficiently the to deal with construction permits in Jambi Indonesia have a lot to gain from adopting local branches of their agencies implement (32% of income per capita). In contrast, an the regulations and practices that are work- national regulations. entrepreneur in Makassar must pay more ing elsewhere in the country—especially in than 4 times as much (131.5% of income per the area of construction permits. The example of the Philippines is telling. capita). Variations in cost are connected to Doing Business in the Philippines 2011 showed the cost of the building construction permit If a hypothetical city in Indonesia were to that 65% of the cities benchmarked for (IMB). adopt the practices of Medan and Yogyakarta, the second time since 2008 made positive OVERVIEW 5

business reforms in at least 1 of the 3 areas NOTES measured—starting a business, register- 1. International Monetary Fund. 2010. ing property and dealing with construction “Indonesia: 2010 Article IV Consultation.” permits.13 The experience of Davao City IMF Country Report No. 10/284. highlights how reform-minded local govern- 2. World Bank. Enterprise Surveys. Indonesia ments can use Doing Business indicators to Country Profile. 2009. Available at http:// motivate and sustain reform efforts. Davao www.enterprisesurveys.org. City introduced a single assessment of all 3. Ibid. business-permit fees at its City Treasurer’s 4. The 2010–2014 National Medium-Term Development Plan (RPJMN 2010–2014) Office, instead of requiring visits to different is the second phase of implementation agencies, and allowed businesses to start of the 2005–2025 National Long-Term operations without waiting for inspections Development Plan (RPJPN 2005–2025). from its City Planning and Development 5. Indonesian Women’s Business Association Office or its Bureau of Fire Protection; these available at http://iwapi-pusat.org/home. inspections now take place after a business 6. The computerized system was first is up and running. As a result of its business introduced in 2001, but was halted in mid- 2009 due to a legal dispute between the reforms, Davao City cut 7 procedures, speed- government of Indonesia and the technology ing up the start-up process by an average of vendor. In 2010, Indonesia’s Ministry of Law 16 days. Thanks to this and other reforms, and Human Rights reopened access to the Davao City was one of the most improved computerized system. cities in terms of business regulations in 7. Law No. 28 of 2009. Doing Business in the Philippines 2011. 8. Law No. 28 of 2009, article 87 (4). 9. These 11 cities are: Balikpapan, Banda Aceh, Consistent reformers have a long-term agen- Denpasar, Jakarta, Makassar, Palembang, da and continually push forward. They stay Pekanbaru, Semarang, Surabaya, Surakarta focused by setting specific goals and regularly and Yogyakarta. Bandung implemented this law, but the tax-free value remained the monitoring progress. The top-ranked econo- same as in 2010, at IDR 60 million. my on the ease of doing business, Singapore, 10. Jakarta raised the tax-free value to IDR 80 introduces business reforms every year. Other million ($ 7,689) and Surabaya to IDR 75 policy makers—such as the Dutch Advisory million ($ 7,208). Board on Administrative Burden (Actal) and 11. Australia; Brunei Darussalam; Canada; Chile; the Better Regulation Executive in the United China; Hong Kong SAR, China; Indonesia; Kingdom—not only routinely assess existing Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; regulations, but they also pay attention to Philippines; Russian Federation; Singapore; managing the flow of new regulations. In the Taiwan, China; Thailand; United States; United Kingdom, a program implemented Vietnam. from 2005 to 2010 reduced the burden of 12. Online at http://www.pemudah.gov.my. regulatory compliance on businesses by 13. World Bank. 2010. Doing Business in the 25%, according to the government.14 That Philippines 2011. Washington, DC: World amounted to savings for firms equivalent to Bank Group. £3.5 billion. New initiatives are under way, 14. Nineteen U.K. government departments participated in the program, which started such as the UK’s “one in, one out” system and with an extensive quantification exercise 15 its Red Tape Challenge. in the summer of 2005. In May 2010 the target was met: a total cost reduction for Cumulative business reforms across a businesses of £3.5 billion. Based on this range of topics produce the best results. experience, a new target was set: to cut the Cooperation across different parts of a ongoing costs of regulation by another £6.5 bureaucracy, at both local and national billion by 2015. Available at http://www.bis. gov.uk. level, is necessary for wide-ranging reforms. 15. World Bank. 2011. Doing Business 2012: Political will and vision coming from a reform Doing Business in a More Transparent World. champion—whether the president, minister, Washington, DC: World Bank Group. or mayor—is central to success. Moreover, consistent reformers are inclusive—involving all relevant actors and institutionalizing the reform effort. 6

About Doing Business and Doing Business in Indonesia 2012

A vibrant private sector—with firms making behavior of businesses will often start by transactions. Some give a higher score for investments, creating jobs and improving changing rules and regulations that affect a simplified way of implementing existing productivity—promotes growth and expands them. Doing Business goes beyond identifying regulation, such as completing business opportunities for poor people. To foster a that a problem exists and points to specific start-up formalities in a one-stop shop. vibrant private sector, governments around regulations or regulatory procedures that may the world have implemented wide-ranging lend themselves to reform. And its quantita- Doing Business in Indonesia 2012 encompasses reforms, including price liberalization and tive measures of business regulation enable 2 types of data. The first come from readings macroeconomic stabilization programs. But research on how specific regulations affect of laws and regulations. The second are time governments committed to the economic firm behavior and economic outcomes. and motion indicators that measure the effi- health of their country and opportunities for ciency and complexity in achieving a regula- its citizens focus on more than macroeco- The first Doing Business report, published tory goal (such as granting the legal identity nomic conditions. They also pay attention in 2003, covered 5 indicator sets and 133 of a business). Within the time and motion to the laws, regulations and institutional economies. This year’s report covers 11 indicators, cost estimates are recorded from arrangements that shape daily economic indicator sets and 183 economies. Ten top- official fee schedules where applicable. A activity. ics are included in the aggregate ranking on regulatory process such as starting a busi- the ease of doing business. The project has ness or registering property is broken down Until 10 years ago, however, there were no benefited from feedback from governments, into clearly defined steps and procedures. globally available indicator sets for monitor- academics, practitioners and reviewers.1 The Here, Doing Business builds on Hernando de ing such microeconomic factors and analyz- initial goal remains: to provide an objective Soto’s pioneering work in applying the time ing their relevance. The first efforts, in the basis for understanding and improving the and motion approach first used by Frederick 1980s, drew on perceptions data from expert regulatory environment for business. Taylor to revolutionize the production of the or business surveys that capture often one- Model T Ford. De Soto used the approach in time experiences of businesses. Such surveys WHAT DOING BUSINESS IN the 1980s to show the obstacles to setting can be useful gauges of economic and policy INDONESIA 2012 COVERS up a garment factory on the outskirts of conditions. But few perception surveys pro- Lima, Peru.2 Doing Business in Indonesia 2012 provides a vide indicators with a global coverage that quantitative measure of the national and lo- are updated annually. WHAT DOING BUSINESS IN cal regulations for 3 Doing Business indicators: INDONESIA 2012 DOES NOT COVER The Doing Business project takes a different starting a business, dealing with construction Just as important as knowing what Doing approach from perception surveys. It looks at permits, and registering property as they Business in Indonesia 2012 does is to know domestic, primarily small and medium-size apply to domestic small and medium-size what it does not do to understand what limi- companies and measures the regulations ap- enterprises. tations must be kept in mind in interpreting plying to them through their life cycle. Based A fundamental premise of Doing Business is the data. on standardized case studies, it presents that economic activity requires good rules. quantitative indicators on business regulation Limited in scope that can be compared across 183 economies These include rules that establish and clarify Doing Business in Indonesia 2012 focuses on and over time. This approach complements property rights, and rules that increase the three topics, with the specific aim of measur- the perception surveys in exploring the major predictability of economic interactions. The ing the regulation and red tape relevant to the constraints for businesses, as experienced by objective: regulations designed to be ef- life cycle of a domestic small to medium-size the businesses themselves and set out in the ficient in their implementation, to be acces- firm. Accordingly: regulations that apply to them. sible to all who need to use them and to be simple in their implementation. Accordingly, Ė Doing Business in Indonesia 2012 does not Rules and regulations are under the direct some Doing Business indicators give a higher measure all 11 indicators covered in the control of policy makers—and policy mak- score for more regulation, such as stricter global Doing Business report. The report ers intending to change the experience and disclosure requirements in related-party covers only those 3 areas of business ABOUT DOING BUSINESS 7

regulation that are the provenance of the liability companies are the most prevalent benchmarks. Closest to Doing Business in local governments and where local differ- business form in most economies around the what it measures is the set of indicators on ences exist starting a business, dealing world. The choice also reflects one focus of product market regulation compiled by the with construction permits, and registering Doing Business: expanding opportunities for Organization for Economic Co-operation and property. entrepreneurship. Investors are encouraged Development (OECD). These indicators are Ė Doing Business in Indonesia 2012 does not to venture into business when potential loss- designed to help assess the extent to which measure all aspects of the business envi- es are limited to their capital participation. the regulatory environment promotes or ronment that matter to firms or investors inhibits competition. They include measures Focused on the formal sector or all factors that affect competitiveness. of the extent of price controls, the licensing It does not, for example, measure security, In constructing the indicators, Doing Business and permit system, the degree of simplicity macroeconomic stability, corruption, the in Indonesia 2012 assumes that entrepreneurs of rules and procedures, the administrative labor skills of the population, the underly- are knowledgeable about all regulations in burdens and legal and regulatory barriers, ing strength of institutions or all aspects place and comply with them. In practice, the prevalence of discriminatory procedures, of the quality of infrastructure. Nor does entrepreneurs may spend considerable time and the degree of government control over it focus on regulations specific to foreign finding out where to go and what documents business enterprises. The rankings on these investment. to submit. Or they may avoid legally required indicators—for the 39 countries that are procedures altogether by not registering for covered, several of them large emerging Ė Doing Business in Indonesia 2012 does not social security, for example. markets—are highly correlated with those on cover all regulations, or all regulatory goals, the ease of doing business (the correlation in any city. As economies and technology Where regulation is particularly onerous, here is 0.72). advance, more areas of economic activ- levels of informality are higher. Informality ity are being regulated. For example, the comes at a cost: firms in the informal sec- Similarly, there is a high correlation (0.82) European Union’s body of laws (acquis) tor typically grow more slowly, have poorer between the rankings on the ease of doing has now grown to no fewer than 14,500 access to credit and employ fewer workers business and those on the World Economic rule sets. Doing Business in Indonesia 2012 and their workers remain outside the protec- Forum’s Global Competitiveness Index, a measures just 3 phases of a company’s 3 tions of labor law. All this may be even more much broader measure capturing such fac- life cycle, through 3 specific indicators. so for female-owned businesses, according tors as macroeconomic stability, aspects The indicator sets also do not cover all as- 4 to country-specific research. Firms in the of human capital, the soundness of public pects of regulation in the particular area. informal sector are also less likely to pay institutions and the sophistication of the For example, the indicators on starting a taxes. Doing Business measures one set of business community. Economies that do well business do not cover all aspects of com- factors that help explain the occurrence of on the Doing Business indicators tend to do mercial legislation. informality and give policy makers insights well on the OECD market regulation indica- into potential areas of reform. Gaining a fuller tors and the Global Competitiveness Index Based on standardized case understanding of the broader business envi- and vice versa.6 scenarios ronment, and a broader perspective on policy The indicators analyzed in Doing Business in challenges, requires combining insights from A bigger question is whether the issues on Indonesia 2012 are based on standardized Doing Business with data from other sources, which Doing Business focuses matter for case scenarios with specific assumptions, such as the World Bank Enterprise Surveys.5 development and poverty reduction. The such as that the business is located in one World Bank study Voices of the Poor asked of the 20 cities in Indonesia measured by the WHY THIS FOCUS 60,000 poor people around the world how report. Economic indicators commonly make Doing Business functions as a kind of cho- they thought they might escape poverty.7 limiting assumptions of this kind. Inflation lesterol test for the regulatory environment The answers were unequivocal: women statistics, for example, are often based on for domestic businesses. A cholesterol test and men alike pin their hopes above all on prices of consumer goods in a few urban does not tell us everything about the state of income from their own business or wages areas. Such assumptions allow global cover- our health. But it does measure something earned in employment. Enabling growth and age and enhance comparability, but they important for our health. And it puts us on ensuring that poor people can participate in inevitably come at the expense of generality. watch to change behaviors in ways that will its benefits requires an environment where improve not only our cholesterol rating but new entrants with drive and good ideas, re- In areas where regulation is complex and also our overall health. gardless of their gender or ethnic origin, can highly differentiated, the standardized case get started in business and where good firms used to construct each Doing Business in One way to test whether Doing Business can invest and grow, generating more jobs. Indonesia 2012 indicator needs to be carefully serves as a proxy for the broader business defined. Where relevant, the standardized environment and for competitiveness is Small and medium-size enterprises are key case assumes a limited liability company. This to look at correlations between the Doing drivers of competition, growth and job cre- choice is in part empirical: private, limited Business rankings and other major economic ation, particularly in developing countries. But 8 DOING BUSINESS IN INDONESIA 2012

in these economies up to 80% of economic investment may rank lower than others that global demand or technology.12 Reforms mak- activity takes place in the informal sector. appear to be less dynamic. ing it easier to start a business tend to have Firms may be prevented from entering the a significant positive effect on investment in formal sector by excessive bureaucracy and But for reform-minded local governments, product market industries such as transport, how much the regulatory environment for regulation. Even firms operating in the formal communications and utilities, which are local entrepreneurs improves matters more 13 sector might not have equal access to trans- often sheltered from competition. There is than their relative ranking. As cities develop, parent rules and regulations affecting their also evidence that more efficient business they strengthen and add to regulations ability to compete, innovate and grow. entry regulations improve firm productivity to protect investor and property rights. and macroeconomic performance.14 Where regulation is burdensome and com- Meanwhile, they find more efficientways petition limited, success tends to depend to implement existing regulations and cut Simpler business registration translates more on whom you know than on what you outdated ones. One finding of Doing Business: into greater employment opportunities in can do. But where regulation is transparent, dynamic and growing economies continually the formal sector. Reducing start-up costs efficient and implemented in a simple way, reform and update their regulations and their for new firms was found to result in higher it becomes easier for any aspiring entrepre- way of implementing them, while many poor take-up rates for education, higher rates of economies still work with regulatory systems neurs, regardless of their connections, to job creation for high-skilled labor and higher dating to the late 1800s. operate within the rule of law and to benefit average productivity because new firms 15 from the opportunities and protections that are often set up by high-skilled workers. the law provides. WHAT RESEARCH SHOWS ON Lowering entry costs can boost legal cer- THE EFFECTS OF BUSINESS tainty: businesses entering the formal sector In this sense Doing Business values good rules REGULATION gain access to the legal system, to the benefit as a key to social inclusion. It also provides a Nine years of Doing Business data, together of both themselves and their customers and basis for studying effects of regulations and with other data sets, have enabled a growing suppliers.16 their application. For example, Doing Business body of research on how specific areas of Assessing the impact of policy reforms poses 2004 found that faster contract enforcement business regulation and regulatory reforms challenges. While cross-country correlations was associated with perceptions of greater in those areas relate to social and economic can appear strong, it is difficult to isolate judicial fairness suggesting that justice de- outcomes. Some 873 articles have been the effect of regulations given all the other layed is justice denied.8 published in peer-reviewed academic jour- potential factors that vary at the country nals, and about 2,332 working papers are level. Generally, cross-country correlations DOING BUSINESS IN INDONESIA available through Google Scholar.9 do not show whether a specific outcome is 2012 AS A BENCHMARKING Much attention has been given to exploring caused by a specific regulation or whether it EXERCISE links to microeconomic outcomes, such coincides with other factors, such as a more Doing Business in Indonesia 2012, in capturing as firm creation and employment. Recent positive economic situation. So how do we some key dimensions of regulatory regimes, research focuses on how business regula- know whether things would have been dif- can be useful for benchmarking. Any bench- tions affect the behavior of firms by creating ferent without a specific regulatory reform? marking for individuals, firms or economies incentives (or disincentives) to register and Some studies have been able to test this by is necessarily partial: it is valid and useful if it operate formally, to create jobs, to innovate investigating variations within an economy helps sharpen judgment, less so if it substi- and to increase productivity.10 Many studies over time. Other studies have investigated tutes for judgment. have also looked at the role played by courts, policy changes that affected only certain credit bureaus, and insolvency and collateral firms or groups. Several country-specific Doing Business in Indonesia 2012 provides 2 laws in providing incentives for creditors and impact studies conclude that simpler entry takes on the data it collects: it presents abso- investors to increase access to credit. The regulations encourage the establishment of lute indicators for each city for each of the 3 literature has produced a range of findings. more new firms: regulatory topics it addresses, and it provides rankings of cities by indicator. Judgment is Lower costs for business registration Ė In Mexico one study found that a program required in interpreting these measures for encourage entrepreneurship and enhance that simplified municipal licensing led to a any city and in determining a sensible and firm productivity. Economies with efficient 5% increase in the number of registered politically feasible path for reform. business registration have a higher entry businesses and a 2.2% increase in wage rate by new firms as well as greater business employment, while competition from Reviewing the Doing Business rankings in density.11 Economies where registering a new new entrants lowered prices by 0.6% isolation may show unexpected results. business takes less time have seen more and the income of incumbent businesses Some cities may rank unexpectedly high on businesses register in industries where the by 3.2%.17 Other research found that the some indicators. And some cities that have potential for growth is greatest, such as those same licensing reform directly led to a had rapid growth or attracted a great deal of that have experienced expansionary shifts in 4% increase in new start-ups and that the ABOUT DOING BUSINESS 9

program was more effective in munici- enforcement tend to produce and export Ė The introduction of improved insolvency palities with less corruption and cheaper more customized products than those with regimes that streamlined mechanisms for additional registration procedures.18 poor contract enforcement.27 Another study reorganization reduced the number of liq- Ė In India the progressive elimination of the shows that in many developing economies uidations by 8.4% in Belgium and by 13.6% license raj led to a 6% increase in new firm production of high-quality output is a pre- in Colombia as more viable firms opted for 36 registrations, and highly productive firms condition for firms to become exporters: reorganization instead. In Colombia the entering the market saw larger increases institutional reforms that lower the cost of new law better distinguished viable from in real output than less productive firms.19 high-quality production increase the posi- nonviable firms, making survival more Simpler entry regulation and labor market tive effect that trade facilitation can have on likely for financially distressed but viable 28 flexibility were found to be complementa- income. Research shows that removing firms. ry. States with more flexible employment barriers to trade needs to be accompanied by regulations saw a 25% larger decrease in other reforms, such as making labor markets HOW GOVERNMENTS USE DOING informal firms and 17.8% larger gains in more flexible, to achieve higher productivity BUSINESS 29 real output than states with less flexible and growth. Quantitative data and benchmarking can be labor regulations.20 The same licensing useful in stimulating debate about policy, Regulations and institutions that form part reform led to an aggregate productivity both by exposing potential challenges, and of the financial market infrastructure—in- improvement of around 22% for firms af- by identifying where policy makers might cluding courts, credit information systems, fected by the reform.21 look for lessons and good practices. For and collateral, creditor and insolvency governments, a common first reaction is to Ė In Colombia new firm registrations in- laws—play a role in easing access to credit. doubt the quality and relevance of the Doing creased by 5.2% after the creation of a Enterprise surveys conducted by the World 22 Business data. Yet the debate typically pro- one-stop shop for businesses. Bank show that access to credit is a major ceeds to a deeper discussion exploring the Ė In Portugal the introduction of a one-stop constraint to businesses around the world.30 relevance of the data to the economy and shop for businesses led to a 17% increase Good credit information systems and strong areas where reform might make sense. in new firm registrations and 7 new jobs collateral laws can help alleviate financ- for every 100,000 inhabitants compared ing constraints. Analysis in 12 transition Most reformers start out by seeking exam- with economies that did not implement economies found that reforms strengthening ples, and Doing Business helps in this (boxes 23 the reform. collateral laws increased the supply of bank 1 and 2). For example, Saudi Arabia used the 31 loans by 13.7% on average. Creditor rights company law of France as a model of for A sound regulatory environment leads and the existence of credit registries, whether revising its own. Many countries in Africa to stronger trade performance. Efforts to public or private, are both associated with a look to Mauritius - the region’s strongest streamline the institutional environment for 32 higher ratio of private credit to GDP. And performer on Doing Business indicators - as a trade (such as by increasing the efficiency greater information sharing through credit source of good practices for business regula- of customs) have been shown to have posi- bureaus is associated with higher bank prof- tion reform. In the words of Luis Guillermo 24 tive effects on trade volumes. One study 33 itability and lower bank risk. Plata, the former minister of commerce, found that an inefficient trade environment industry and tourism of Colombia, was among the main factors in poor trade Country-specific research assessed the effect performance in Sub-Saharan African coun- of efficient debt recovery and exit processes It’s not like baking a cake where you tries.25 Similarly, another study identified in determining conditions of credit and in follow the recipe. No. We are all different. the government’s ability to formulate and ensuring that less productive firms are either But we can take certain things, certain implement sound policies and regulations restructured or exit the market: key lessons, and apply those lessons and that promote private sector development, see how they work in our environment. customs efficiency, quality of infrastructure Ė The establishment of specialized debt recovery tribunals in India sped up the and access to finance as important factors Over the past 9 years there has been much resolution of debt recovery claims and in improving trade performance.26 The same activity by governments in reforming the reg- allowed lenders to seize more collateral study found that economies with more con- ulatory environment for domestic business- on defaulting loans. It also increased the strained access to foreign markets benefit es. Most reforms relating to Doing Business probability of repayment by 28% and more from improvements in the investment topics were nested in broader programs lowered interest rates on loans by 1—2 climate than those with easier access. of reform aimed at enhancing economic percentage points.34 competitiveness. In structuring their reform Research also shows that an economy’s Ė Following a broad bankruptcy reform in programs for the business environment, ability to enforce contracts is an important Brazil in 2005 that, among other things, governments use multiple data sources and determinant of its comparative advantage improved the protection of creditors, the indicators. And reformers respond to many in the global economy: among compa- cost of debt fell by 22% and the aggregate stakeholders and interest groups, all of whom rable economies, those with good contract level of credit rose by 39%.35 bring important issues and concerns into the 10 DOING BUSINESS IN INDONESIA 2012

reform debate. World Bank Group dialogue businesses a year will be more familiar with BOX 1 HOW ECONOMIES HAVE USED DOING BUSINESS IN REGULATORY REFORM with governments on the investment climate the process than an entrepreneur, who will PROGRAMS is designed to encourage critical use of the register a business only once or maybe twice. To ensure coordination of efforts across data, sharpening judgment, avoiding a narrow A bankruptcy judge deciding dozens of cases agencies, such economies as Colombia, focus on improving Doing Business rankings a year will have more insight into bankruptcy Rwanda and Sierra Leone have formed regu- and encouraging broad-based reforms that than a company that may undergo the latory reform committees reporting directly to enhance the investment climate. The World process. the president that use the Doing Business indi- cators as one input to inform their programs Bank Group uses a vast range of indicators for improving the business environment. and analytics in this policy dialogue, includ- Development of the methodology More than 20 other economies have formed ing its Global Poverty Monitoring Indicators, The methodology for calculating each in- such committees at the interministerial Logistics Performance Indicators and many dicator is transparent, objective and easily level. These include India, Malaysia, Taiwan others. With the open data initiative, all in- (China) and Vietnam in East and South Asia; replicable. Leading academics collaborate the Arab Republic of Egypt, Morocco, Saudi dicators are available to the public at http:// in the development of the indicators, ensur- Arabia, the Syrian Arab Republic, the United data.worldbank.org. ing academic rigor. Eight of the background Arab Emirates and the Republic of Yemen in papers underlying the indicators have been the Middle East and North Africa; Georgia, METHODOLOGY AND DATA published in leading economic journals. Kazakhstan, the Kyrgyz Republic, Moldova and Tajikistan in Eastern Europe and Central Doing Business in Indonesia 2012 covers Doing Business uses a simple averaging Asia; Kenya, Liberia, Malawi and Zambia in 20 cities. The data are based on national approach for weighting sub-indicators and Sub-Saharan Africa; and Guatemala, Mexico and local laws and regulations as well as and Peru in Latin America. Governments have administrative requirements. (For a detailed calculating rankings. Other approaches were reported more than 300 regulatory reforms explored, including using principal compo- that have been informed by Doing Business explanation of the Doing Business in Indonesia nents and unobserved components. The since 2003. 2012 methodology, see data notes). principal components and unobserved com- Information sources for the data ponents approaches turn out to yield results Most of the indicators are based on laws nearly identical to those of simple averaging. and regulations. In addition, most of the cost The tests show that each set of indicators indicators are backed by official fee sched- provide sufficiently broad coverage across BOX 2 HOW REGIONAL ECONOMIC FO- topics. Therefore, the simple averaging ap- RUMS USES DOING BUSINESS ules. Doing Business respondents both fill out proach is used. The Asia-Pacific Economic Cooperation written surveys and provide references to the relevant laws, regulations and fee schedules, (APEC) organization uses Doing Business to Improvements to the methodology identify potential areas of regulatory reform, aiding data checking and quality assurance. to champion economies that can help oth- The methodology has undergone continual ers improve and to set measurable targets. For some indicators part of the cost compo- improvement over the years. Changes have In 2009 APEC launched the Ease of Doing nent (where fee schedules are lacking) and been made mainly in response to country Business Action Plan with the goal of making the time component are based on actual suggestions. In accordance with the Doing it 25% cheaper, faster and easier to do busi- ness in the region by 2015.1 The action plan practice rather than the law on the books. Business methodology, these changes have sets specific targets, such as making it 25% This introduces a degree of subjectivity. been incorporated into the Doing Business in faster to start a business by reducing the av- The Doing Business approach has therefore Indonesia 2012. erage time by 1 week. been to work with legal practitioners or Drawing on a firm survey, planners identi- professionals who regularly undertake the For starting a business, for example, the fied 5 priority areas: starting a business, get- transactions involved. Following the stan- minimum capital requirement can be an ting credit, enforcing contracts, trading across obstacle for potential entrepreneurs. Initially, borders and dealing with permits. APEC dard methodological approach for time and economies then selected 6 champion econo- motion studies, Doing Business breaks down Doing Business measured the required mini- mies for the priority areas: New Zealand and each process or transaction, such as start- mum capital regardless of whether it had to the United States (starting a business), Japan ing and legally operating a business, into be paid up front or not. In many economies (getting credit), Korea (enforcing contracts), separate steps to ensure a better estimate only part of the minimum capital has to be Singapore (trading across borders) and Hong Kong SAR, China (dealing with construction of time. The time estimate for each step is paid up front. To reflect the actual potential permits). In 2010 and 2011 several of the given by practitioners with significant and barrier to entry, the paid-in minimum capital champion economies organized workshops routine experience in the transaction. has been used since 2004. to develop programs for building capacity in their area of expertise. The Doing Business approach to data col- This year’s report removes procedures relat- 1. APEC (Asia-Pacific Economic Cooperation). lection contrasts with that of enterprise or ed to getting an electricity connection from 2010. “APEC Ease of Doing Business Action Plan (2010-2015).” http://aimp.apec.org/ firm surveys, which capture often one-time dealing with construction permits indicators. perceptions and experiences of businesses. This has been done to avoid double count- A corporate lawyer registering 100—150 ing as the Doing Business report includes an ABOUT DOING BUSINESS 11

11th indicator this year - Getting Electricity.37 2002. “The Regulation of Entry.” Quarterly the European Economic Association 3 (4): Doing Business in Indonesia 2012 has reflected Journal of Economics 117 (1): 1–37; Alesina, 791-825. the removal of procedures related to getting Alberto, Silvia Ardagna, Giuseppe Nicoletti 14. Loayza,Norman, Ana Maria Oviedo and Fabio Schiantarelli. 2005. “Regulation an electricity connection from dealing with and Luis Serven. 2005. “Regulation and and Investment.” Journal of the European Macroeconomic Performance.” Policy construction permits to allow for interna- Economic Association 3 (4): 791–825; Perotti, Research Working Paper 3469, World Bank, tional comparability. Enrico, and Paolo Volpin. 2005. “The Washington DC; Barseghyan, Levon. 2008. Political Economy of Entry: Lobbying and “Entry Costs and Cross-Country Differences All changes in methodology are explained in Financial Development.” Paper presented in Productivity and Output.” Journal of the data notes section of this report as well at the American Finance Association 2005 Economic Growth 13 (2): 145-67. Philadelphia Meetings; Klapper, Leora, Luc as on the Doing Business website. In addition, 15. Dulleck, Uwe, Paul Frijters and R. Winter- Laeven and Raghuram Rajan. 2006. “Entry Ebmer. 2006. “Reducing Start-up Costs data time series for each indicator and city Regulation as a Barrier to Entrepreneurship.” for New Firms: The Double Dividend on are available on the website. The website Journal of Financial Economics 82 (3): the Labor Market.” Scandinavian Journal of also makes available all original data sets 591–629; Fisman, Raymond, and Virginia Economics 108: 317–37; Calderon, César, Sarria-Allende. 2010. “Regulation of used for background papers. Alberto Chong and Gianmarco Leon. 2007. Entry and the Distortion of Industrial “Institutional Enforcement, Labor-Market Organization.” Journal of Applied Economics Information on data corrections is pro- Rigidities, and Economic Performance.” 13 (1): 91–120; Antunes, Antonio, and Tiago vided in the data notes and on the website. Emerging Markets Review 8 (1): 38–49; Cavalcanti. 2007. “Start Up Costs, Limited Micco, Alejandro, and Carmen Pagés. 2006. A transparent complaint procedure allows Enforcement, and the Hidden Economy.” “The Economic Effects of Employment anyone to challenge the data. If errors are European Economic Review 51 (1): 203–24; Protection: Evidence from International confirmed after a data verification process, Barseghyan, Levon. 2008. “Entry Costs and Industry-Level Data.” IZA Discussion Paper they are expeditiously corrected. Cross-Country Differences in Productivity and Output.” Journal of Economic Growth 13 2433, Institute for the Study of Labor (IZA), (2): 145–67; Eifert, Benjamin. 2009. “Do Bonn, Germany. Regulatory Reforms Stimulate Investment 16. Masatlioglu, Yusufcan, and Jamele Rigolini. NOTES and Growth? Evidence from the Doing 2008. “Informality Traps.” B.E. Journal of 1. This has included a review by the World Business Data, 2003–07.” Working Paper Economic Analysis & Policy 8 (1); Djankov, Bank Independent Evaluation Group 159, Center for Global Development, Simeon. 2009. “The Regulation of Entry: A (2008) as well as ongoing input from the Washington, DC; Klapper, Leora, Anat Lewin Survey.” World Bank Research Observer 24 International Tax Dialogue. and Juan Manuel Quesada Delgado. 2009. (2): 183–203. 2. De Soto, Hernando. 2000. The Mystery of “The Impact of the Business Environment 17. Bruhn, Miriam. 2011. “License to Sell: The Capital: Why Capitalism Triumphs in the West on the Business Creation Process.” Policy Effect of Business Registration Reform on and Fails Everywhere Else. New York: Basic Research Working Paper 4937, World Bank, Entrepreneurial Activity in Mexico.” Review Books. Washington, DC; Djankov, Simeon, Caroline of Economics and Statistics 93 (1): 382–86. 3. Schneider, Friedrich. 2005. “The Informal Freund and Cong S. Pham. 2010. “Trading on 18. Kaplan, David, Eduardo Piedra and Enrique Sector in 145 Countries.” Department of Time.” Review of Economics and Statistics 92 Seira. 2007. “Entry Regulation and Business Economics, University Linz. (1): 166–73; Klapper, Leora, and Inessa Love. Start-Ups: Evidence from Mexico.” Policy 2011. “The Impact of Business Environment 4. Amin, Mohammad. 2011. “Labor Research Working Paper 4322, World Bank, Reforms on New Firm Registration.” Policy Productivity, Firm-Size and Gender: The Washington, DC. Research Working Paper 5493, World Bank, Case of Informal Firms in Argentina and Washington, DC; Chari, Anusha. 2011. 19. Aghion, Philippe, Robin Burgess, Stephen Peru.” Enterprise Note 22, Enterprise “Identifying the Aggregate Productivity Redding and Fabrizio Zilibotti. 2008. “The Analysis Unit, World Bank Group, Effects of Entry and Size Restrictions: An Unequal Effects of Liberalization: Evidence Washington, DC. http://enterprisesurveys. Empirical Analysis of License Reform in from Dismantling the License Raj in India.” org./ India.” American Economic Journal: Economic American Economic Review 98 (4): 1397–412. 5. http://www.enterprisesurveys.org Policy 3: 66–96; Bruhn, Miriam. 2011. 20. Sharma, Siddharth. 2009. “Entry Regulation, 6. The World Economic Forum’s Global “License to Sell: The Effect of Business Labor Laws and Informality: Evidence from Competitiveness Report uses part of the Registration Reform on Entrepreneurial India.” Enterprise Survey Working Paper, Doing Business data sets on starting a Activity in Mexico.” Review of Economics and Enterprise Analysis Unit, World Bank Group, business, employing workers, protecting Statistics 93 (1): 382–86. Washington, DC. investors and getting credit (legal rights). 11. Klapper, Lewin and Quesada Delgado 2009. 21. Chari, Anusha. 2011. “Identifying the 7. Narayan, Deepa, Robert Chambers, Meer Entry rate refers to newly registered firms Aggregate Productivity Effects of Entry and Kaul Shah and Patti Petesh. 2000. Voices of as a percentage of total registered firms. Size Restrictions: An Empirical Analysis of the Poor: Crying Out for Change. Washington, Business density is defined as the total License Reform in India.” American Economic DC: World Bank Group. number of businesses as a percentage of the Journal: Economic Policy 3: 66–96. 8. World Bank. 2003. Doing Business in 2004: working-age population (ages 18-65). 22. Cardenas, Mauricio, and Sandra Rozo. 2009. Understanding Regulation. Washington, DC: 12. Ciccone, Antonio, and Elias Papaioannou. “Firm Informality in Colombia: Problems World Bank Group. 2007. “Red Tape and Delayed Entry.” Journal and Solutions.” Desarrollo y Sociedad, no. 63: 9. According to searches on Google Scholar of the European Economic Association 5 211–43. (http://scholar.google.com) and the Social (2-3):444-58. 23. Branstetter, Lee G., Francisco Lima, Lowell J. Science Citation Index. 13. Alesina, Alberto, Silvia Ardagna, Giuseppe Taylor and Ana Venâncio. 2010. “Do Entry 10. Djankov, Simeon, Rafael La Porta, Florencio Nicoletti and Fabio Schiantarelli. 2005. Regulations Deter Entrepreneurship and Job L pez-de-Silanes and Andrei Shleifer. “Regulation and Investment.” Journal of Creation? Evidence from Recent Reforms 12 DOING BUSINESS IN INDONESIA 2012

in Portugal.” NBER Working Paper 16473, 32. Djankov, Simeon, Caralee McLiesh and National Bureau of Economic Research, Andrei Shleifer. 2007. “Private Credit in 129 Cambridge, MA. Countries.” Journal of Financial Economics 24. Djankov, Simeon, Caroline Freund and Cong 84 (2): 299–329; Houston, Joel, Chen S. Pham. 2010. “Trading on Time.” Review of Lin, Ping Lin and Yue Ma. 2010. “Creditor Economics and Statistics 92 (1): 166–73. Rights, Information Sharing, and Bank Risk Taking.” Journal of Financial Economics 96 (3): 25. Iwanow, Thomasz, and Colin Kirkpatrick. 485–512. 2009. “Trade Facilitation and Manufacturing Exports: Is Africa Different?” World 33. Ibid. Development 37 (6): 1039–50. 34. Visaria, Sujata. 2009. “Legal Reform and 26. Seker, Murat. 2011. “Trade Policies, Loan Repayment: The Microeconomic Investment Climate, and Exports.” MPRA Impact of Debt Recovery Tribunals in India.” Paper 29905, University Library of Munich, American Economic Journal: Applied Economics Germany. 1 (3): 59–81. 27. Nunn, Nathan. 2007. “Relationship- 35. Funchal, Bruno. 2008. “The Effects of Specificity, Incomplete Contracts, and the 2005 Bankruptcy Reform in Brazil.” the Pattern of Trade.” Quarterly Journal of Economics Letters 101: 84–86. Economics 122 (2): 569–600. 36. Dewaelheyns, Nico, and Cynthia Van Hulle. 28. Rauch, James. 2010. “Development through 2008. “Legal Reform and Aggregate Small Synergistic Reforms.” Journal of Development and Micro Business Bankruptcy Rates: Economics 93 (2): 153–61. Evidence from the 1997 Belgian Bankruptcy Code.” Small Business Economics 31 (4): 29. Chang, Roberto, Linda Kaltani and 409–24; Giné, Xavier, and Inessa Love. Norman Loayza. 2009. “Openness Can 2010. “Do Reorganization Costs Matter Be Good for Growth: The Role of Policy for Efficiency? Evidence from a Bankruptcy Complementarities.” Journal of Development Reform in Colombia.” Journal of Law and Economics 90: 33–49; Cunat, Alejandro, Economics 53 (4): 833–64. and Marc J. Melitz. 2007. “Volatility, Labor Market Flexibility, and the Pattern of 37. Previous years’ data on dealing with con- Comparative Advantage.” NBER Working struction permits are adjusted to reflect this Paper 13062, National Bureau of Economic change. They are made available on Doing Research, Cambridge, MA. Business website under “historical data” (http://www.doingbusiness.org). 30. http://enterprisesurveys.org. 31. Haselmann, Rainer, Katharina Pistor and Vikrant Vig. 2010. “How Law Affects Lending.” Review of Financial Studies 23 (2): 549–80. The countries studied were Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the Slovak Republic, Slovenia and Ukraine. 13

Starting a business

The global financial crisis intensified the FIGURE 2.1 What are the time, cost, paid-in minimum capital and number of procedures to get a local policy focus on small and medium-size limited liability company up and running? enterprises as engines of employment Cost (% of income per capita) and growth. In Indonesia, micro, small and Formal medium-size businesses contribute around operation 60% of the country’s gross domestic prod- 1 Paid-in $ Number of uct. They also serve as the biggest source of minimum procedures employment, providing livelihoods for more capital than 90% of the country’s workforce.2

Research shows that more new firms are Entrepreneur created and employment grows when busi- Time (days) PreregistrationRegistration, Postregistration ness entry becomes easier. For example, incorporation after Malaysia reduced the cost of business registration as part of a recent economic stimulus package, 320,000 new businesses standardized business that is 100% domesti- across Indonesia, there are marked dif- registered in 2009.3 In Mexico, researchers cally owned, has a start-up capital equivalent ferences among the cities measured. The found that a municipal license reform across to 10 times income per capita, engages in decentralization process initiated a decade states increased new firm registrations by general industrial or commercial activities ago provided regional governments with the 5% and employment by 2.2%.4 The effect and employs between 10 and 50 people. authority to administer business licenses. As was greater in states with less corruption Among the 20 Indonesian cities studied, a result, local governments apply their own and better governance.5 starting a business takes, on average, 9 license practices and enforce national regu- Formal registration has many immediate procedures, 33 days and costs 22% of the lations differently. In addition, some local benefits for business owners, employees national income per capita. It is 13 days branches of national agencies perform more and governments alike. Formally registered faster and 8% cheaper than what was mea- companies have access to services and sured 2 years ago.6 But overall, the country TABLE 2.1 Where is it easy to start a institutions—such as courts, banks as well still lags behind the Asia-Pacific Economic business—and where not? as new markets—that are not available to Cooperation (APEC) average. Indonesians RANK City RANK City unregistered firms. And where firms are wait almost 1 month more than Malaysians 1 Yogyakarta 11 Palembang formally registered, their employees can and spend 4 times as much as Thai entre- 2 Palangka Raya 12 Bandung benefit from protections provided by the law. preneurs to start a business. In the region’s 3 Surakarta 13 Pontianak Formal incorporation also generates more best performers—New Zealand, Australia 4 Semarang 14 Surabaya tax revenue for governments. and Singapore—starting a business takes 5 Banda Aceh 15 Batam no more than 3 days and 1% of income per Doing Business measures the procedures, capita. In addition to direct start-up costs, 6 Gorontalo 16 Pekanbaru time and cost for a small to medium-size, Indonesian entrepreneurs are also required 7 Balikpapan 17 Makassar limited liability company to start up and op- to deposit IDR 12,500,000 ($1,201)— 8 Jakarta 18 Jambi erate formally (figure 2.1). These procedures the equivalent of 46.6% of income per 9 Denpasar 19 Medan include obtaining all necessary licenses capita—as paid-in minimum capital. Most 10 Mataram 20 Manado and permits and completing any required other APEC countries have abolished this Note: Rankings are based on the average city per- notifications, verifications or inscriptions for requirement.7 centile rankings on the procedures, time, cost and the company and employees with relevant paid-in minimum capital to start a business. See Data notes for details. authorities. To make the data comparable Despite a shared national legislative frame- across 183 economies, Doing Business uses a work that regulates business registration Source: Doing Business database.

14 DOING BUSINESS IN INDONESIA 2012

FIGURE 2.2 Time and cost to start a business in Indonesia—fastest in Gorontalo and Palangka Raya; Starting a business is fastest in Gorontalo cheapest in Pontianak and Palangka Raya: just 27 days, similar to Indonesia Cost 20 city average Time Thailand (figure 2.2). In Jakarta, it takes 45 (% of income per capita) (days) Cost Time days. Among APEC economies, only entre- Pontianak 17.8 42 preneurs in Papua New Guinea and Brunei Jakarta 17.9 45 Darussalam wait longer. In almost all cities, half of the total time to start a business is Yogyakarta 18.5 29 spent on preincorporation steps—such as Palembang 19.0 34 name reservation, notarization of the com- Banda Aceh 19.3 29 pany deed of incorporation and the act of Semarang 19.7 28 business registration. The legalization of the Jambi 20.2 44 company establishment by the Ministry of Surakarta 20.5 29 Law and Human Rights is usually issued in 7 Medan 21.2 39 days—1 week faster than in 2010. However, Makassar 22.0 35 entrepreneurs across Indonesia must wait 7 Palangka Raya 22.0 27 additional days for the courier service used Gorontalo 22.2 27 by the Ministry to deliver its approval to cit- Mataram 22.4 31 ies outside Jakarta. Batam 22.7 39 Denpasar 22.9 31 The process is fastest where the business- Surabaya 23.5 32 licensing process was consolidated. For Bandung 24.3 30 example, in Palangka Raya, the total time Balikpapan 26.3 28 needed to obtain the business trading Pekanbaru 26.6 29 license, the company registration certificate Manado 30.8 34 and the location permit is only 5 days. By contrast, in Pontianak, an entrepreneur has to apply separately and wait 15 days to ob- Source: Doing Business database. tain the same 3 licenses. Variations in time efficiently than others. Within the country, nationwide, Palangka Raya, Surakarta and among cities are also caused by different starting a business is easiest in Yogyakarta Yogyakarta were among the first cities to levels of performance by the local branches and most difficult in Manado (table 2.1). consolidate registrations for all local business of national agencies responsible for post- licenses. Through continuous and integrated incorporation procedures. Registration with Four initial requirements—reserving the efforts by the national, provincial and subna- the Ministry of Manpower can be completed company name, signing the act of establish- tional governments, the number of one-stop in 1 day in Banda Aceh, where labor registra- ment, getting the act legalized and paying 8 shops for local licenses increased from only tion is conducted at the one-stop shop since 9 the administrative fee for incorporation—are 49 before 2006 to 274 by the end of 2009. 2010. The same registration takes 2 weeks mandatory across the country and adminis- Semarang, Denpasar, Jakarta and Balikpapan in Jakarta. tered nationally. A second set of 2 start-up have since streamlined their business licens- steps are also mandatory in all cities, but ex- ing processes, too. For example, the one-stop At 22% of income per capita, the average cost ecuted at local level by branches of national shop in Semarang was reorganized to act not to start a business in Indonesia is almost 3 agencies—namely tax and social insurance only as the recipient of documents but also times higher than the APEC average, relative registrations. Between 2 and 5 more steps an issuer of local licenses. Moreover, service to income. Public notary fees constitute the are needed to comply with labor regulation delivery improved and informational bro- biggest expense in Indonesia, reaching half and local licensing requirements, which are chures were issued to help guide applicants of the total cost (around $350, on average). administered at the local level. Complying through the local licensing requirements. The use of notaries for company incorpora- with all licensing requirements in Balikpapan, Along with the elimination of the company tion is mandated by law. Currently, only no- Denpasar, Jakarta, Palangka Raya, Surakarta domicile certificate and improved efficiency taries can clear and reserve company names and Yogyakarta can be done in just 1 step. By at the local tax office, these changes resulted and validate the deed of incorporation issued contrast, entrepreneurs in Medan have to pay in an overall reduction in the time to start a by the Ministry of Law and Human Rights. 4 different visits to obtain a domicile permit, business in Semarang from 47 days to just Across the 20 cities surveyed, the cost a nuisance permit, a business trading license 28 days. Similarly, a single-package licensing varies from 17.8% of income per capita in and a company registration certificate. system implemented in Denpasar in 2010 Pontianak to 30.8% in Manado. Local licens- resulted in the elimination of 1 procedure ing fees also vary among cities. Following the Following a 2007 ministerial decree encour- and 1 week from the business registration enactment of the Law on Regional Tax and aging the establishment of one-stop shops process. User-Charges10 in 2010, half of the cities STARTING A BUSINESS 15

TABLE 2.2 It is easier to start a business now in all 14 cities benchmarked since 2010 Improved Introduced Computerized Introduced efficiency at Improved statutory system for standard the local tax efficiency at the Eliminated Introduced or time limit for Eliminated company name incorporation and Jamsostek labor (Dinas) fees for local improved OSS for issuing local domicile reservation forms offices office licenses local licenses licenses letter Balikpapan   Banda Aceh   Bandung   Denpasar   Jakarta   Makassar   Manado  Palangka Raya   Palembang   Pekanbaru  Semarang    Surabaya   Surakarta   Yogyakarta   National level  Local level Note: This table records all Doing Business reforms that occurred between August 2009 and July 2011. Source: Doing Business database. measured have eliminated several licensing Hukum (SABH)—and the introduction of vision and strong leadership. Such is the case fees, including the business trading license— standardized and simplified incorporation in both Makassar and Palangka Raya, where Surat Izin Usaha Perdagangan (SIUP)—and forms for limited liability companies. In ad- local licenses are now issued free of charge. the company registration certificate—Tanda dition, improved efficiency at local branches There is no local decree governing the elimi- Daftar Perusahaan (TDP). By contrast, entre- of national agencies has resulted in time nation of such fees, but the decision was tak- preneurs in Gorontalo still pay IDR 500,000 savings for tax, labor and social security en during interagency consultations led by ($48) for SIUP and IDR 250,000 ($24) for registrations. their mayors. Furthermore, a joint ministerial TDP. Obtaining a location permit costs IDR decree11 mandated the implementation of 750,000 ($72) in Pekanbaru, while the same To encourage formal-sector development an integrated information system to transfer costs IDR 50,000 ($5) in Banda Aceh. In and underpin sustainable economic growth Manado, a new business has to pay an ad- across the country, the central government data among local and national government ditional billboard tax and yearly cleanliness issued legislation to consolidate and stream- FIGURE 2.3 Reforms resulted in faster business fee, equivalent to $50, at the Local Revenue line local business-licensing requirements. start up (selected cities) Office, before obtaining the permits to start 60 Some local governments jumped on the 2010 a business. No such charges are required in regulatory bandwagon and implemented before 55 reform any other city measured in this report. these changes not only to comply with the 47 national regulation but also to boost their 45 Doing Business in Indonesia 2010 identified 2012 45 42 local economies. Examples of reforms man- after good practices, pointed out bottlenecks and dated at the national level and implemented reform provided recommendations for business at the local level include the elimination or startup reforms beyond Jakarta. Two years reduction of fees for local licenses, the intro- 31 later, this report tracks progress over time. 29 28 28 duction of one-stop shops, the elimination The results are impressive. All 14 cities mea- of the certificate of company domicile and sured for the second time improved business the introduction of statutory time-limits for entry (table 2.2). issuing local permits and licenses. Even in All cities benefited from the rollout of na- cities where supporting local regulation is tional reforms, such as the introduction of still being formulated, some of the changes Jakarta Pekanbaru Semarang Denpasar Balikpapan mandated at the national level have already a new computerized company registration Note: Reforms occurred between August 2009 and July 2011 system in 2010—Sistem Administrasi Badan been implemented, thanks to their mayors’ Source: Doing Business database. 16 DOING BUSINESS IN INDONESIA 2012

FIGURE 2.4 Regionally, big cuts in the time and procedures to start a business since 2010 ensures that the business really exists and operates in a specific city. However, experi- DB2012 DB2010 ence from other cities shows that a simple statement letter from the company founder Procedures (number) confirming the new firm’s address can serve Indonesia 9 9 the same purpose. In the past 2 years, Banda Aceh and Surabaya did away with domicile APEC 6 8 certificates, thus eliminating 1 procedure and Malaysia 4 10 2 days for their entrepreneurs.

Korea 3 8 Most Indonesian cities now have a one-stop shop that centralizes procedures adminis- Time (days) tered at the local level and provides advice Indonesia 31 44 to entrepreneurs. However, others still need

APEC 23 29 to follow suit, eliminate unnecessary clear- ances and allow joint applications for local Malaysia 6 18 licenses.

Korea 7 14 Consolidate both local and national

Cost (% of income per capita) government approvals at a single Indonesia 22.0 30.0 access point and expand the use of information technology APEC 7.7 8.9 Consolidating both pre- and postincorpora- Malaysia 16.4 15.6 tion procedures at a one-stop shop would make it easier for entrepreneurs to meet Korea 14.6 14.7 the requirements of all local and national Note: The data sample for Indonesia includes the 14 cities measured both in Doing Business in Indonesia 2010 and Doing Business in government agencies involved in business Indonesia 2012. registration. An entrepreneur could fill in a Source: Doing Business database. single application form with all the informa- agencies involved in business registration. Overhaul local licenses tion required by local licensing, tax, labor In Batam, a pilot system complying with this The business licensing regime has improved and social security authorities, as well as the joint decree is under way. These national and over the past 2 years. Nevertheless, there are company registrar. Officials at the one-stop local efforts have paid off (figure 2.3). still marked differences among cities. More shop would be granted the power to act on specifically, new companies require 3 to 5 lo- behalf of their respective agencies. But note that other countries in the region cal licenses carried out in 1 to 3 procedures, made similar—or even more dramatic—ef- Alternatively, the one-stop shop can be depending on which city they operate in. For forts to reform business start up (figure connected electronically with all agencies example, in Manado, an entrepreneur needs 2.4). To become more competitive and keep involved. Information technology is already to obtain an official non-objection statement up with its neighbors, Indonesia needs to being used, at the national level, by the from neighbors, while in Banda Aceh, the continue its reform initiatives at both the Ministry of Law and Human Rights for com- requirement was replaced with a declaration national and local levels. To start, cities in pany name reservation and legalization of the from the entrepreneur that (s)he obtained the act of establishment and by the Tax Authority Indonesia could learn from each other and neighbors’ consent. Meanwhile, in Medan, to issue tax registration numbers. At the local adopt good practices that are already work- an entrepreneur needs to pay 3 different level, information technology is also used ing elsewhere in the country. visits to obtain a trading permit, business for business licensing in a number of cities. registration certificate and nuisance permit. Moreover, a national government initiative, WHAT TO REFORM The same 3 licenses can be obtained in just currently under way, aims to implement Doing Business in Indonesia 2010 recom- 1 visit to the one-stop shop in Yogyakarta. an integrated information system—Sistem mended the simplification of local licensing Although a certificate of company domicile Pelayanan Informasi dan Perizinan Investasi requirements, better coordination between is no longer required to start a business, ac- Secara Elektronik (SPIPISE)—for transferring different levels of government, the con- cording to the national regulation, 6 of the 20 data from the local one-stop shops involved solidation of registration procedures and cities surveyed—Bandung, Batam, Medan, in business licensing directly to the National public access to the company incorporation Makassar, Manado and Jambi—still hold it as Investment Coordination Board in Jakarta and process. These reform recommendations a prerequisite to obtain a business license. It onwards to the relevant ministries. The ability remain valid for some or all cities. has been argued that the domicile certificate to connect the existing separate databases STARTING A BUSINESS 17

FIGURE 2.5 The company registry is the information exchange hub for business and government

Businesses and intermediaries e-Government partners Consumers of company information

REGISTRATION FUNCTIONS Other business start-up registrations Private sector Name search (tax identification, social security, statistics) (credit bureaus,financial institutions, trading counterparties) Company registration COMPANY REGISTRY APPLICATION Public sector regulators Annual accounts filing (licensing agencies, tax authorities, customs agencies) Amendments Shared services infrastructure to registration (e-payment, secure authentication) Other registries (collateral, land, intellectual property)

Source: The Investment Climate in Practice Note Series. “Leveraging Technology to Support Business Registration Reform: Insights from recent country experience.” John R. Wille, Karim O. Belayachi, Numa de Magalhaes, Frederic Meunier. World Bank Group. July 2011. of all government agencies involved in busi- Improve coordination between as the top 2 challenges for doing business ness registration and to allow data exchange national and local governments in Indonesia.15 The 2 problems may be among them would make starting a business to reduce legal uncertainty and intertwined. Take the example of Surakarta, much easier for entrepreneurs in Indonesia. promote transparency which requires the fewest number of steps to Leveraging existing networks and infrastruc- start a business in Indonesia. Surakarta also The decentralization process that has taken ture would also eliminate the waiting time gets the top (best) ranking in Transparency place over the past 10 years in Indonesia has for incorporation papers to travel to Jakarta International’s “corruption perception index” granted wide-ranging authority to local gov- for legalization, currently the lengthiest step among 50 cities in Indonesia. Surakarta’s ernments and created new challenges. The across all cities outside Jakarta (2 weeks). An score (6%) is more than double the coun- national government has issued regulations 16 electronic interface between the IT system try’s average (2.8%). and standard operating procedures regarding of the Ministry of Law and Human Rights Better information available to the public can and the local one-stop shops would enable public services. But in the absence of clear greatly reduce the burden on entrepreneurs companies to be issued an incorporation implementing guidelines, varying interpreta- and even the agencies that deal with them. certificate through the one-stop shop. tions of national regulations and procedures exist among local governments. For example, Easy access not only saves businesses time; According to a 2010/2011 survey of 34 in Medan and Jambi, a nuisance permit is it also increases predictability in the ap- company registries that implemented required for all business types, regardless plication of regulations and fee schedules. technology solutions, more than two-thirds of their environmental impact. However, the New Zealand, the world’s top performer allowed electronic data-sharing with other need for this nuisance permit was eliminated in starting a business, publishes a 10-page government agencies as well as the dissemi- by a national regulation. Similarly, fees for nation of company information to the private local licenses were eliminated for small and FIGURE 2.6 The cost to start a business is lower 12 where information on the fees is sector. Figure 2.5 illustrates this growing medium-size enterprises by decree at the easily accessible “ecosystem” of information suppliers and us- national level.14 In practice, entrepreneurs ers surrounding the company registry. Within still pay these fees in Banda Aceh, Bandung, Average cost 66 to start a business the government, information was typically Batam, Gorontalo, Jakarta, Manado and (% of income per capita) shared with the tax authority (59% of sys- Medan. This can create administrative tems) and, to a lesser extent, with the social confusion. Better coordination between all security agency (18%). Experience shows levels of government coupled with clear and that establishing a virtual one-stop shop that complete guidelines for business registration collects all required information through a could eliminate such inconsistencies and re- single online interface and shares it within duce inefficiencies, as well as opportunities 18 the government can reduce registration time for corruption. and eliminate redundant requirements for Economies where Economies where information. Singapore’s online registration Complex regulations require frequent fee schedules fee schedules are system saves businesses an estimated $42 contact between entrepreneurs and public are easily accessible not easily accessible million annually.13 Electronic services are also officials—and offer more chance for brib- Source: The Investment Climate in Practice Note Series. more accessible to entrepreneurs, saving ery. In 2010, the World Economic Forum’s “Leveraging Technology to Support Business Registration Reform: Insights from recent country experience.” John R. Wille, Karim O. them the time and cost of traveling to gov- “Executive Opinion Survey” cited inefficient Belayachi, Numa de Magalhaes, Frederic Meunier. World Bank ernment agencies and waiting in line. government bureaucracy and corruption Group. July 2011. 18 DOING BUSINESS IN INDONESIA 2012

FIGURE 2.7 How much are entrepreneurs requirement to use a notary to form a Since 2005, 57 economies around the world required to deposit as minimum company, allowing entrepreneurs to file the have reduced or eliminated this requirement, capital? 149.6 documents themselves. lowering the average paid-in minimum capital requirement from 184% of income Other Asian countries, such as Hong Kong per capita to 49% globally.22 Germany is Minimum capital SAR, China—provide these e-services to among them. In 2008, Germany introduced requirement everybody, including small businesses. a new type of limited liability company, (% of income per capita) 100.4 In Vietnam, entrepreneurs can currently the Unternehmergesellschaft (UG), with download standard incorporation forms and a minimum capital requirement of EUR 1. submit the application online. In Indonesia, The aim was to foster the economic activ- where notary fees amount to more than half ity of small entrepreneurs. From November of the total cost to start a business, making 2008 to January 2010, 12,000 new UGs 46.6 notaries optional could greatly reduce the were created.23 Among APEC members, 16 start up cost across the country. out of 21 have made the necessary legisla- tive changes and eliminated their minimum 14.1 7.7 Eliminate the minimum capital capital requirements. Some economies have 1.6 requirement found other ways to protect investors and Russian APEC OECD Indonesia China India creditors, particularly in the case of limited Federation A minimum capital requirement can act as a barrier to entry—especially for small compa- liability companies. For example, Hong Kong SAR, China, now outlines provisions on sol- Source: Doing Business database. nies that may need to constitute their capital vency safeguards in its company act. Taiwan, during operations. Moreover, fixed amounts China, now requires an audit report showing guidebook covering all issues regarding of capital do not take into account differ- that the amount a company has invested is business registration and the steps needed ences in commercial risks. A small company enough to cover its establishment cost. to complete the process.17 Moreover, easier in the services industry (low initial capital) access to fee schedules and lower fees tend does not represent the same risk as a big to go hand in hand. Regardless of income manufacturing company (high initial capital) NOTES levels, incorporation fees tend to be lower in in a volatile market. In practice, a minimum 1. The Central Bureau of Statistics, Indonesia, economies where information on fee sched- capital requirement is hardly a protection for 2010. ules is easily accessible (figure 2.6). The cost investors during insolvency. When creditors 2. The International Finance Corporation (IFC)- to start a business averages 18% of income make an investment decision, they rarely Indonesia. Small Enterprise Development Policies in Indonesia: An Overview. October per capita in economies where fee schedules look at the minimum capital but use a wide 2007. are easily accessible, 66% in economies range of protection instruments through the 3. Companies Commission of Malaysia where they are not.18 company law, insolvency laws or specific ne- (Suruhanjaya Syarikat Malaysia). Press gotiated contracts to mitigate risks. Finally, release. March 31, 2009. Provide public access to the recovery rates in bankruptcy are no higher 4. Bruhn, Miriam. 2011. “License to Sell: The business-registration process in economies with minimum capital require- Eff ect of Business Registration Reform on Entrepreneurial Activity in Mexico.” Review and make the use of professional ments than in those without.19 In 2010 to of Economics and Statistics 93 (1): 382–86. intermediaries optional 2011, the recovery rate was the same (34%) 5. Kaplan, David, Eduardo Piedra and Enrique The company name reservation is already in economies without any paid-in capital Seira. 2007. “Entry Regulation and Business computerized and done through an online requirement as in the others.20 Start-Ups: Evidence from Mexico.” Policy system managed by the Ministry of Law Research Working Paper 4322, World Bank, and Human Rights. However, to date, only Indonesia’s law on limited liability compa- Washington, DC. public notaries can access the system. nies21 sets the minimum capital requirement 6. Doing Business in Indonesia 2010 measured 14 cities. Data is as of August 2009. Likewise, standard incorporation forms have at IDR 50,000,000 ($4,800)—25% of which needs to be deposited in the founder’s 7. Only the following APEC member countries been introduced based on a joint agreement require a paid-in minimum capital when between the Indonesian Notary Association bank account (the equivalent of 46.6% starting a business: Russian Federation and the Ministry of Law and Human Rights. of income per capita). Most other APEC (1.6% of income per capita), the Philippines The form, however, has not been made economies have abolished this requirement (5.2%), Mexico (8.4%) and China (100.4%). available publicly. Only notaries can file the (figure 2.7). In addition to Indonesia, only 8. OSS–Pelayanan Terpadu Satu Pintu (PTSP). incorporation documents. The government the following APEC members require paid-in 9. “Subnational Business Climate Reform” could help lower the cost of incorporation minimum capital when starting a business: report prepared by the Asia Foundation for by opening access to the name-reservation The Russian Federation (1.6% of income the International Finance Corporation (IFC) system and by making standard articles per capita), the Philippines (5.2%), Mexico and the Decentralization Support Facility publicly available. This would eliminate the (8.4%) and China (100.4%). (DSF) for the National One-Stop Shop STARTING A BUSINESS 19

Project. March 2010. 10. Law No. 28 of 2009. 11. Joint decree of the Ministry of Trade, Ministry of Home Affairs, Ministry for Employment Manpower and Transmigration, Ministry of Justice and Human Rights, and the Investment Coordinating Board: Joint Regulation Nr. 69/2009 and Nr. M.HH-08. AH.01.01.2009 and Nr. 60/M-DAG/ PER/12/2009 and Nr.30/MEN/XII/2009 and Nr.10/2009 dated December 17, 2009. 12. Wille, John, Karim Ouled Belayachi, Numa De Magalhaes and Frederic Meunier. 2011. “Leveraging Technology to Support Business Registration Reform.” Investment Climate In Practice Note 17, Investment Climate Advisory Services, World Bank Group, Washington, DC. 13. World Bank conference, “The Singapore Experience: Ingredients for Successful Nation-Wide eTransformation,” Singapore, September 30, 2009. 14. As per Ministry of Trade Regulation No.36 and 37 of 2007. 15. World Economic Forum. The Indonesia Competitiveness Report 2011-Sustaining The Growth Momentum, June 2011 16. Transparency International. Indonesia’s Corruption Perception Index Survey 2010. 17. Companies: A guide for New Zealand busi- nesses. Ministry of Economic Development, The Companies Office, June 2010. 18. World Bank. 2011. Doing Business 2012: Doing Business in a More Transparent World. Washington, DC: The World Bank Group. 19. Djankov, Simeon, Oliver Hart, Caralee McLeish and Andrei Shleifer. 2008. “Debt Enforcement around the World.” Journal of Political Economy 116 (6):1105-49. 20. World Bank. 2011. Doing Business 2012: Doing Business in a More Transparent World. Washington, DC: The World Bank Group. 21. Law No. 40 of 2007. 22. World Bank. 2011. Doing Business 2012: Doing Business in a More Transparent World. Washington, DC: The World Bank Group. 23. Common Register Portal of the German Federal States, https://www.handelsregister.de/. 20

Dealing with construction permits

By 2040, half of the population of Indonesia FIGURE 3.1 What are the time, cost and number of procedures to comply with formalities will be living in a city.1 Indonesian cities are to build a warehouse? already struggling with sprawling illegal Cost (% of income per capita) settlements, traffic congestion and environ- Completed mental degradation. Updated master plans warehouse and efficient construction permit systems help local governments cope with the Number of procedures pressures of increasing urbanization while improving the safety of their citizens. A business in It is not easy to find the right balance the construction industry between safety and efficiency. Good regula- Time (days) Before During After construction tions ensure public safety and revenue for construction construction and utilities the government, while making the construc- tion process more affordable both for those Differing local regulations, practices, and from the head of the village and the head of who use it and for those who administer it. fees applied at the municipal level result in the subdistrict. In Palembang, location clear- Construction regulations need to be clear large variations among cities. Dealing with ances and building permits can be obtained and adaptable to economic and techno- construction permits is easiest in Balikpapan from Palembang’s recently established one- and most difficult in Jakarta. In Gorontalo, no logical change. Rules that are unclear, overly stop shop in a simple 2-step process. building permit for commercial warehouses rigid and/or poorly implemented may push has been issued since 2008 (table 3.1).2 Inspections during the construction of the construction into the informal sector, under- warehouse are required only in Denpasar. In mining their intent. A construction company wishing to build a all cities, after the construction is complete warehouse in Balikpapan spends 52 days to To measure the ease of dealing with con- get through 8 procedures in order to obtain struction permits, Doing Business records TABLE 3.1 Where is it easy to deal with building approvals and utility connections, the procedures, time and cost required for construction permits—and where at a cost of 62.8% of income per capita. not? a small to medium-size business to obtain Compared globally, this city would rank 11th RANK City RANK City all the necessary approvals to build a simple out of 183 economies as measured by Doing 1 Balikpapan 11 Makassar commercial warehouse and connect it to Business. 2 Jambi 12 Mataram water, sewerage and a fixed telephone line. 3 Palembang 12 Surakarta The case study includes all inspections and The number of steps required to deal with 4 Banda Aceh 14 Palangka Raya certificates needed before, during and after construction permits varies from 7 in both 5 Yogyakarta 15 Pekanbaru construction of a warehouse (figure 3.1). Medan and Yogyakarta to 14 in Manado. Most local variations occur before construc- 6 Medan 16 Surabaya Across Indonesia, dealing with construction tion (figure 3.3). In Surakarta and Jakarta, 7 Pontianak 17 Denpasar permits takes, on average, 10 procedures, entrepreneurs who wish to build a simple 8 Bandung 18 Manado 74 days, and costs 69.7 % of income per 2-story commercial warehouse must go 8 Semarang 19 Jakarta capita – faster and more affordable than the through 7 different steps before being able 10 Batam No Practice Gorontalo APEC average of 18 procedures, 150 days to start construction—including obtaining Note: The methodology for dealing with construction and 87 % of income per capita (figure 3.2). location clearances, on-site inspections, permits changed in 2011. Rankings are based on the average city percentile rankings on the procedures, time, The average city in Indonesia would rank environmental clearances and land ownership and cost to deal with construction permits. See Data 20th, ahead of Australia (42nd) but behind verifications, either by notarizing the land notes for details. Thailand (14th). ownership certificate or by getting a clearance Source: Doing Business database. DEALING WITH CONSTRUCTION PERMITS 21

FIGURE 3.2 Procedures, time and cost to deal with construction permits permit—Izin Penggunaan Bangunan (IPB). Utility connection requirements are very 33 CHINA 311 CHINA 444.1 CHINA similar throughout the country. Depending 30 PHILIPPINES 260 MALAYSIA MAKASSAR on the efficiency of the local office of Telkom 131.5 Indonesia, the time required to connect to 22 MALAYSIA 110.5 PHILIPPINES telephone network varies from a few days to Range in 87 APEC 3 weeks. Similar variations occur in relation Indonesia 150 APEC 18 APEC JAKARTA158 157 THAILAND to connections to water and sewerage with 15 AUSTRALIA, 147 AUSTRALIA MANADO 14 UNITED STATES 69.7 PDAM (Perusahaan Daerah Air Minum). Indonesia 10 average 85 PHILIPPINES 8 THAILAND 74 The cost of dealing with construction per- MEDAN, 7 6 HONG KONG 67 HONG KONG 17.8 HONG KONG YOGYAKARTA SAR, CHINA BANDA 42 SAR, CHINA JAMBI 32.0 SAR, CHINA mits varies considerably from city to city 26 UNITED STATES 12.8 UNITED STATES ACEH 9.9 AUSTRALIA (figure 3.5). In Jambi, the administrative 9.5 THAILAND Procedures Time Cost 7.1 MALAYSIA costs of building a warehouse and hooking it (number) (days) (% of income per capita) up to utilities amounts to just 32% of income Source: Doing Business database. per capita. In Makassar, the same process is more than 4 times as expensive—131.5% of but before the building can be occupied, the carried out, the one-stop issues the building income per capita. entrepreneur must register it both with the construction permit in 24 days. Across Indonesia there are staggering dif- local Tax Office and the local Industry and ferences in the cost of obtaining the building Trade Agency (or one-stop shop). Additional Additional postconstruction requirements construction permit (IMB). Cities set the fees postconstruction requirements include a also matter. The obtainment of the official for the building permit taking into account report on completion of construction and nuisance permit (Jambi and Palangka Raya), multiple factors—such as the use of the compliance with the building permit can take an official document declaring the comple- building, its size and the number of stories. tion of construction and its compliance with more than a month (as seen in Pekanbaru The building permit costs IDR 4,942,280 the building permit (Banda Aceh, Jakarta, and Manado) while the nuisance permit can ($475) in Jambi and more than 6 times more Palembang, Pekanbaru, and Surabaya) or take almost two weeks (as seen in Palangka in Makassar—IDR 31,761,209 ($3,053). both (Manado). Jakarta also requires a Raya). In Jakarta, entrepreneurs must Other pre-construction procedures—such building usage permit while Denpansar wait 49 days to obtain the building usage as the obtainment of zoning clearances, the requires an endorsement from the local Environmental Agency. FIGURE 3.3 Palembang has fewer preconstruction procedures than other cities in Indonesia Obtaining all the necessary approvals to Before After construction construction Utilities build a warehouse and connect it to utili- Medan 7 ties takes 42 days in Banda Aceh but three Yogyakarta 7 times longer in Jakarta—158 days (figure Balikpapan 8 3.4). Different preconstruction requirements Makassar 8 explain many of the differences in time. In Batam 9 Jakarta, entrepreneurs spend 22 days dealing Palembang 9 with the pre-approval letter from the Zoning Banda Aceh 10 Department, 1 day notarizing a copy of the Bandung 10 land ownership certificate and 18 days deal- Jambi 10 ing with the preparation and the approval of Mataram 10 the environmental management plan—Upaya Pekanbaru 10 Pengelolaan Lingkungan Hidup (UKL)—and Semarang 10 the environmental monitoring plan—Upaya Indonesia average 10 Pemantauan Lingkungan Hidup (UPL). Once Palangka Raya 11 these requirements have been satisfied, the Pontianak 11 building construction permit —Izin Mendirikan Surabaya 11 Bangunan (IMB)—is obtained in 21 days. In Surakarta 11 *During Banda Aceh, entrepreneurs need only 2 days Denpasar * 12 construction to verify the ownership of the land with the Jakarta 13 head of the village and the head of the sub- Manado 14 district. Once these verifications have been Source: Doing Business database. 22 DOING BUSINESS IN INDONESIA 2012

FIGURE 3.4 Dealing with construction permits is fastest in Banda Aceh verifications are now carried out internally

Days Indonesia through the coordination of the Civil Works Banda Aceh 42 average Agency, in charge of the technical aspects, Bandung 44 and a one-stop shop, which calculates the Batam 45 fees and issues the permits. Back in 2010, Makassar 51 companies had to go through 9 different Yogyakarta 51 steps, pay a total of IDR 19,501,063 ($1,874) Balikpapan 52 and wait for 103 days before they could start Palembang 57 construction. Now construction starts after Pontianak 59 only 5 procedures carried out over 26 days Jambi 68 at a cost of IDR 15,851,063 ($1,523). Once Medan 71 construction is over, the local Industry and Surakarta 71 Trade Agency requires companies to obtain Semarang 72 a warehouse license. This new procedure, Palangka Raya 82 aimed at monitoring the urban development Mataram 83 of the city, has been paired with increased Pekanbaru 83 coordination between agencies involved in Denpasar 94 the process—specifically, relevant agencies Manado 107 now hold regular meetings to update each Surabaya 116 other on their work. As a result, the process- Jakarta 158 ing time for postconstruction procedures has 74 been shortened by 22 days. Moreover, the Source: Doing Business database. successful reconstruction of the city’s water- notarization of land ownership certificate, and implementation of 2 new local regulations in delivery system and telephone network cut 4 the preparation of environmental plans by an January 2010, preconstruction clearances the time to connect to these utilities by 13 external consultant (as seen in Jakarta)—can were merged with the building construc- days and 55 days, respectively. add up to IDR 16,507,000 ($1,586). tion permit (IMB) application. Location and zoning clearances, architectural assess- Surabaya also rationalized its construction Postconstruction requirements are free ments, planned infrastructure and border permit system. Since passing a new local of charge in Balikpapan, Banda Aceh, Palembang, Pekanbaru, Pontianak, Semarang, FIGURE 3.5 Staggering differences in the cost of the building construction permit (IMB) across Surakarta and Yogyakarta. Other cities charge Indonesia fees that range from IDR 62,500 ($6) to IDR Cost Before After (% of income per capita) construction construction Utilities 2,041,275 ($196) to register the warehouse Jambi 32.0 with the local Industry and Trade Agency Pontianak 32.3 (or local one-stop shop), obtain a report of Pre-requisites for Building Palangka Raya 37.5 Building Construction Construction compliance with the building permit (as seen Permit (IMB) Permit (IMB) Semarang 38.6 in Manado, Jakarta and Surabaya) and/or a Surakarta 41.9 nuisance permit (as seen in Jambi, Manado Palembang 50.5 and Palangka Raya). Mataram 58.4 Doing Business in Indonesia 2010 identified Balikpapan 62.8 good practices, pointed out bottlenecks and Pekanbaru 64.5 provided recommendations. Progress over Banda Aceh 66.5 the past 2 years is impressive: 10 of the 14 Indonesia average 69.7 cities measured a second time introduced Medan 70.3 Surabaya 71.2 improvements that made it easier to deal with Denpasar 71.4 construction permits (table 3.2). As a result, Bandung 76.5 the average time to deal with construction Yogyakarta 85.5 permits dropped from 106 to 77 days. The Manado 100.1 average cost decreased from IDR 22,093,645 Jakarta 105.3 ($2,123) to IDR 19,247,290 ($1,850).3 Batam 127.3 Banda Aceh transformed its construction Makassar 131.5 permit system radically (figure 3.6). After the Source: Doing Business database. DEALING WITH CONSTRUCTION PERMITS 23

TABLE 3.2 Business reforms improving the ease of dealing with construction permits over the last two years Improved administrative Simplification of efficiency (through better Introduced or administrative coordination, use of technology, Improved utility Streamlined improved one- requirements for simple and staff training) infrastructure procedures Reduced fees stop shop commercial buildings Banda Aceh  Bandung  Makassar  Manado  Palangka Raya  Palembang  Pekanbaru  Semarang  Surabaya   Surakarta  Yogyakarta 

 Doing Business reforms making it easier to deal with construction permits  Doing Business reforms making it more difficult to deal with construction permits Note: This table records all Doing Business reforms that occurred between August 2009 and July 2011. Source: Doing Business database. regulation in 2009,5 the city planning state- Palangka Raya also reformed. Since May Overall, processing times improved in most ment is the only location clearance needed 2010, its local authorities have combined of the cities that introduced a one-stop shop to apply for the building permit. Surabaya’s zoning requirements and plot-ownership or increased coordination in the existing one. one-stop shop issues the city planning verifications with procedures to obtain a At the end of 2009, Semarang transferred statement in exchange for an application principal permit (Izin Prinsip)9—thus elimi- preconstruction clearances, building permits including a notarized copy of the land own- nating 2 procedures and reducing the time and warehouse registrations to its one-stop ership certificate, the ID of the applicant to deal with construction permits by 11 days. shop—thus reducing the overall time to and a receipt attesting that the company is current with the property tax payments. As FIGURE 3.6 Banda Aceh transformed its construction permit system radically a result, preconstruction procedures take 64 Days 2010 days—just half the time required 2 years ago. 180 Before reforms The same regulation eliminated the need to apply for a separate building usage permit (IPB), saving another 49 days. In 2010 the 150 registration of new buildings was transferred from the Ministry of the Industry and Trade to the one-stop shop—thus reducing the 120 processing time for this procedure by 7 days and eliminating its cost altogether. 6

In Surakarta the administrative procedures 90 Water and for the building construction permit (IMB) Obtain the Building sewerage Construction Permit were simplified and a building usage permit connection (IPB) is no longer necessary. Building proj- 60 Telephone ects that meet zoning requirements now connection just need to obtain a zoning usage permit and a print-out of the city master plan from 30 2012 Surakarta’s one-stop shop.7 Such documents After reforms are considerably less expensive than the “Advis Planning,”8 a location permit that was 0 mandatory for all buildings 2 years ago and is 12345678910 11 12 13 now required only for projects that are not in Procedures line with the city masterplan. Source: Doing Business database. 24 DOING BUSINESS IN INDONESIA 2012

carry out these procedures by 26 days. In 7,112,590 ($684). These cost savings, how- To prevent overlap and ensure efficiency, it Yogyakarta, the same policy reduced the time ever, were offset by the doubling of the cost is a good practice to put the agencies under for environmental clearances and warehouse for the building construction permit (IMB), the same roof. One-stop shops improve registration by 4 and 3 days, respectively. now IDR 15,802,290 ($1,519). An even the organization of the review process and In Bandung, the increased efficiency of the greater price increase has been registered help coordinate the interactions of different one-stop shop—achieved through training in Makassar, where the cost of the building agencies. In this way, more resources can be personnel to better use the computerized construction permit (IMB) increased from devoted to safety checks rather than to mul- system to process applications for building IDR 15,210,517 ($1,462) to IDR 31,761,209 tiple interactions between the entrepreneur permit and warehouse registration—resulted ($3,053). and the various agencies. in a reduction of time for these procedures by 32 days altogether. WHAT TO REFORM In 17 out of the 20 Indonesian cities mea- sured, entrepreneurs interact with an entity Doing Business in Indonesia 2010 recom- Over the past 2 years, central and local referred to as a one-stop shop. The role that mended: (a) streamlining of pre-approval governments also made efforts to simplify this entity plays in the permit processing clearances, (b) the creation of single access environmental compliance rules for low-risk system, however, varies from city to city. points or one-stop shops for pre-approval buildings. In 2010, the central government Building companies in Balikpapan, Bandung, clearances, (c) the introduction of online introduced a risk-based approach to environ- Yogyakarta and Pontianak use the local permit applications and electronic process- mental clearances, providing basic guidance one-stop shop as a single-access point for ing and (d) risk-based approvals. These for local governments. Acting upon these all construction-related procedures, except reform recommendations remain valid for guidelines, most local governments reviewed 1—the registration of the building at the local most of the cities, additional recommenda- their regulations and standard operating pro- Tax Office. In other cities, the one-stop shop tions also apply: cedures. Such modifications often resulted in can only be used for some of the procedures a reduction of costs, sometimes by as much Simplify construction permit fees related to the construction process. Very as IDR 15,000,000 ($1,442). Currently, often, land ownership verifications and In many cities, construction permit (IMB) Yogyakarta’s one-stop shop provides user- environmental clearances are carried out fees are calculated through complex for- friendly templates of the environmental man- through different offices— such as the local mulas. Each project is assigned a base rate agement plan (UKL) and the environmental Environmental Agency, the National Land monitoring plan (UPL). The templates can covering the processing costs. The base rate is multiplied by a series of coefficients. Board or the head of the village. Cities in be populated in-house by the construction Indonesia should expand the involvement company before being submitted to the local Depending on the city, these coefficients of their one-stop shops in the construction Environmental Agency through the one-stop take into account design, structure, size, permit system, for example, by increasing shop at no charge. Similar approaches have location, number of stories and whether the their coordinating power in the building been implemented in Surabaya, Manado and proposed building is going to be permanent permitting process. Palangka Raya. Surakarta has adopted an or not. Additional fees are sometimes levied for the review and the issuance of the permit. even simpler solution: building companies Further consolidate location Even when local regulations contain infor- prepare a statement letter—Surat Pernyataan clearances Kesanggupan Pengelolaan dan Pemantauan mation about base rates and coefficients, In many cities, building companies need to Lingkungan Hidup (SPPL)—that is cleared by entrepreneurs find it difficult to anticipate obtain location clearances before applying for the local Environmental Agency and then construction permit costs. the construction permit (IMB). The agency attached to the application for the building Simplifying permit fees increases transpar- issuing them is often that same agency that permit. Since January 2011, simple commer- ency. For example, in Canada, where building later issues the permit—the city’s one-stop cial buildings in Palembang do not require permit fees are straightforward and based shop. However, in Banda Aceh, Bandung, any environmental clearance altogether. solely on the size of the warehouse, costs can Medan, Denpansar and Makassar, location Additional curbs on costs have been intro- be estimated easily by the applicant. Banda clearances are now part of the procedures duced by the enactment, at the local level, of Aceh, Pekanbaru and Jakarta already apply to obtain the construction permit. The one- the Law on Regional Tax and User-Charges.10 similar criteria. The other cities in Indonesia stop shop checks whether the location of the However, as of July 2011, only 2 cities— should follow suit. plot can accommodate the warehouse at the Surakarta and Pekanbaru—eliminated fees same time as processing the application for associated with the construction permit sys- Increase involvement of local the building permit. No intermediate confir- tem. Surakarta cancelled charges to register one-stop shops in the construction mation is needed, thus saving companies a a warehouse. Authorities in Pekanbaru also permit system considerable amount of time and separate eliminated the cost for the “Advis Planning” Before a building plan is approved, appropriate visits to the one-stop shop. Provided that and the report of completion and compli- clearances are needed to ensure quality and there is an updated and comprehensive land- ance of the warehouse—a reduction of IDR safety. Often several agencies are involved. use plan and the public is informed about DEALING WITH CONSTRUCTION PERMITS 25

its requirements, other cities in Indonesia since 2008. Storage facilities are allowed should follow suit. only as an extension of existing buildings and cannot exceed 30% of their size. Increase computerization of the 3. The data is back calculated because of the building permitting process methodology change. 4. Mayor Regulation No. 64 of 2009 and The computerization of the building per- Mayor Decree No. 317 of 2009. mitting process in Indonesia is lagging 5. Local Regulation No. 7 of 2009. behind other countries. At the moment, only 6. Local Regulation No. 1 of 2010 and Mayor Balikpapan, Bandung, Denpasar, Banda Aceh, Regulation No. 35 of 2010. Makassar, Medan, Palembang, Pekanbaru 7. Local Regulation No. 8 of 2009. and Yogyakarta have websites providing 8. The “Advis Planning” is a certificate that updated regulations and a comprehensive confirms the planning parameters for the description of the building requirements. specific plot of land, such as the allowed Since 2008, Jakarta has a computerized building height or size. In other cities, such as Pontianak and Surabaya, a certificate tracking system for the internal monitoring with similar features is called city planning of permit applications. Other cities have statement—Surat Keterangan Rencana Kota extended the tracking function to be acces- (SKRK). sible to customers. Balikpapan, Denpansar, 9. The principal permit (Izin Prinsip) is a Palembang, Pekanbaru and Yogyakarta general clearance which confirms that the followed the example set by Bandung a project abides by the zoning requirements for that particular area of the city. few years ago when it introduced a tracking 10. Law No. 28 of 2009. system to allow companies to monitor the 11. Information available online at http://www. progress of their applications, either online natlpartnerstreamline.org/. or through text messages. However, to date, no Indonesian city allows permit applications to be submitted online.

In many economies across the world, regard- less of location and income level, policy mak- ers are adopting technology to make it easier to do business, lower transaction costs and increase transparency. In Singapore—glob- ally the best performing city on the ease of dealing with construction permits—the Building and Construction Authority pro- vides easy access to relevant information and allows online submission of all paperwork. In the United States, more than 20 cities use “e-Plan Review.” This system of online sub- mission for building plans has shortened the review period by 40%, eliminated the risk of lost plans and reduced by 80% the number of in-person visits made to building authori- ties by out-of-state owners and architects.11

NOTES 1. In 2040, the urban population of Indonesia will be 170 million people. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision and World Urbanization Prospects: The 2009 Revision. 2. In Gorontalo, no building permit for separate commercial warehouses has been issued 26

Registering property

Anyone living on the island of Java knows FIGURE 4.1 What are the time, cost and number of procedures required to transfer property between the value of space. Although Java represents 2 local companies? only about 7% of Indonesia’s total land area, Cost (% of property value) it is home to over 60% of the country’s pop- Buyer can use ulation of nearly 240 million—making it one the property, of the most densely populated areas in the resell it or use it as collateral world. For businesses a big market means big opportunities as the economy grows. But Procedures it also presents challenges in terms of access Land & 2-story warehouse to land and property. For local governments, Seller with property balancing the need to generate tax revenues registered and no title disputes from properties with the private sector’s Time demand for a simple and inexpensive Preregistration Registration Postregistration (days) property-registration process is a challenge. may benefit governments through higher property value to transfer the property from According to the World Bank’s Enterprise numbers of formally registered proper- one domestic private company to another. Surveys, Indonesian firms identified “access ties—and greater tax revenues as a result. to land” as 1 of the top 10 constraints to firm Registering property in Indonesia is lengthier 1 Following a land-titling project in Thailand, investment. and considerably more expensive with an property values increased by 75% to 197% average of 6 procedures, 33 days and a Entrepreneurs across Java looking to buy or after being registered.3 cost of 11% of the property value across sell property face similar regulatory require- the 20 Indonesian cities measured. When ments, in theory. However, in practice, the Doing Business records the procedures nec- compared to the East Asia and the Pacific time to complete the transaction varies essary for a business to purchase a property regional average—5 procedures, 81 days and considerably from one city to another. In from another business and to transfer the a cost of 4.1% of property value—Indonesian Bandung, it takes 19 days to complete the property title to the new buyer’s name. The cities have, on average, more procedures and legal transfer of property. Meanwhile, the process starts with obtaining the necessary TABLE 4.1 Where is it easy to register process takes 36 days in Yogyakarta and 43 documents—such as a copy of the seller’s property—and where not? days in Semarang. The range is even wider title—and conducting due diligence, if re- RANK City RANK City when considering Indonesian cities mea- quired. The transaction is considered com- 1 Bandung 11 Surabaya sured outside Java: 12 days in Manado versus plete when it is opposable to third parties 54 days in both Surakarta and Batam. 1 Jakarta 12 Balikpapan and when the buyer can use the property as 3 Palembang 12 Banda Aceh The benefits of having an efficient property collateral for a bank loan or resell it (figure 4 Mataram 12 Denpasar registration system are numerous. Formal 4.1). 5 Gorontalo 15 Manado land titles allow entrepreneurs to use land The ease of registering property varies great- as collateral, thus increasing credit supply2— 6 Yogyakarta 16 Palangka Raya ly among economies around the world. It is which fosters more investment and econom- 7 Jambi 17 Surakarta ic growth. Countries with efficient property easiest to register property in Saudi Arabia, 7 Medan 18 Pekanbaru where the entire process can be completed registration systems tend to also have better 9 Makassar 19 Semarang with just 2 procedures, in 2 days, at no cost. property-rights protections, which is of 9 Pontianak 20 Batam particular significance for small firms that Some economies in the East Asia and the Note: Rankings are based on the average city per- may not be able to invest in security systems Pacific region are not far behind. In Thailand, centile rankings on the procedures, time and cost to or other costly measures to defend their it also takes only 2 procedures and 2 days; register property. See Data notes for details. property. In addition, property registration in New Zealand, it costs just 0.1% of the Source: Doing Business database. REGISTERING PROPERTY 27

FIGURE 4.2 Obtaining the property transfer license in Batam need not be present. Once completed and Cost cleared, the buyer is informed that he/she Time (days) (% of property value) can proceed to make the payment at BIDA 60 15 and obtain the license. This additional proce- Time 54 days dure has its historical roots in Batam’s status Cost 50 Cost 13.3% as a special territory, where legally all land Obtaining the property transfer belongs to BIDA and therefore any transfer license from BIDA: 30 days of property must be approved. The license 40 10 enables the buyer to lease the land from the Time city of Batam. 30 Despite a mostly standardized property reg- istration process defined by national regula- 20 5 tions, local factors—such as the volume of new registrations and transfers and the level 10 of administrative efficiency—lead to consid- erable time variations among cities. Manado Seller pays Transfer Tax of 2.5% remains the fastest city with just 12 days, 0 0 while in Batam and Surakarta the process 1234567 Procedures takes 54 days (figure 4.3). Source: Doing Business database. Even though national regulations aim to expe- a higher cost, but are faster. In relation to the land and building, (4) having a land deed dite the land registration process at local land Asia-Pacific Economic Cooperation (APEC) official execute the sale and purchase of agency offices (BPN) across Indonesia, the economies, Indonesia is the most expensive the land deed, (5) registering the land deed differences in efficiency across local offices place to register property among the 21 with the local land agency office (BPN), and continues to be the main reason for variations economies covered (the APEC average is (6) registering the deed at the Tax on Land in time—from 5 days in Manado to 45 days in just 3.7% of property value). and Building Office under the name of the Surakarta. A regulation passed in 20105 rein- new owner. However, 2 cities, Batam and forced a similar regulation in 20086 that set Comparing the results of Doing Business in Semarang,4 require a 7th procedure. a maximum time for local land agency offices Indonesia 2010 to the current report, Bandung (BPN) to deliver registered land deeds in the and Jakarta remain the cities where it is easi- While in most cities the parties can proceed new owner’s name. In 2008, these time lim- est to transfer property (table 4.1). Manado to execute the sale with a land deed official its helped Jakarta speed up property transfer is still the fastest city, but it dropped on the once tax payments are made and required from 39 days to 22 days.7 However, despite overall ease-of-property-transfer ranking be- documents submitted, that is not the case renewed national legislation to reduce delays cause other cities reduced the tax on land and in Semarang. In Semarang, the land deed of- and homogenize performance across BPN building, while Manado did not. For example, ficial must previously visit the local revenue locations, implementation and enforcement in Palembang and Yogyakarta the 2009 tax- office—Dinas Pengelolaan Keuangan dan Aset remain major challenges. A high volume of free allowance of IDR 20 million ($1,922) and Daerah (DPKAD)—and obtain a note certify- registrations in fast-growing cities, the lack IDR 15 million ($1,442) respectively were ing that the price is in line with market value. of institutional capacity and inadequate increased to IDR 60 million ($5,767) tax-free Although there is no legal basis for this pro- technological support explain some of these in 2011, lowering the cost to register proper- cedure, it is required in practice. ongoing bottlenecks. ties in these 2 cities. Meanwhile, among the 6 cities covered for the first time, Mataram Meanwhile, in Batam, the buyer must obtain The BPN office of Batam is the second fastest, and Gorontalo rank within the top 5 on the a property transfer license from the Batam registering land deeds in just 7 days. However, ease of property transfer. Industrial Development Authority (BIDA) obtaining the property transfer license from after the land certificate has been examined the Batam Industrial Development Authority Among the 20 cities measured, 18 require 6 at the local land agency office (figure 4.2). adds an extra 30 days to the process. On procedures to complete the legal transfer of a In order to obtain the license, the buyer the other hand, in Surakarta, completing the property between 2 companies. The standard visits the Directorate of Land Management registration of the land deed at BPN takes 45 procedures shared by all cities are: (1) pass- at BIDA to request approval for the prop- days—the longest among all cities surveyed. ing the land-certificate examination at the erty license transfer. BIDA officials make According to the Head of the Business local land agency office—Badan Pertanahan an on-site inspection of the property in the Licensing Office, the staff at Surakarta’s local Nasional (BPN), (2) paying the transfer tax, following days to assess the location, use BPN (numbering around 90) handles a very (3) paying the tax on the acquisition of and value. The parties to the transaction large workload, which is the main cause of 28 DOING BUSINESS IN INDONESIA 2012

FIGURE 4.3 Registering property is fastest in Manado and least expensive in Jakarta pass new regulations in order to specify the tax-free limit. Among the 20 cities covered Manado 11.02 12 Cost Time in this report, all but 4 cities11 have passed Palangka Raya 11.03 15 (% of property value) (days) and implemented the local regulations to Bandung 10.88 19 be in line with the national law. In the case Palembang 10.88 21 of Palangka Raya, the local regulation was Jakarta 10.81 22 passed, but in practice, the old tax-free Mataram 10.88 25 amount is still being applied. Among the 14 Pekanbaru 10.88 29 cities previously measured, 11 cities12 raised Gorontalo 10.88 31 the tax-free value, although in most cases Yogyakarta 10.88 36 only up to the minimum. Jambi 10.88 37 Medan 10.88 37 Over the past 7 years, Doing Business re- Makassar 10.88 38 ported that 56 economies around the world Pontianak 10.88 38 lowered transfer taxes and other government Balikpapan 10.88 39 fees, reducing the average cost to register 13 Banda Aceh 10.88 39 property by 4% of the property value. Denpasar 10.88 39 Twenty-three of these reformers were in Sub- Surabaya 10.83 39 Saharan Africa, the region with the highest Semarang 10.88 43 average cost—although it’s now below 10% of property value, lower than Indonesia’s. Batam 13.35 54 But Indonesia need not look so far for reform Surakarta 10.88 54 inspiration. Numerous economies within Source: Doing Business database. the East Asia and the Pacific region—like

delays. Citizens’ frustration with the delays tax-free value), paid to local governments. FIGURE 4.4 Registering property in Indonesia is resulted in protests in front of Surakarta’s In addition, entrepreneurs must pay the land expensive, compared to the East Asia and the Pacific region and the global 8 local BPN offices in 2010. deed official at the time of the execution of average the sale-purchase deed, at the regulated 11.0 In an effort to extend coverage in a country maximum rate of 1% of the property value. % of property value with a geography as complex as Indonesia’s, Jakarta is the least expensive city at 10.8%. BPN continues to implement mobile land- Meanwhile, Batam is the most expensive registration services—called “Larasita”—in city—costing 13.3% of the property value villages and rural areas. BPN reaches remote due to the property-transfer license, which areas by car and motorcycle, providing adds an additional 2.5% to the total cost. services using laptops with wireless con- nections to the main database. In addition, Other minor cost variations stem from in late 2008, BPN also launched its “Online differing tax exemptions on property, used 6.3 9 Map” —sharing spatial and non-spatial data to determine the total tax on the acquisi- 5.7 5.7 online, including links to search land transac- tion of land and building. Specifically, the tions across Indonesia with the goal to help tax exemption ranges from IDR 20 million solve more than 2,810 land disputes. ($1,922) in Palangka Raya to IDR 80 million 4.1 4.1 ($7,689) in Jakarta. Back in 2008, national Registering property continues to be 3.3 regulation capped the amount of the sale expensive—with an average cost amounting 2.8 price that could be declared as tax-exempt 2.3 to 11% of the property value (figure 4.4). In at IDR 60 million ($5,767). But rising market neighboring economies—such as Vietnam, values for properties across Indonesia con- Thailand, Malaysia and Singapore—property vinced the government to raise the tax-free 0.6 transfers cost between 0.6% and 6.3% of limit, to provide incentives to entrepreneurs the property value. to pay their taxes and register their land. A Brazil The 2 main components of the cost are new national regulation, enacted in 2009, Japan Vietnam Thailand average Malaysia

set this amount as a minimum and allowed Singapore

the transfer tax (5% of property value), Indonesia SAR, China SAR, Hong Kong local governments to freely raise the tax- which is paid to the national government, Global average (183 economies) and the tax on the acquisition of land and free limit. According to the new law,10 as of Asia & Pacific East building (5% of property value minus the January 1, 2010, local governments had to Source: Doing Business database. REGISTERING PROPERTY 29

Singapore or Malaysia—have significantly sliding scale according to the property size. when time limits are not respected. For lowered costs for transferring property. The Reducing fees does not necessarily mean example, Spain has an innovative way to region’s average cost is now just 4.1% of the reducing revenues. In fact, the Indian state ensure compliance: the registry’s fees are property value. of Maharashtra experienced an increase in cut by 30% if registration takes more than 15 government revenues after reducing fees— days. Improving the efficiency of the offices When it comes to finding inspiration to re- due to an increased number of registrations. would reduce registration time across cities. duce delays in the property transfer process, Maharashtra’s stamp duty revenues jumped good practices can be found not only abroad by 20% after the state reduced the stamp Keeping statistical information and conduct- but also at home. For example, in 9 out of duty from 10% to 5% of property value.14 ing a workload analysis helps assess how the 20 Indonesian cities, the land certificate Globally, 17 economies have low fixed taxes process could be faster. For example, cities examination procedure at the local land of- and fees for property transfer—ranging from could consider having separate windows for fice can be completed within 1 day, while in around $20 to $300, regardless of the prop- the registration of new properties and for the others it can take up to a week. In cities such erty value.15 transfers of existing properties, with separate as Manado, Palangka Raya and Bandung, staffs. Thegovernment could also consider the entire process can be completed in less The new national legislation establishing a placing 1 or 2 land office employees in a local than 20 days—setting an example for other minimum tax-free value for the tax on the one-stop shop dealing with business startup Indonesian cities. Sharing the same legal acquisition of land and building is a step and/or construction permits. framework for property registration proce- in the right direction, since it allows local dures at a national level makes it easier for governments more room to reduce costs Make the registry electronic Indonesian cities to emulate good practices for businesses. But this applies only to local Title searches, registration and payment from peer-to-peer learning. But broader and taxes; the national tax rate for the transfer tax are done manually at land offices across deeper reforms may also be necessary to remains at 5% of the property value. At the Indonesia. Economies that transferred paper streamline procedures and improve the ef- local level, cities yet to enact the necessary records to electronic forms benefit from local regulations to set tax-free limits should ficiency of the property registration process shorter processing times. For example, in do so quickly in order to avoid uncertainty for throughout Indonesia. 2006 Tunisia computerized its land regis- businesses. try, reducing the time it takes to check for WHAT TO REFORM Improve coordination between encumbrances from up to 10 days in 2006 Doing Business in Indonesia 2010 recom- to just 1 day in 2010.16 Other economies that government agencies mended (a) reducing transfer taxes and the have computerized their property registries After registering a property transfer at the tax on the acquisition of land and buildings have seen the time to register property drop local land office, a buyer must notify the tax or replacing them with fixed fees, (b) im- by 45%, on average.17 Worldwide, 60% of office. This step could be eliminated through proving coordination between government economies have electronic files for their better inter-agency information sharing. agencies, (c) monitoring implementation of property registries. All 31 OECD high-income Streamlining the process administratively national regulations across Indonesia and economies have electronic registries, and and informing the public that a procedure speeding up procedures at the land office, 11—including France, the Netherlands and is no longer required will not only ease the and (d) making the registry electronic. All New Zealand—offer electronic registration.18 these recommendations remain valid. process for buyers, but also avoid losing title transfers, if buyers fail to notify all the agen- Going electronic also makes it easier to iden- Reduce transfer taxes and the tax on cies involved. tify errors and overlapping titles, improving the acquisition of land and buildings title security. This works best when people Monitor and enforce or replace them with fixed fees using the registration services (i.e., land deed implementation of national Indonesia is among the most expensive officials and the public at large) have Internet regulations across cities to speed economies in the world for transferring access. And digital records can be backed up up procedures at the land office property. According to Doing Business 2012, and maintained more easily than paper ones. the average cost in the top ten economies The time needed to register property at In Banda Aceh, many land books were lost or in the ease-of-property-transfer ranking is the land office is the main bottleneck in destroyed during the Tsunami, making it dif- just 0.6% of the property value. For example, Indonesia. The land office regulations from ficult to identify properties’ rightful owners. New Zealand imposes a fee of just 0.1% of 2008 and 2010 need to be better imple- The online registration of properties and pay- property value to transfer property title. mented and enforced in all cities. In both regulations, 5 days is set as the time limit for ment of taxes saves time—an entrepreneur The government should consider reduc- BPN to complete the registration of the land can avoid unnecessary visits to government ing the percentage of the property value deed with the name of the buyer, but in prac- offices or commercial banks and can visit a charged or replacing the current transfer tice the local land offices are not complying. virtual registry to register a deed from his or tax and the tax on the acquisition of land Sanctions should be levied if deadlines are her own desk. This reform would cut at least and building with a fixed fee based on a not respected. Or, fees could be reduced 2 procedures across Indonesia. 30 DOING BUSINESS IN INDONESIA 2012

NOTES 1. World Bank. Enterprise Surveys. Indonesia Country Profile. 2009. Available at www. enterprisesurveys.org. 2. World Bank. 2009. Doing Business in 2010: Reforming through difficult times. Washington, DC: World Bank Group. 3. Burns, Anthony. 2002. “Land Registration to Improve Security, Transparency, Governance & Sustainable Resource Management.” In “Comparative Study of Land Administration Systems,” World Bank Asia Regional Workshop on Land Policy and Administration working paper, World Bank, Washington, DC. 4. In Doing Business in Indonesia 2010, this additional procedure for Semarang was not counted. For Doing Business in Indonesia 2012 the procedure “Verification of the property market value at the Local Revenue Office (DPKAD)” was added (duration: 5 days; no cost). 5. Regulation of the Head of National Land Agency No. 1 of 2010 on the Standard for Land Administration Service and Land Regulation. 6. Regulation No. 6 of 2008 on the Simplification and Acceleration of the Standard Operating Procedures on Land Regulation and Services for Certain Types of Land Services. 7. World Bank. 2009. Doing Business in 2010: Reforming through difficult times. Washington, DC: World Bank Group. 8. Solo Pos newspaper, December 2010. 9. Peta Online at http://map.bpn.go.id/ 10. Law No. 28 of 2009. 11. These 4 cities are: Manado, Palangka Raya, Gorontalo and Medan. 12. These 11 cities are: Balikpapan, Banda Aceh, Denpasar, Jakarta, Makassar, Palembang, Pekanbaru, Semarang, Surabaya, Surakarta and Yogyakarta. Bandung implemented this law, but the tax-free value remained the same as in 2009, at IDR 60 million. 13. World Bank. 2011. Doing Business in 2012: Doing business in a more transparent world. Washington, DC: World Bank Group. 14. World Bank. 2005. Doing Business in 2006: Creating jobs. Washington, DC: World Bank Group. 15. World Bank. 2010. Doing Business in 2011: Making a difference for entrepreneurs. Washington, DC: World Bank Group. 16. World Bank. 2010. Doing Business in the Arab World 2011. Washington, DC: World Bank Group. 17. World Bank. 2008. Doing Business 2009: Comparing regulations in 181 economies. Washington, DC: World Bank Group. 18. World Bank. 2011. Doing Business in 2012: Doing business in a more transparent world. Washington, DC: World Bank Group. 31

Data notes

The indicators presented and analyzed in with the Doing Business in Indonesia 2012 team, Doing Business in Indonesia 2012 measure through face-to-face interviews, conference ECONOMY CHARACTERISTICS business regulation and the protection of calls and written correspondence. The data Gross national income (GNI) per property rights—and their effect on businesses, from questionnaires are subjected to numerous capita especially small and medium-size domestic tests for robustness, which lead to revisions or Doing Business in Indonesia 2012 re- ports 2010 income per capita as pub- expansions of the information collected. For firms. The indicators document the degree of lished in the International Monetary regulation, such as the number of procedures example, the preliminary findings are presented Fund’s World Economic Outlook data- to start a business or to register and transfer to the local governments through right of reply base (April 2011). Indonesia’s GNI per commercial property. They also gauge the consultations with administrators and other capita in 2010 = US$ 2,580. time and cost of achieving a regulatory goal local government officials. or complying with regulation, such as the time Exchange rate and cost to enforce a contract. The Doing Business methodology offers several The exchange rate used in this report advantages. It is transparent, using factual is: 1 US$ = 10,405 IDR. In this report, Doing Business indicators have information about what laws and regulations been created for 20 cities in Indonesia, 14 of say and allowing multiple interactions with Region and income group which, were benchmarked in Doing Business in local respondents to clarify potential misinter- Doing Business uses the World Bank Indonesia 2010. The data presented in this report pretations of questions. Having representative regional and income group classifica- for Jakarta and other economies are based on samples of respondents is not an issue: Doing tions available at http://www.worldbank. org/data/countryclass. the global report Doing Business 2012—Doing Business is not a statistical survey, and the business in a more transparent world. The data texts of relevant laws and regulations are for all sets of indicators in Doing Business in collected and answers checked for accuracy. Indonesia 2012 are current as of July 2011. The The methodology is inexpensive and easily data for all sets of indicators taken from Doing replicable, so data can be collected in a large Business 2012 are current as of June 2011. sample of economies. Because standard assumptions are used in the data collection, METHODOLOGY comparisons and benchmarks are valid across economies. Finally, the data not only highlight The Doing Business in Indonesia 2012 data are the extent of specific regulatory obstacles to collected in a standardized way. To start, the doing business but also identify their source Doing Business team, with academic advisers, and point to what might be reformed. designs a questionnaire. The questionnaire uses a simple business case to ensure comparability across countries and over time—with assump- LIMITS TO WHAT IS MEASURED tions about the legal form of the business, its The Doing Business methodology has 4 size, its location and the nature of its operations. limitations that should be considered when Then the questionnaire is customized to the interpreting the data. First, the data often focus particular case of Indonesia. on a specific business form—a limited liability company of a specified size—and may not Questionnaires are administered through more be representative of the regulation on other than 210 local experts, including lawyers, busi- businesses, for example, sole proprietorships. ness consultants, construction firms, engineers, Second, transactions described in a standard- local and national-level government officials and ized case study refer to a specific set of issues other professionals routinely administering or and may not represent the full set of issues a advising on legal and regulatory requirements. business encounters. Third, the measures of These experts have several rounds of interaction time involve an element of judgment by the 32 DOING BUSINESS IN INDONESIA 2012

expert respondents. When sources indicate procedure under normal circumstances and Procedures different estimates, the time indicators reported the paid-in minimum capital requirements if A procedure is defined as any interaction of in Doing Business represent the median values of applicable. Subsequently, local incorporation the company founder with external parties several responses given under the assumptions lawyers, notaries and government officials (for example, government agencies, lawyers, of the standardized case. complete and verify the data. auditors or notaries). Interactions between company founders or company officers and Finally, the methodology assumes that a busi- Information is also collected on the sequence employees are not counted as procedures. ness has full information on what is required in which procedures are to be completed Procedures that must be completed in the and does not waste time when completing and whether procedures may be carried out same building but in different offices are procedures. In practice, completing a pro- simultaneously. It is assumed that any required counted as separate procedures. If founders cedure may take longer if the business lacks information is readily available and that all have to visit the same office several times information or is unable to follow up promptly. agencies involved in the start-up process for different sequential procedures, each is Alternatively, the business may choose to function without corruption. If answers by counted separately. The founders are assumed disregard some burdensome procedures. For local experts differ, inquiries continue until to complete all procedures themselves, without both reasons the time delays reported in Doing the data are reconciled. middlemen, facilitators, accountants or lawyers, Business in Indonesia 2012 would differ from unless the use of such a third party is mandated the perceptions of entrepreneurs reported in To make the data comparable across countries, by law. If the services of professionals are the World Bank Enterprise Surveys or other several assumptions about the business and required, procedures conducted by such perception surveys. the procedures are used. professionals on behalf of the company are Assumptions about the business counted separately. Each electronic procedure CHANGES IN WHAT IS MEASURED The business: is counted separately. If 2 procedures can be The methodology for the dealing with construc- completed through the same website but Ė Is a limited liability company. If there is tion permits indicator was updated this year. more than one type of limited liability require separate filings, they are counted as 2 The global Doing Business report now includes company in the country, the limited liabil- procedures. Both pre- and post incorporation getting electricity indicators in its overall ity form most popular among domestic procedures that are officially required for an analysis of the ease of doing business. For this firms is chosen. Information on the most entrepreneur to formally operate a business reason, the procedures, time and cost related popular form is obtained from incorpora- are recorded (table 5.1). to obtaining an electricity connection were tion lawyers or the statistical office. removed from the dealing with construction Ė Operates in the commercial district of the Procedures required for official correspondence permits indicator. In line with Doing Business selected city. or transactions with public agencies are also methodology and to allow for international and Ė Is 100% domestically owned and has 5 included. For example, if a company seal or subnational comparability, Doing Business in owners, none of whom is a legal entity. stamp is required on official documents, such as tax declarations, obtaining the seal or stamp Indonesia 2012 has also removed procedures, Ė Has start-up capital of 10 times income time, and cost related to getting an electricity per capita at the end of 2010, paid in cash. is counted. Similarly, if a company must open connection from the dealing with construction a bank account before registering for sales tax Ė Performs general commercial activities, permits indicator. such as the production or sale of products or value added tax, this transaction is included or services to the public. The business does not perform foreign trade activities FIGURE 5.1 STARTING A BUSINESS and does not handle products subject to a STARTING A BUSINESS: GETTING A LOCAL special tax regime, for example, liquor or LIMITED LIABILITY COMPANY UP Doing Business in Indonesia 2012 records all AND RUNNING tobacco. It is not using heavily polluting procedures that are officially required for Rankings are based on 4 indicators production processes. an entrepreneur to start up and formally Leases the commercial plant and offices Preregistration, As % of income operate a commercial business. These include Ė registration and per capita, no and is not a proprietor of real estate. postregistration bribes included obtaining all necessary licenses and permits (in calendar days) and completing any required notifications, Ė Does not qualify for investment incentives or any special benefits. verifications or inscriptions for the company Ė Has at least 10 and up to 50 employees 1 25% 25% and employees with relevant authorities. The Cost month after the commencement of opera- Time ranking on the ease of starting a business is tions, all of them nationals. 25% 25% the simple average of the percentile rankings Procedures Paid-in on its component indicators (figure 5.1). Ė Has a turnover of at least 100 times in- minimum come per capita. capital After a study of laws, regulations and publicly Ė Has a company deed 10 pages long. Procedure is Funds deposited in a available information on business entry, a completed when bank or with a notary final document before registration (or detailed list of procedures is developed, along is received within 3 months), as % with the time and cost of complying with each of income per capita DATA NOTES 33

TABLE 5.1 waste time and commits to completing each DEALING WITH CONSTRUCTION WHAT DO THE STARTING A BUSINESS remaining procedure without delay. The time PERMITS INDICATORS MEASURE? that the entrepreneur spends on gathering Doing Business in Indonesia 2012 records all Procedures to legally start and operate a company (number) information is ignored. It is assumed that the procedures required for a business in the Preregistration (for example, name verification or entrepreneur is aware of all entry regulations construction industry to build a standardized reservation, notarization) and their sequence from the beginning but has warehouse. These procedures include submit- Registration in the economy’s largest business city had no prior contact with any of the officials. ting all relevant project-specific documents (for Postregistration (for example, social security registra- example, building plans and site maps) to the tion, company seal) authorities; obtaining all necessary clearances, Time required to complete each procedure Cost (calendar days) Cost is recorded as a percentage of the licenses, permits and certificates; completing all Does not include time spent gathering information required notifications; and receiving all neces- economy’s income per capita. It includes all Each procedure starts on a separate day sary inspections. Doing Business in Indonesia official fees and fees for legal or professional Procedure completed once final document is received 2012 also records procedures for obtaining services if such services are required by law. No prior contact with officials connections for water, sewerage, and a fixed Fees for purchasing and legalizing company Cost required to complete each procedure telephone landline. Procedures necessary to (% of income per capita) books are included if these transactions are register the property so that it can be used as Official costs only, no bribes required by law. The company law, the com- collateral or transferred to another entity are No professional fees unless services required by law mercial code and specific regulations and fee also counted. The survey divides the process of Paid-in minimum capital (% of income per capita) schedules are used as sources for calculating building a warehouse into distinct procedures Funds deposited in a bank or with a notary before and calculates the time and cost of completing registration (or within 3 months) costs. In the absence of fee schedules, a government officer’s estimate is taken as an each procedure. The ranking on the ease of dealing with construction permits is the as a procedure. Shortcuts are counted only if official source. In the absence of governmenta simple average of the percentile rankings on they fulfill 4 criteria: they are legal, they are officer’s estimate, estimates of incorporation its component indicators (figure 5.2). available to the general public, they are used lawyers are used. If several incorporation by the majority of companies, and avoiding lawyers provide different estimates, the median Information is collected from experts in them causes substantial delays. reported value is applied. In all cases the cost construction licensing, including architects, construction lawyers, construction firms, utility Only procedures required of all businesses excludes bribes. service providers and public officials who deal are covered. Industry-specific procedures are with building regulations, including approvals excluded. For example, procedures to comply Paid-in minimum capital and inspections. To make the data comparable with environmental regulations are included The paid-in minimum capital requirement across economies, several assumptions about only when they apply to all businesses conduct- reflects the amount that the entrepreneur the business, the warehouse project and the ing general commercial or industrial activities. needs to deposit in a bank or with a notary utility connections are used. Procedures that the company undergoes to before registration and up to 3 months following connect to electricity, water, gas and waste incorporation and is recorded as a percentage of Assumptions about the disposal services are not included. the economy’s income per capita. The amount construction company Time is typically specified in the commercial code The business (BuildCo): Time is recorded in calendar days. The measure or the company law. Many countries have Ė Is a limited liability company. captures the median duration that incorporation a minimum capital requirement but allow Ė Operates in the selected city. lawyers indicate is necessary to complete businesses to pay only a part of it before Ė Is 100% domestically and privately owned. a procedure with minimum follow-up with registration, with the rest to be paid after the Ė Has 5 owners, none of whom is a legal government agencies and no extra payments. It first year of operation. entity. is assumed that the minimum time required for Ė Is fully licensed and insured to carry out each procedure is 1 day. Although procedures The data details on starting a business can construction projects, such as building may take place simultaneously, they cannot be found for each economy at http://www warehouses. start on the same day (that is, simultaneous .doingbusiness.org by selecting the economy in the Ė Has 60 builders and other employees, procedures start on consecutive days). A drop-down list. This methodology was developed all of them nationals with the technical procedure is considered completed once the expertise and professional experience nec- in Djankov, Simeon, Rafael la Porta, Florencio company has received the final document, such essary to obtain construction permits and as the company registration certificate or tax López-de-Silanes and Andrei Schleifer. 2002. approvals. ¨The Regulation of Entry.¨ Quarterly Journal of number. If a procedure can be accelerated for an Ė Has at least 1 employee who is a licensed additional cost, the fastest procedure is chosen. Economics 117(1):1-37, and is adopted here with architect and registered with the local as- It is assumed that the entrepreneur does not minor changes. sociation of architects. 34 DOING BUSINESS IN INDONESIA 2012

FIGURE 5.2 Assumptions about the utility waste time and commits to completing each DEALING WITH CONSTRUCTION PERMITS: remaining procedure without delay. The time BUILDING A WAREHOUSE connections that BuildCo spends on gathering information Rankings are based on 3 indicators The water and sewerage connection: is ignored. It is assumed that BuildCo is aware Days to build a As % of income Ė Is 32 feet 10 inches (10 meters) from the warehouse in per capita, no existing water source and sewer tap. of all building requirements and their sequence main city bribes included from the beginning. Ė Does not require water for fire protection 33.3% 33.3% reasons; a fire extinguishing system (dry Cost Time Cost system) will be used instead. If a wet fire protection system is required by law, it is Cost is recorded as a percentage of the assumed that the water demand specified economy’s income per capita. Only official 33.3% below also covers the water needed for fire costs are recorded. All the fees associated with Procedures protection. completing the procedures to legally build a Ė Has an average water use of 662 liters (175 warehouse are recorded, including those as- Procedure is completed when final document is gallons) a day and an average wastewater sociated with obtaining land use approvals and received; construction permits, inspections and utility connections included flow of 568 liters (150 gallons) a day. preconstruction design clearances; receiving Ė Has a peak water use of 1,325 liters (350 inspection before, during and after construction; Ė Has paid all taxes and taken out all neces- gallons) a day and a peak wastewater flow getting utility connections; and registering sary insurance applicable to its general of 1,136 liters (300 gallons) a day. the warehouse property. Nonrecurring taxes business activity (for example, accidental Ė Will have a constant level of water demand required for the completion of the warehouse insurance for construction workers and and wastewater flow throughout the year. project are also recorded. The building code, third-person liability insurance). The telephone connection: information from local experts and specific Ė Owns the land on which the warehouse is regulations and fee schedules are used as built. Ė Is 32 feet, 10 inches (10 meters) from the main telephone network. sources for costs. If several local partners Assumptions about the warehouse Ė Is a fixed telephone landline. provide different estimates, the median reported The warehouse: value is used. Ė Will be used for general storage activities, Procedures The data details on dealing with construction per- such as storage of books or stationery. The A procedure is any interaction of the company’s mits can be found for each economy at http://www warehouse will not be used for any goods employees or managers with external parties, requiring special conditions, such as food, .doingbusiness.org by selecting the economy in including government agencies, notaries, the chemicals or pharmaceuticals. the drop-down list. land registry, the cadastre, utility companies, Has 2 stories, both above ground, with Ė public and private inspectors and technical a total surface of approximately 14,000 experts apart from in-house architects and square feet (1,300.6 square meters). Each engineers. Interactions between company floor is 9 feet, 10 inches (3 meters) high. employees, such as development of the ware- Ė Has road access and is located in the peri- house plans and inspections conducted by TABLE 5.2 urban area of the selected city (that is, on employees, are not counted as procedures. WHAT DO THE DEALING WITH CONSTRUCTION the fringes of the city but still within its PERMITS INDICATORS MEASURE? official limits). Procedures that the company undergoes to connect to water, sewerage and telephone Procedures to legally build a warehouse (number) Ė Is not located in a special economic or in- services are included. All procedures that are Submitting all relevant documents and obtain- dustrial zone. The zoning requirements for ing all necessary clearances, licenses, permits and warehouses are met by building in an area legally or in practice required for building a certificates where similar warehouses can be found. warehouse are counted, even if they may be Completing all required notifications and receiving all necessary inspections Ė Is located on a land plot of 10,000 square avoided in exceptional cases (table 5.2). Obtaining utility connections for water, sewerage feet (929 square meters) that is 100% and a fixed telephone landline owned by BuildCo and is registered in the Time Registering the warehouse after its completion (if cadastre and land registry. Time is recorded in calendar days. The measure required for use as collateral or for transfer of the warehouse) Ė Is a new construction (there was no previ- captures the median duration that local experts ous construction on the land). indicate is necessary to complete the procedure Time required to complete each procedure (calendar days) in practice. It is assumed that the minimum time Ė Has complete architectural and technical Does not include time spent gathering information plans prepared by a licensed architect. required for each procedure is 1 day. Although Each procedure starts on a separate day Ė Will include all technical equipment procedures may take place simultaneously, Procedure completed once final document is received required to make the warehouse fully they cannot start on the same day (that is, operational. simultaneous procedures start on consecutive No prior contact with officials Will take 30 weeks to construct (excluding days). If a procedure can be accelerated legally Cost required to complete each procedure Ė (% of income per capita) all delays due to administrative and regula- for an additional cost, the fastest procedure is Official costs only, no bribes tory requirements). chosen. It is assumed that BuildCo does not DATA NOTES 35

FIGURE 5.3 REGISTERING PROPERTY TABLE 5.3 REGISTERING PROPERTY: TRANSFER OF PROPERTY WHAT DO THE REGISTERING PROPERTY Doing Business in Indonesia 2012 records the BETWEEN 2 LOCAL COMPANIES INDICATORS MEASURE? full sequence of procedures necessary for a Rankings are based on 3 indicators Procedures to legally transfer title on immovable business (buyer) to purchase a property from property (number) another business (seller) and to transfer the Preregistration procedures (for example, checking for Days to transfer As % of property liens, notarizing sales agreement, paying property property title to the buyer’s name so that the property in value, no bribes transfer taxes) main city included buyer can use the property for expanding its Registration procedures in the economy’s largest business, as collateral in taking new loans or, if business city 33.3% 33.3% necessary, sell to another business. The process Time Cost Postregistration procedures (for example, filing title with municipality) starts with obtaining the necessary documents, Time required to complete each procedure such as a copy of the seller’s title if necessary, (calendar days) 33.3% and conducting due diligence if required. The Procedures Does not include time spent gathering information transaction is considered complete when it is Each procedure starts on a separate day opposable to third parties and when the buyer Procedure completed once final document is received can use the property, use it as collateral for a Steps to check encumbrances, obtain clearance certificates, prepare deed and transfer title so No prior contact with officials bank loan or resell it. The ranking on the ease that the property can be occupied, sold or used as collateral Cost required to complete each procedure of registering property is the simple average (% of property value) of the percentile rankings on its component Official costs only, no bribes Ė Is registered in the land registry or cadas- indicators (figure 5.3). tre, or both, and is free of title disputes. No value added or capital gains taxes included Ė Is located in a periurban commercial zone, Every procedure required by law or neces- they may be avoided in exceptional cases. It and no rezoning is required. sary in practice is included, whether it is the is assumed that the buyer follows the fastest Consists of land and a building. The land responsibility of the seller or the buyer or must Ė legal option available and used by the majority area is 6,000 square feet (557.4 square be completed by a third party on their behalf. of property owners. Although the buyer may use meters). A 2-story warehouse of 10,000 Local property lawyers, notaries and property lawyers or other professionals where necessary square feet (929 square meters) is located registries provide information on procedures on the land. The warehouse is 10 years old, in the registration process, it is assumed that as well as the time and cost to complete each is in good condition and complies with it does not employ an outside facilitator in the of them. all safety standards, building codes and registration process unless legally or in practice other legal requirements. The property of required to do so (table 5.3). To make the data comparable across econo- land and building will be transferred in its mies, several assumptions about the parties to entirety. Time the transaction, the property and the procedures Ė Will not be subject to renovations or ad- Time is recorded in calendar days. The measure are used. ditional building following the purchase. captures the median duration that property Ė Has no trees, natural water sources, natu- lawyers, notaries or registry officials indicate Assumptions about the parties ral reserves or historical monuments of is necessary to complete a procedure. It is The parties (buyer and seller): any kind. assumed that the minimum time required for Ė Are limited liability companies. Ė Will not be used for special purposes, and each procedure is 1 day. Although procedures Ė Are located in the periurban area of the no special permits, such as for residential may take place simultaneously, they cannot selected city. use, industrial plants, waste storage or start on the same day (that is, simultaneous certain types of agricultural activities, are procedures start on consecutive days). It is Ė Are 100% domestically and privately required. owned. assumed that the buyer does not waste time Ė Has no occupants (legal or illegal), and no and commits to completing each remaining Ė Have 50 employees each, all of whom are other party holds a legal interest in it. nationals. procedure without delay. If a procedure can be accelerated for an additional cost, the Ė Perform general commercial activities. Procedures fastest legal procedure available and used by A procedure is defined as any interaction of the the majority of property owners is chosen. If Assumptions about the property buyer or the seller, their agents (if an agent is procedures can be undertaken simultaneously, it The property: legally or in practice required) or the property is assumed that they are. It is assumed that the Ė Has a value of 50 times income per capita. with external parties, including government parties involved are aware of all regulations and The sale price equals the value. agencies, inspectors, notaries and lawyers. their sequence from the beginning. Time spent Ė Is fully owned by the seller. Interactions between company officers and on gathering information is not considered. Ė Has no mortgages attached and has been employees are not considered. All procedures under the same ownership for the past 10 that are legally or in practice required for years. registering property are recorded, even if 36 DOING BUSINESS IN INDONESIA 2012

Cost DISTANCE TO FRONTIER majority of economies (a total of 174) and for Cost is recorded as a percentage of the property MEASURE all 9 indicator sets included in the measure. To mitigate the effects of extreme outliers in value, assumed to be equivalent to 50 times This year’s report, Doing Business 2012—Doing the distributions of the rescaled data (very income per capita. Only official costs required business in a more transparent world, introduces few economies need 694 days to complete by law are recorded, including fees, transfer a new measure to illustrate how the regula- the procedures to start a business, but many taxes, stamp duties and any other payment to tory environment for local businesses in each need 9 days), the maximum (max) is defined the property registry, notaries, public agencies economy has changed over time. The distance as the 95th percentile of the pooled data for or lawyers. Other taxes, such as capital gains tax to frontier measure illustrates the distance of all economies and all years for each indicator. or value added tax, are excluded from the cost an economy to the “frontier” and shows the measure. Both costs borne by the buyer and extent to which the economy has closed this those borne by the seller are included. If cost gap over time. The frontier is a score derived estimates differ among sources, the median from the most efficient practice or highest score reported value is used. achieved on each of the component indicators The data details on registering property can in 9 Doing Business indicator sets (excluding be found for each economy at http://www. the employing workers and getting electricity doingbusiness.org by selecting the economy in indicators) by any economy since 2005. In the drop-down list. starting a business, for example, New Zealand has achieved the highest performance on the time (1 day), Canada and New Zealand on the RANKINGS number of procedures required (1), Denmark and Slovenia on the cost (0% of income per The ranking on each topic is the simple average capita) and Australia on the paid-in minimum of the percentile rankings on its component capital requirement (0% of income per capita). indicators. The ease of starting a business is a simple average of the city rankings on the Calculating the distance to frontier for each number of procedures, and the associated time economy involves 2 main steps. First, individual and cost (% of income per capita) required indicator scores are normalized to a common to start a business. The ease of dealing with unit. To do so, each of the 32 component indica- construction permits is a simple average of the tors y is rescaled to (y − min)/(max − min), city rankings on the number of procedures, and with the minimum value (min) representing the associated time and cost (% of income per the frontier—the highest performance on that capita) required to build a warehouse. The ease indicator across all economies since 2005. of registering property is a simple average of Second, for each economy the scores obtained the city rankings on the number of procedures, for individual indicators are aggregated through associated time and cost (% of the property simple averaging into one distance to frontier value) required to register property. score. An economy’s distance to the frontier The rankings are limited in scope. They do not is indicated on a scale from 0 to 100, where account for an economy’s proximity to large 0 represents the frontier and 100 the lowest markets, the quality of its infrastructure services performance. (other than services related to construction permits), the security of property from theft The difference between an economy’s distance and looting, macroeconomic conditions or to frontier score in 2005 and its score in 2011 the strength of underlying institutions. There illustrates the extent to which the economy has remains a large unfinished agenda for research closed the gap to the frontier over time. The into what regulation constitutes binding con- maximum (max) and minimum (min) observed straints, what package of reforms is most values are computed for the 174 economies effective and how these issues are shaped by included in the Doing Business sample since the context of an economy. The Doing Business 2005 and for all years (from 2005 to 2011). indicators provide a new empirical data set that The year 2005 was chosen as the baseline may improve understanding of these issues. for the economy sample because it was the first year in which data were available for the 37

City tables

Balikpapan, East Kalimantan Starting a business (rank) 7 Dealing with construction permits (rank) 1 Registering property (rank) 12 Procedures (number) 8 Procedures (number) 8 Procedures (number) 6 Time (days) 28 Time (days) 52 Time (days) 39 Cost (% of income per capita) 26.3 Cost (% of income per capita) 62.8 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Banda Aceh, Aceh Province Starting a business (rank) 5 Dealing with construction permits (rank) 4 Registering property (rank) 12 Procedures (number) 9 Procedures (number) 10 Procedures (number) 6 Time (days) 29 Time (days) 42 Time (days) 39 Cost (% of income per capita) 19.3 Cost (% of income per capita) 66.5 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Bandung, West Java Starting a business (rank) 12 Dealing with construction permits (rank) 8 Registering property (rank) 1 Procedures (number) 9 Procedures (number) 10 Procedures (number) 6 Time (days) 30 Time (days) 44 Time (days) 19 Cost (% of income per capita) 24.3 Cost (% of income per capita) 76.5 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Batam, Riau Islands Starting a business (rank) 15 Dealing with construction permits (rank) 10 Registering property (rank) 20 Procedures (number) 9 Procedures (number) 9 Procedures (number) 7 Time (days) 39 Time (days) 45 Time (days) 54 Cost (% of income per capita) 22.7 Cost (% of income per capita) 127.3 Cost (% of the property value) 13.35 Minimum capital (% of income per capita) 46.6

Denpasar, Bali Starting a business (rank) 9 Dealing with construction permits (rank) 17 Registering property (rank) 12 Procedures (number) 8 Procedures (number) 12 Procedures (number) 6 Time (days) 31 Time (days) 94 Time (days) 39 Cost (% of income per capita) 22.9 Cost (% of income per capita) 71.4 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Gorontalo, Gorontalo Starting a business (rank) 6 Dealing with construction permits (rank) np Registering property (rank) 5 Procedures (number) 9 Procedures (number) np Procedures (number) 6 Time (days) 27 Time (days) np Time (days) 31 Cost (% of income per capita) 22.2 Cost (% of income per capita) np Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6 38 DOING BUSINESS IN INDONESIA 2012

Jakarta, DKI Jakarta Starting a business (rank) 8 Dealing with construction permits (rank) 19 Registering property (rank) 1 Procedures (number) 8 Procedures (number) 13 Procedures (number) 6 Time (days) 45 Time (days) 158 Time (days) 22 Cost (% of income per capita) 17.9 Cost (% of income per capita) 105.3 Cost (% of the property value) 10.81 Minimum capital (% of income per capita) 46.6

Jambi, Jambi Starting a business (rank) 18 Dealing with construction permits (rank) 2 Registering property (rank) 7 Procedures (number) 10 Procedures (number) 10 Procedures (number) 6 Time (days) 44 Time (days) 68 Time (days) 37 Cost (% of income per capita) 20.2 Cost (% of income per capita) 32 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Makassar, South Sulawesi Starting a business (rank) 17 Dealing with construction permits (rank) 11 Registering property (rank) 9 Procedures (number) 10 Procedures (number) 8 Procedures (number) 6 Time (days) 35 Time (days) 51 Time (days) 38 Cost (% of income per capita) 22 Cost (% of income per capita) 131.5 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Manado, North Sulawesi Starting a business (rank) 20 Dealing with construction permits (rank) 18 Registering property (rank) 15 Procedures (number) 11 Procedures (number) 14 Procedures (number) 6 Time (days) 34 Time (days) 107 Time (days) 12 Cost (% of income per capita) 30.8 Cost (% of income per capita) 100.1 Cost (% of the property value) 11.02 Minimum capital (% of income per capita) 46.6

Mataram, West Nusa Tenggara Starting a business (rank) 10 Dealing with construction permits (rank) 12 Registering property (rank) 4 Procedures (number) 9 Procedures (number) 10 Procedures (number) 6 Time (days) 31 Time (days) 83 Time (days) 25 Cost (% of income per capita) 22.4 Cost (% of income per capita) 58.4 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Medan, North Sumatra Starting a business (rank) 19 Dealing with construction permits (rank) 6 Registering property (rank) 7 Procedures (number) 11 Procedures (number) 7 Procedures (number) 6 Time (days) 39 Time (days) 71 Time (days) 37 Cost (% of income per capita) 21.2 Cost (% of income per capita) 70.3 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Palangka Raya, Central Kalimantan Starting a business (rank) 2 Dealing with construction permits (rank) 14 Registering property (rank) 16 Procedures (number) 8 Procedures (number) 11 Procedures (number) 6 Time (days) 27 Time (days) 82 Time (days) 15 Cost (% of income per capita) 22 Cost (% of income per capita) 37.5 Cost (% of the property value) 11.03 Minimum capital (% of income per capita) 46.6 CITY TABLES 39

Palembang, South Sumatra Starting a business (rank) 11 Dealing with construction permits (rank) 3 Registering property (rank) 3 Procedures (number) 10 Procedures (number) 9 Procedures (number) 6 Time (days) 34 Time (days) 57 Time (days) 21 Cost (% of income per capita) 19 Cost (% of income per capita) 50.5 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Pekanbaru, Riau Starting a business (rank) 16 Dealing with construction permits (rank) 15 Registering property (rank) 18 Procedures (number) 10 Procedures (number) 10 Procedures (number) 6 Time (days) 29 Time (days) 83 Time (days) 29 Cost (% of income per capita) 26.6 Cost (% of income per capita) 64.5 Cost (% of the property value) 10.89 Minimum capital (% of income per capita) 46.6

Pontianak, West Kalimantan Starting a business (rank) 13 Dealing with construction permits (rank) 7 Registering property (rank) 9 Procedures (number) 10 Procedures (number) 11 Procedures (number) 6 Time (days) 42 Time (days) 59 Time (days) 38 Cost (% of income per capita) 17.8 Cost (% of income per capita) 32.3 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Semarang, Central Java Starting a business (rank) 4 Dealing with construction permits (rank) 8 Registering property (rank) 19 Procedures (number) 9 Procedures (number) 10 Procedures (number) 7 Time (days) 28 Time (days) 72 Time (days) 43 Cost (% of income per capita) 19.7 Cost (% of income per capita) 38.6 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Surabaya, East Java Starting a business (rank) 14 Dealing with construction permits (rank) 16 Registering property (rank) 11 Procedures (number) 9 Procedures (number) 11 Procedures (number) 6 Time (days) 32 Time (days) 116 Time (days) 39 Cost (% of income per capita) 23.5 Cost (% of income per capita) 71.2 Cost (% of the property value) 10.83 Minimum capital (% of income per capita) 46.6

Surakarta, Central Java Starting a business (rank) 3 Dealing with construction permits (rank) 12 Registering property (rank) 17 Procedures (number) 8 Procedures (number) 11 Procedures (number) 6 Time (days) 29 Time (days) 71 Time (days) 54 Cost (% of income per capita) 20.5 Cost (% of income per capita) 41.9 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6

Yogyakarta, DI Yogyakarta Starting a business (rank) 1 Dealing with construction permits (rank) 5 Registering property (rank) 6 Procedures (number) 8 Procedures (number) 7 Procedures (number) 6 Time (days) 29 Time (days) 51 Time (days) 36 Cost (% of income per capita) 18.5 Cost (% of income per capita) 85.5 Cost (% of the property value) 10.88 Minimum capital (% of income per capita) 46.6 40

Indicator tables

Starting a business Dealing with construction permits

Paid-in Ease of minimum Ease of Cost dealing with Cost capital starting a (% of construction Procedures Time (% of income (% of income business Procedures Time income per permits (number) (days) per capita) per capita) (rank) (number) (days) capita) (rank) Balikpapan 8 28 26.3 46.6 7 8 52 62.8 1 East Kalimantan Banda Aceh 9 29 19.3 46.6 5 10 42 66.5 4 Aceh Province Bandung 9 30 24.3 46.6 12 10 44 76.5 8 West Java Batam 9 39 22.7 46.6 15 9 45 127.3 10 Riau Islands Denpasar 8 31 22.9 46.6 9 12 94 71.4 17 Bali Gorontalo 9 27 22.2 46.6 6No No No No Gorontalo practice practice practice practice Jakarta 8 45 17.9 46.6 8 13 158 105.3 19 DKI Jakarta Jambi 10 44 20.2 46.6 18 10 68 32 2 Jambi Makassar 10 35 22 46.6 17 8 51 131.5 11 South Sulawesi Manado 11 34 30.8 46.6 20 14 107 100.1 18 North Sulawesi Mataram 9 31 22.4 46.6 10 10 83 58.4 12 West Nusa Tenggara Medan 11 39 21.2 46.6 19 7 71 70.3 6 North Sumatra Palangka Raya 8 27 22 46.6 2 11 82 37.5 14 Central Kalimantan Palembang 10 34 19 46.6 11 9 57 50.5 3 South Sumatra Pekanbaru 10 29 26.6 46.6 16 10 83 64.5 15 Riau Pontianak 10 42 17.8 46.6 13 11 59 32.3 7 West Kalimantan Semarang 9 28 19.7 46.6 4 10 72 38.6 8 Central Java Surabaya 9 32 23.5 46.6 14 11 116 71.2 16 East Java Surakarta 8 29 20.5 46.6 3 11 71 41.9 12 Central Java Yogyakarta 8 29 18.5 46.6 1 7 51 85.5 5 DI Yogyakarta INDICATOR TABLES 41

Registering property

Cost Ease of (% of registering Procedures Time property property (number) (days) value) (rank) Balikpapan 6 39 10.88 12 East Kalimantan Banda Aceh 6 39 10.88 12 Aceh Province Bandung 6 19 10.88 1 West Java Batam 7 54 13.35 20 Riau Islands Denpasar 6 39 10.88 12 Bali Gorontalo 6 31 10.88 5 Gorontalo Jakarta 6 22 10.81 1 DKI Jakarta Jambi 6 37 10.88 7 Jambi Makassar 6 38 10.88 9 South Sulawesi Manado 6 12 11.02 15 North Sulawesi Mataram 6 25 10.88 4 West Nusa Tenggara Medan 6 37 10.88 7 North Sumatra Palangka Raya 6 15 11.03 16 Central Kalimantan Palembang 6 21 10.88 3 South Sumatra Pekanbaru 6 29 10.89 18 Riau Pontianak 6 38 10.88 9 West Kalimantan Semarang 7 43 10.88 19 Central Java Surabaya 6 39 10.83 11 East Java Surakarta 6 54 10.88 17 Central Java Yogyakarta 6 36 10.88 6 DI Yogyakarta 42 DOING BUSINESS IN INDONESIA 2012

The requirement to pay the non–tax state revenue when the NPWP and NPPKP cards are ready for pick LIST OF PROCEDURES (PNBP) fee for legal services in relation to the estab- up. NPPKP needs further verification beyond applica- lishment of a small company (Perseroan Terbatas– tion but NPWP can be obtained in 1 day. STARTING A BUSINESS PT) is based on Government Regulation No. 38 of The NPWP application can also be arranged on–line 2009 concerning types and tariffs on non–tax state but the applicant still needs to provide hard copies revenues replacing the previous regulation which is of documents and visit the Tax Office to pick up the Balikpapan, East Kalimantan regulation No. 19 of 2007. NPWP Card. Most applicants visit the Tax Office in Standard company legal form: Limited Liability Company person. (LLC)– Perseroan Terbatas (PT) Procedure 4. Apply to the Ministry of Law Paid–in minimum capital requirement: IDR 12,500,000 and Human Rights for approval of the deed Procedure 6. Apply for the nuissance of establishment = USD 1,201 permit (HO), the permanent business Data as of: July 2011 Time: 14 days trading license (Surat Izin Usaha Cost: IDR 1,580,000 (IDR 1,000,000 for validation of Perdagangan, SIUP) and the registration Procedure 1. Arrange for a notary; obtain company as legal entity + IDR 30,000 for publication certificate (Tanda Daftar Perusahaan, TDP) the standard form of the company deed; in the State Gazette, BNRI + IDR 550,000 for publica- at the Investment and Licensing Agency obtain clearance for the company name tion in the Supplement to the State Gazette, TBNRI) (BPMP2T) electronically from the Ministry of Law and Comments: Based on Articles 9, 10, 29 and 30 of the Time: 5 days Indonesian Company Law No. 40/ 2007, the public Human Rights Cost: IDR 750,000 (for HO) notary preparing the company deed of establishment Time: 4 days must electronically file the required documents with Comments: Since April 2010, following the new SOP Cost: IDR 200,000 (name clearance and reservation) the Ministry of Law and Human Rights. The process of BPMP2T, the licenses can be obtained as a package. Comments: The uniqueness of the company name will take place as follows: The applicant submits only 1 complete document to the licensing agency, which will verify the documents must be checked to ensure that it has not been used a. The application should be filled no later than 60 and issue the registration number for the applicant. by another Indonesian company, to avoid a rejection days from the date of the deed; by the Ministry of Law and Human Rights of the The technical team will conduct an inspection of the b. Within 30 days of the notice of “no objection” from company’s deed of establishment and articles of as- business location at which the entrepreneur does not the Ministry of Law and Human Rights, the original sociation. Because the process must be done through have to be present. Based on the inspection minutes application and supporting documents should be a computerized processing system, the reservation (BAPL), the licenses are approved or not. After submitted; and clearance must be done by a public notary (the approval, the licenses are printed and signed by the new computerized system for nontax state revenue c. Seven days after the fulfillment of above require- Head of the Licensing Agency. The applicant will be payments may be accessed only by a public notary). ments, the Ministry of Law and Human Rights will informed by phone to pick up the licenses. Upon payment and verification, the applicant receives issue the legalization of the establishment of the The following copies of documents should be attached an online notification (via email) with the cleared company; to obtain the licenses: company name. The reserved name will be blocked d. The company data (name, location, object and a. Application letter; for 60 days. purpose, capital) will be inserted in the Company b. Articles of association; Based on the Government Regulation Number 38 of Registry; c. Copy of ID card; 2009 (enacted on May 28, 2009 and entered into e. The Ministry of Law and Human Rights will an- force on June 3, 2009) regarding the Non Tax State nounce the establishment of the company in the d. Proof of the lease of premises; Revenue for the Ministry of Law and Human Rights, Supplement State Gazette (TBNRI) within 14 days e. Map of the business location; the fee for this procedure is IDR 200,000. of the Ministry’s Approval Letter. f. Copy of the deed establishment; By virtue of Government Regulation 38/ 2009 (enact- g. Passport photo size 3x4; Procedure 2. Notarize company documents ed on May 28, 2009 and entered into force on June h. Letter of no objection from the neighborhood (for before a notary public 3, 2009) regarding the Non Tax State Revenue for the HO); Time: 1 day Ministry of Law and Human Rights, a new schedule of official fees was enforced for the establishment of a i. Copy of IMB or leases the premises; Cost: IDR 4,520,000 (notary fee) domestic limited liability company (PT). j. Copy of NPWP & NPWPD (Local fiscal charges); Comments: Once the notary gets the company name Delays depend on the workload of the Ministry and on k. Balance sheet of company (stamp IDR 6,000); approval from the Ministry of Law and Human Rights, the approved courier service used by the Ministry to the founders can sign the deed of establishment. l. Copy of technical permit related to the business deliver its approval to the notary. The process usually Standard articles of association are available at the type. takes 7 days for processing and approximately 7 days notary office. Based on the local regulation No. 10 of 2008 regarding for courier service. There is improvement in quality of HO levy, the following formula to calculate HO permit: The notary fees associated with this procedure cover courier service, by using Pos or TIKI express services the following services: name check, deed drafting now the process to deliver the documents is faster Business area x location index x total of the nuisance and approval, and payment of non tax state revenue within 4–7 days. index x Tariff (PNBP) fees. Commonly, local notary associations set 100 m2 x 3 x (1+1) x IDR 1,250= IDR 750,000. the scale of notary fees. In practice, the fee depends Procedure 5. Obtain a taxpayer registration According to the new law No 28 of 2009 and based on the agreement between notary and client. number (NPWP) and a Value Added Tax on Mayor instruction No. 1 of 2011, enacted January The costs for accessing the Electronic Administration (VAT) collector number (NPPKP) from the 2011, SIUP & TDP is free of charge and according to System of Legal Status (SABH), name checking, and local Tax Office the mayor instruction, the statutory time to complete PNBP are counted separately. this procedure is 14 days, but in practice, it can be Time: 3 days done faster within 5 days. Procedure 3. Pay the State Treasury for Cost: No cost the non–tax state revenue (PNBP) fees for Comments: Maximum one month from the start of Procedure 7*. Register with the Ministry of legal services at a bank business operations, the company must register with Manpower at the local Manpower Office Time: 1 day the Tax Office. The company must also obtain a VAT Time: 1 day collector number (NPPKP) if it anticipates annual rev- Cost: No cost enue of more than IDR 600 million from the sales of Cost: No cost Comments: This payment is for name clearances and goods and services. The company domicile certificate, Comments: According to Law 13/2003, companies company approval. Because the new computerized articles of association, and identity cards of the direc- with more than 10 workers or a monthly payroll of IDR system for non–tax state revenue payments (PNBP)— tors must be submitted to obtain the tax numbers. 1 million must register with the Ministry of Manpower. which has been implemented by the Ministry of Law NPWP and NPPKP can be arranged simultaneously This procedure can be completed concurrently with and Human Rights—may be accessed only by a notary in one package. The applicant submits the required other post–registration procedures by filing the public, payment for registering or establishing a com- documents to the Tax Office and gets the receipt of compulsory report with the local office of the Ministry pany is normally done through a notary. application. The Tax Officer will inform the applicant of Manpower. The applicant gets a receipt of docu- ment submission. The Manpower office conducts a LIST OF PROCEDURES 43

verification process and issues an official copy of the and clearance must be done by a public notary (the c. Seven days after the fulfillment of above require- registration to the applicant. The applicant returns to new computerized system for nontax state revenue ments, the Ministry of Law and Human Rights will the office to pick up the official copy of the registra- payments may be accessed only by a public notary). issue the legalization of the establishment of the tion. For a company with less than 50 employees, the Upon payment and verification, the applicant receives company; verification process can be done on the spot. an online notification (via email) with the cleared d. The company data (name, location, object and company name. The reserved name will be blocked purpose, capital) will be inserted in the Company Procedure 8*. Apply for the Workers Social for 60 days. Registry; Security Program (Jamsostek Program) Based on the Government Regulation Number 38 of e. The Ministry of Law and Human Rights will an- Time: 2 days 2009 (enacted on May 28, 2009 and entered into nounce the establishment of the company in the force on June 3, 2009) regarding the Non Tax State Cost: No cost Supplement State Gazette (TBNRI) within 14 days Revenue for the Ministry of Law and Human Rights, of the Ministry’s Approval Letter. Comments: According to legal provisions on workers’ the fee for this procedure is IDR 200,000. social security (Law No. 3/1992), it is mandatory for By virtue of Government Regulation 38/ 2009 (enact- every company or individual employing 10 workers ed on May 28, 2009 and entered into force on June Procedure 2. Notarize company documents 3, 2009) regarding the Non Tax State Revenue for the or more or generating a monthly payroll of at least before a notary public IDR 1 million to apply for the Workers Social Security Ministry of Law and Human Rights, a new schedule of Program (Jamsostek). This social security program Time: 1 day official fees was enforced for the establishment of a covers occupational accidents, death, old age, and Cost: IDR 3,020,000 (notary fee) domestic limited liability company (PT). health security. It is arranged after the company starts Comments: Once the notary gets the company name Delays depend on the workload of the Ministry and on to recruit workers. approval from the Ministry of Law and Human Rights, the approved courier service used by the Ministry to Arranging for Jamsostek is the same for all Indonesian the founders can sign the deed of establishment. deliver its approval to the notary. The process usually locations: Standard articles of association are available at the takes 7 days for processing and approximately 7 days for courier service. There is improvement in quality of a. Fill out the form, which can be downloaded from notary office. courier service, by using Pos or TIKI express services the website jamsostek.go.id or obtained from The notary fees associated with this procedure cover now the process to deliver the documents is faster Jamsostek Branch Offices; the following services: name check, deed drafting within 4–7 days. b. Visit the Jamsostek Office to submit the filled–in and approval, and payment of non tax state revenue form; (PNBP) fees. Commonly, local notary associations set the scale of notary fees. In practice, the fee depends Procedure 5. Obtain a taxpayer registration c. Jamsostek official conducts data input to Jam- on the agreement between notary and client. number (NPWP) and a Value Added Tax sostek data base; The costs for accessing the Electronic Administration (VAT) collector number (NPPKP) from the d. The applicant receives the company membership System of Legal Status (SABH), name checking, and local Tax Office certificate. PNBP are counted separately. Time: 3 days From submitting the application form until obtaining Cost: No cost the membership certificate it usually takes between 1 Procedure 3. Pay the State Treasury for Comments: Maximum one month from the start of and 3 days. In practice, if the company doesn’t pick up the non–tax state revenue (PNBP) fees for the certificate, the local Jamsostek Office will mail it business operations, the company must register with to the applicant no later than 7 days from the date of legal services at a bank the Tax Office. The company must also obtain a VAT the application. In 30 days, the company should pay Time: 1 day collector number (NPPKP) if it anticipates annual the first insurance premium. Having received the first Cost: No cost revenue of more than IDR 600 million from the sales of goods and services. The company domicile payment, the Jamsostek Office will issue membership Comments: This payment is for name clearances and certificates for each employee. certificate, articles of association, and identity cards company approval. Because the new computerized of the directors must be submitted to obtain the A company is not obliged to enroll its employees in system for non–tax state revenue payments (PNBP)— tax numbers. NPWP and NPPKP can be arranged the Jamsostek social security program if it offers an which has been implemented by the Ministry of Law simultaneously in one package. The applicant submits independent social security program to its employees, and Human Rights—may be accessed only by a notary the required documents to the Tax Office and gets the with comparable or better benefits than those offered public, payment for registering or establishing a com- receipt of application. The Tax Officer will inform the by the Package of Basic Health Maintenance Security pany is normally done through a notary. applicant when the NPWP and NPPKP cards are ready (according to Government Regulation No. 14/1993, as The requirement to pay the non–tax state revenue for pick up. NPPKP needs further verification beyond amended by Government Regulation No. 28 /2002). (PNBP) fee for legal services in relation to the estab- application but NPWP can be obtained in 1 day only. * This procedure can be completed simultaneously lishment of a small company (Perseroan Terbatas– Both NPWP and NPPKP can be obtained in 2-3 days. with previous procedures. PT) is based on Government Regulation No. 38 of Obtaining NPPKP could take 7–14 days if the company 2009 concerning types and tariffs on non–tax state is selected randomly for physical inspection. STARTING A BUSINESS revenues replacing the previous regulation which is The NPWP application can also be arranged on–line regulation No. 19 of 2007. Banda Aceh, Aceh Province but the applicant still needs to provide hard copies of documents and visit the Tax Office to pick up the Standard company legal form: Limited Liability Company Procedure 4. Apply to the Ministry of Law NPWP Card. Most applicants visit the Tax Office in (LLC)– Perseroan Terbatas (PT) and Human Rights for approval of the deed person. Paid–in minimum capital requirement: IDR 12,500,000 of establishment = USD 1,201 Time: 14 days Procedure 6. Obtain a location permit Data as of: July 2011 Cost: IDR 1,580,000 (IDR 1,000,000 for validation of (SITU) from the One Stop Service company as legal entity + IDR 30,000 for publication (KPPTSP) Procedure 1. Arrange for a notary; obtain in the State Gazette, BNRI + IDR 550,000 for publica- Time: 1 day the standard form of the company deed; tion in the Supplement to the State Gazette, TBNRI) Cost: IDR 50,000 obtain clearance for the company name Comments: Based on Articles 9, 10, 29 and 30 of the electronically from the Ministry of Law and Comments: City regulation (Qanun Kota Banda Aceh Indonesian Company Law No. 40/ 2007, the public 4/2003) governs the SITU process in Banda Aceh. Human Rights notary preparing the company deed of establishment SITU is a requirement to obtain the permanent busi- Time: 4 days must electronically file the required documents with ness trading license (Surat Izin Usaha Perdagangan, the Ministry of Law and Human Rights. The process Cost: IDR 200,000 (name clearance and reservation) SIUP). The applicant submits the complete documen- will take place as follows: Comments: The uniqueness of the company name tation to KPPTSP, obtains a registration number, and a. The application should be filled no later than 60 must be checked to ensure that it has not been used pays the registration fee at the Bank located within days from the date of the deed; by another Indonesian company, to avoid a rejection KPPTSP. The license is issued same day if the docu- by the Ministry of Law and Human Rights of the b. Within 30 days of the notice of “no objection” from ments are complete. The following documents should company’s deed of establishment and articles of as- the Ministry of Law and Human Rights, the original be attached: sociation. Because the process must be done through application and supporting documents should be a. Letter of application signed on stamp by the ap- a computerized processing system, the reservation submitted; plicant; 44 DOING BUSINESS IN INDONESIA 2012

b. Copy of ID card from applicant; Procedure 9*. Apply for the Workers Social Based on the Government Regulation Number 38 of c. The deed company establishment for the legal Security Program (Jamsostek Program) 2009 (enacted on May 28, 2009 and entered into entity; force on June 3, 2009) regarding the Non Tax State Time: 3 days Revenue for the Ministry of Law and Human Rights, d. Passport photo color size 3 x 4 cm (2 pieces); Cost: No cost the fee for this procedure is IDR 200,000. e. The status of the office space. Comments: According to legal provisions on workers’ Procedure 2. Notarize company documents Procedure 7. Apply for the permanent social security (Law No. 3/1992), it is mandatory for every company or individual employing 10 workers before a notary public business trading license (Surat Izin Usaha or more or generating a monthly payroll of at least Time: 1 day Perdagangan, SIUP) and the registration IDR 1 million to apply for the Workers Social Security Cost: IDR 4,020,000 (notary fee) certificate (Tanda Daftar Perusahaan, TDP) Program (Jamsostek). This social security program at the One Stop Service (KPPTSP Banda covers occupational accidents, death, old age, and Comments: Once the notary gets the company name Aceh City) health security. It is arranged after the company starts approval from the Ministry of Law and Human Rights, to recruit workers. the founders can sign the deed of establishment. Time: 3 days Standard articles of association are available at the Arranging for Jamsostek is the same for all Indonesian Cost: IDR 275,000 (IDR 75,000 for SIUP + IDR notary office. locations: 200,000 for TDP) The notary fees associated with this procedure cover a. Fill out the form, which can be downloaded from Comments: SIUP and TDP can be arranged as a the following services: name check, deed drafting the website jamsostek.go.id or obtained from package, at the same time, with the same Officer at and approval, and payment of non tax state revenue Jamsostek Branch Offices; the One Stop Service (KPPTSP Banda Aceh City). The (PNBP) fees. Commonly, local notary associations set applicant submits the completed application forms, b. Visit the Jamsostek Office to submit the filled–in the scale of notary fees. In practice, the fee depends along with the required documents, gets a confirma- form; on the agreement between notary and client. tion receipt, and pays the official user charges. After c. Jamsostek official conducts data input to Jam- The costs for accessing the Electronic Administration verification, the licenses will be issued. The time to sostek data base; System of Legal Status (SABH), name checking, and obtain both SIUP and TDP is sometimes faster which d. The applicant receives the company membership PNBP are counted separately. is 2–3 days. certificate. Based on Local Regulation No. 6/ 2004 and Local From submitting the application form until obtaining Procedure 3. Obtain a certificate of Regulation No. 7/2004, the fee for obtaining TDP is the membership certificate it usually takes between 1 company domicile from the Village Office IDR 200,000 and fee for SIUP is IDR 75,000 for a and 3 days. In practice, if the company doesn’t pick up Time: 2 days medium company (PT). Payment is made at the local the certificate, the local Jamsostek Office will mail it Cost: No cost government’s bank which is located in the One Stop to the applicant no later than 7 days from the date of Service, KPPTSP. the application. In 30 days, the company should pay Comments: This certificate is issued by the Head of Both SIUP and TDP are valid for 5 years. The following the first insurance premium. Having received the first the village (the Lurah) where the company is located documents should be attached to the application: payment, the Jamsostek Office will issue membership or by the building management, if office space is leased. The application form for domicile certificate a. Letters of application; certificates for each employee. should be completed with the number and date of the A company is not obliged to enroll its employees in b. Passport photo size 3 x 4 (4 pieces); deed of establishment and the name of the notary, the Jamsostek social security program if it offers an c. Copy of ID card; the type of business, and a declaration mentioning the independent social security program to its employees, company has informed its neighbors. A copy of the d. Copy of SITU; with comparable or better benefits than those offered signed deed of establishment should also be attached. e. Copy of the receipts of payment; by the Package of Basic Health Maintenance Security f. Copy of the Deed of Establishment and proof of the (according to Government Regulation No. 14/1993, as There is no official fee to obtain this certificate in court registration if the company is Limited Liability amended by Government Regulation No. 28 /2002). Bandung. Instead, a “voluntary social contribution” for Company (Perseroan Terbatas, PT); the development of the community can be made. * This procedure can be completed simultaneously g. Copy of the approval from Ministry of Law and with previous procedures. Procedure 4. Pay the State Treasury for Human Rights if the company is Limited Liability the non–tax state revenue (PNBP) fees for Company (Perseroan Terbatas, PT); STARTING A BUSINESS legal services at a bank h. Copy of NPWP; Bandung, West Java Time: 1 day i. Copy of nuisance permit (HO) only for specific industries. Standard company legal form: Limited Liability Company Cost: No cost (LLC)– Perseroan Terbatas (PT) Comments: This payment is for name clearances and Procedure 8*. Report company employment Paid–in minimum capital requirement: IDR 12,500,000 company approval. to the Ministry of Manpower through the = USD 1,201 Because the new computerized system for non–tax One Stop Service (KPPTSP) Data as of: July 2011 state revenue payments (PNBP)—which has been Time: 1 day implemented by the Ministry of Law and Human Procedure 1. Arrange for a notary; obtain Rights—may be accessed only by a notary public, Cost: IDR 50,000 the standard form of the company deed; payment for registering or establishing a company is Comments: According to Law No. 13/2003, compa- obtain clearance for the company name normally done through a notary. nies with more than 10 workers or a monthly payroll electronically from the Ministry of Law and The requirement to pay the non–tax state revenue of IDR 1 million must register with the Ministry of Human Rights (PNBP) fee for legal services in relation to the estab- Manpower. This procedure can be completed by filing lishment of a small company (Perseroan Terbatas– Time: 4 days the compulsory report with the Office of Social and PT) is based on Government Regulation No. 38 of Manpower Affairs for the city of Banda Aceh. The Cost: IDR 200,000 (name clearance and reservation) 2009 concerning types and tariffs on non–tax state office conducts a verification process and issues the Comments: The uniqueness of the company name revenues replacing the previous regulation which is official copy of the registration to the applicant. For a must be checked to ensure that it has not been used regulation No. 19 of 2007. company with less than 50 employees, the verification by another Indonesian company, to avoid a rejection process can be done on the spot. by the Ministry of Law and Human Rights of the Procedure 5. Apply to the Ministry of Law Based on Mayor Decree No. 56 of 2010 concerning company’s deed of establishment and articles of as- and Human Rights for approval of the deed the delegation of authority for signing of employment, sociation. Because the process must be done through of establishment this procedure is now conducted at the One Stop a computerized processing system, the reservation Shop, KPPTSP. The applicant only visits the office to fill and clearance must be done by a public notary (the Time: 14 days out the form. new computerized system for nontax state revenue Cost: IDR 1,580,000 (IDR 1,000,000 for validation of The fee depends on the number of the employees: payments may be accessed only by a public notary). company as legal entity + IDR 30,000 for publication in the State Gazette, BNRI + IDR 550,000 for publica- a. 1–25 employees: IDR 25,000 ; Upon payment and verification, the applicant receives an online notification (via email) with the cleared tion in the Supplement to the State Gazette, TBNRI) b. 25–50 employees: IDR 50,000; company name. The reserved name will be blocked c. 50–99 employees: IDR 75,000. for 60 days. LIST OF PROCEDURES 45

Comments: Based on Articles 9, 10, 29 and 30 of the Cost: IDR 726,000 (IDR 306,000 for SITU/HO + Although there is no official fee, an unofficial admin- Indonesian Company Law No. 40/ 2007, the public IDR 420,000 for TDP) istrative fee may be charged, which usually starts at notary preparing the company deed of establishment Comments: The applications for HO/SITU, SIUP and IDR 150,000. must electronically file the required documents with TDP can be submitted at the same time, at the same the Ministry of Law and Human Rights. The process window, with the same Officer at Bandung One Stop Procedure 9*. Apply for the Workers Social will take place as follows: Shop (BPPT). The detailed process will take place as Security Program (Jamsostek Program) a. The application should be filled no later than 60 follows: Time: 1 day days from the date of the deed; a. The applicant submits the completed documents to Cost: No cost b. Within 30 days of the notice of “no objection” from BPPT and gets the registration number; Comments: According to legal provisions on workers’ the Ministry of Law and Human Rights, the original b. BPPT will verify the documents; social security (Law No. 3/1992), it is mandatory for application and supporting documents should be c. A technical team will conduct the field survey to every company or individual employing 10 workers submitted; check the business location and the type of busi- or more or generating a monthly payroll of at least c. Seven days after the fulfillment of above require- ness (the applicant doesn’t need to be present); IDR 1 million to apply for the Workers Social Security ments, the Ministry of Law and Human Rights will d. Based on the technical team report, the application Program (Jamsostek). This social security program issue the legalization of the establishment of the can be approved or not; covers occupational accidents, death, old age, and company; health security. It is arranged after the company starts e. If the application has been approved, BPPT will d. The company data (name, location, object and to recruit workers. issue the license. purpose, capital) will be inserted in the Company Arranging for Jamsostek is the same for all Indonesian HO will be processed first because HO is prerequisite Registry; locations: for SIUP. By the time HO has been approved, SIUP & e. The Ministry of Law and Human Rights will an- TDP will start to be processed. The process is usually a. Fill out the form, which can be downloaded from nounce the establishment of the company in the completed within 5 days. the website jamsostek.go.id or obtained from Supplement State Gazette (TBNRI) within 14 days Jamsostek Branch Offices; of the Ministry’s Approval Letter. The following documents should be attached to apply for HO, SIUP & TDP: b. Visit the Jamsostek Office to submit the filled–in By virtue of Government Regulation 38/ 2009 (enact- form; ed on May 28, 2009 and entered into force on June a. Application form; c. Jamsostek official conducts data input to Jam- 3, 2009) regarding the Non Tax State Revenue for the b. Copy of the deed establishment legalized by the sostek data base; Ministry of Law and Human Rights, a new schedule of Ministry of Law and Human Rights (Kemen- official fees was enforced for the establishment of a hukham); d. The applicant receives the company membership certificate. domestic limited liability company (PT). c. An attestation of location and address of the com- Delays depend on the workload of the Ministry and on pany’s offices; From submitting the application form until obtaining the membership certificate it usually takes between 1 the approved courier service used by the Ministry to d. Copy of NPWP; and 3 days. In practice, if the company doesn’t pick up deliver its approval to the notary. The process usually e. Copy of ID card; takes 7 days for processing and approximately 7 days the certificate, the local Jamsostek Office will mail it for courier service. There is improvement in quality of f. Agreement/approval letter with the land/building to the applicant no later than 7 days from the date of courier service, by using Pos or TIKI express services owner and/or leasing agreement between land/ the application. In 30 days, the company should pay now the process to deliver the documents is faster building owner and the applicant; the first insurance premium. Having received the first within 4–7 days. g. Domicile letter (prerequisite for HO); payment, the Jamsostek Office will issue membership h. Letter of no objection from the Head of neighbor- certificates for each employee. Procedure 6. Obtain a taxpayer registration hood; A company is not obliged to enroll its employees in number (NPWP) and a Value Added Tax i. Letter of ability to meet the environmental preser- the Jamsostek social security program if it offers an (VAT) collector number (NPPKP) from the vation (prerequisite for HO); independent social security program to its employees, local Tax Office with comparable or better benefits than those offered j. Passport photo 4x6 (2 pcs). by the Package of Basic Health Maintenance Security Time: 3 days According to Regulation of Ministry of Trade No. (according to Government Regulation No. 14/1993, as Cost: No cost 46/2009, and Mayor regulation of Bandung, SIUP is amended by Government Regulation No. 28 /2002). Comments: Maximum one month from the start of free of charge. Based on local regulation No. 12/2002, fee for TDP is IDR 420,000. Based on local regulation * This procedure can be completed simultaneously business operations, the company must register with with previous procedures. the Tax Office. The company must also obtain a VAT No. 27 of 2002 concerning nuisance permit (HO), the formula cost to calculate fee for HO is: collector number (NPPKP) if it anticipates annual STARTING A BUSINESS revenue of more than IDR 600 million from the = Business area x location index x nuisance index x sales of goods and services. The company domicile tariff Batam, Riau Islands certificate, articles of association, and identity cards = 100 m2 x 3 x 2 x 510 = IDR 306,000 Standard company legal form: Limited Liability Company of the directors must be submitted to obtain the Although the application process can be done elec- (LLC)– Perseroan Terbatas (PT) tax numbers. NPWP and NPPKP can be arranged tronically (www.boss.or.id), the applicant still has to Paid–in minimum capital requirement: IDR 12,500,000 simultaneously in one package. The applicant submits visit the office to submit the original documents. the required documents to the Tax Office and gets the = USD 1,201 receipt of application. The Tax Officer will inform the Procedure 8*. Register with the Ministry of Data as of: July 2011 applicant when the NPWP and NPPKP cards are ready Manpower at the local Manpower Office for pick up. Procedure 1. Arrange for a notary; obtain The NPWP application can also be arranged on–line Time: 1 day the standard form of the company deed; but the applicant still needs to provide hard copies Cost: No cost obtain clearance for the company name of documents and visit the Tax Office to pick up the Comments: According to Law No. 13/2003, compa- electronically from the Ministry of Law and NPWP Card. Most applicants visit the Tax Office in nies with more than 10 workers or a monthly payroll Human Rights person. of IDR 1 million must register with the Ministry of Time: 4 days Manpower. This procedure can be completed concur- Cost: IDR 200,000 (name clearance and reservation) Procedure 7. Apply for the nuisance rently with other post–registration procedures by permit (Hinder Ordinantie– HO/SITU), filing the compulsory report with the local office of the Comments: The uniqueness of the company name must be checked to ensure that it has not been used the permanent business trading license Ministry of Manpower. The applicant gets a receipt of document submission. The Manpower office conducts by another Indonesian company, to avoid a rejection (Surat Izin Usaha Perdagangan– SIUP), and by the Ministry of Law and Human Rights of the the registration certificate (Tanda Daftar a verification process and issues an official copy of the registration to the applicant. For a company with less company’s deed of establishment and articles of as- Perusahaan– TDP) at the Bandung One than 50 employees, the verification process can be sociation. Because the process must be done through Stop Shop (BPPT) done on the spot. a computerized processing system, the reservation Time: 5 days and clearance must be done by a public notary (the new computerized system for nontax state revenue 46 DOING BUSINESS IN INDONESIA 2012

payments may be accessed only by a public notary). Procedure 5. Apply to the Ministry of Law Procedure 7. Apply for the permanent Upon payment and verification, the applicant receives and Human Rights for approval of the deed business trading license (Surat Izin Usaha an online notification (via email) with the cleared company name. The reserved name will be blocked of establishment Perdagangan, SIUP) and registration for 60 days. Time: 14 days certificate (Tanda Daftar Perusahaan–TDP) Based on the Government Regulation Number 38 of Cost: IDR 1,580,000 (IDR 1,000,000 for validation of at the one–stop shop 2009 (enacted on May 28, 2009 and entered into company as legal entity + IDR 30,000 for publication Time: 3 days force on June 3, 2009) regarding the Non Tax State in the State Gazette, BNRI + IDR 550,000 for publica- Cost: IDR 500,000 (for TDP) tion in the Supplement to the State Gazette, TBNRI) Revenue for the Ministry of Law and Human Rights, Comments: Based on Mayor Decree No. 8 of 2001 the fee for this procedure is IDR 200,000. Comments: Based on Articles 9, 10, 29 and 30 of the and the standard procedure (SOP) in the integrated Indonesian Company Law No. 40/ 2007, the public licensing services (http://www.bpbatam.go.id/ini/ Procedure 2. Notarize company documents notary preparing the company deed of establishment aboutBida/pemko2.jsp), the requirements to obtain before a notary public must electronically file the required documents with SIUP are: the Ministry of Law and Human Rights. The process Time: 1 day a. Application form, including the phone number and will take place as follows: Cost: IDR 3,800,000 (notary fee) the stamp of the company; a. The application should be filled no later than 60 b. Copy of deed establishment; Comments: Once the notary gets the company name days from the date of the deed; approval from the Ministry of Law and Human Rights, c. Original and copy of the company approval from b. Within 30 days of the notice of “no objection” from the founders can sign the deed of establishment. the Ministry of Law and Human Rights (3 copies); the Ministry of Law and Human Rights, the original Standard articles of association are available at the d. Copy of ID card; notary office. application and supporting documents should be submitted; e. Copy of NPWP PT; The notary fees associated with this procedure cover the following services: name check, deed drafting c. Seven days after the fulfillment of above require- f. Copy of the domicile letter from the Head of of Vil- and approval, and payment of non tax state revenue ments, the Ministry of Law and Human Rights will lage with the original letter attached for processing; (PNBP) fees. Commonly, local notary associations set issue the legalization of the establishment of the g. Proof of land ownership or lease of premises; the scale of notary fees. In practice, the fee depends company; h. Map of business location; on the agreement between notary and client. d. The company data (name, location, object and i. The original balance sheet of the company; purpose, capital) will be inserted in the Company The costs for accessing the Electronic Administration j. Passport photo size 3x4 (4 pcs). System of Legal Status (SABH), name checking, and Registry; The official time to complete this procedure is 3 days PNBP are counted separately. e. The Ministry of Law and Human Rights will an- nounce the establishment of the company in the and it is implemented in practice. Procedure 3. Obtain a certificate of Supplement State Gazette (TBNRI) within 14 days Procedure 8*. Register with the Ministry of company domicile from the Village Office of the Ministry’s Approval Letter. Manpower at the local Manpower Office Time: 7 days By virtue of Government Regulation 38/ 2009 (enact- ed on May 28, 2009 and entered into force on June Time: 3 days Cost: No cost 3, 2009) regarding the Non Tax State Revenue for the Cost: No cost Comments: The domicile letter is required as pre Ministry of Law and Human Rights, a new schedule of Comments: According to Law No. 13/2003, compa- requisite for other procedures. There is no official fee official fees was enforced for the establishment of a nies with more than 10 workers or a monthly payroll for this procedure but in practice, the applicant usually domestic limited liability company (PT). of IDR 1 million must register with the Ministry of pays IDR 300,000–IDR 600,000. The following cop- Delays depend on the workload of the Ministry and on Manpower. This procedure can be completed concur- ies of documents should be attached: the approved courier service used by the Ministry to rently with other post–registration procedures by a. Copy of the deed establishment; deliver its approval to the notary. The process usually filing the compulsory report with the local office of the b. Copy of the ID card of the director; takes 7 days for processing and approximately 7 days Ministry of Manpower. The applicant gets a receipt c. Passport photo size 3x4 (2pc)s; for courier service. There is improvement in quality of of document submission. The Manpower office courier service, by using Pos or TIKI express services d. A recommendation letter from the Head of neigh- conducts a verification process and issues an official now the process to deliver the documents is faster borhood; copy of the registration to the applicant. The applicant within 4–7 days. returns to the office to pick up the official copy of the e. Map of business location; registration. f. The proof of the leasing the business premises. Procedure 6. Obtain a taxpayer registration Although there is no official fee, an unofficial admin- As of January 2011, based on Mayor instructions, number (NPWP) from the local Tax Office istrative fee may be charged, which usually starts at the Head of the Sub district is prohibited to issue the Time: 3 days IDR 150,000. Domicile Letter but in practice this procedure is still Cost: No cost required by the notaries. Procedure 9*. Apply for the Workers Social Comments: This procedure is required as a pre–requi- Security Program (Jamsostek Program) Procedure 4. Pay the State Treasury for site for SIUP. NPWP can be applied for online at: www. Time: 7 days the non–tax state revenue (PNBP) fees for pajak.go.id. But, in practice, most applicants do not use the online system. Even if the service is available legal services at a Bank Cost: No cost online, the applicant still has to visit the Tax Office in Comments: According to legal provisions on workers’ Time: 1 day person to submit the original documents. social security (Law No. 3/1992), it is mandatory for Cost: No cost The following copies of documents should be at- every company or individual employing 10 workers Comments: This payment is for name clearances and tached: or more or generating a monthly payroll of at least company approval. Because the new computerized a. Copy of deed of establishment; IDR 1 million to apply for the Workers Social Security system for non–tax state revenue payments (PNBP)— b. Copy of ID card; Program (Jamsostek). This social security program which has been implemented by the Ministry of Law covers occupational accidents, death, old age, and and Human Rights—may be accessed only by a notary c. Copy of domicile letter from the Head of Village; health security. It is arranged after the company starts public, payment for registering or establishing a com- d. Receipt of payment of Land and Building Tax (PBB); to recruit workers. pany is normally done through a notary. e. Proof of land ownership or the leases premises. Arranging for Jamsostek is the same for all Indonesian The requirement to pay the non–tax state revenue Time to complete this procedure is 2–7 days and there locations: (PNBP) fee for legal services in relation to the estab- is no official cost. In practice, the applicant usually a. Fill out the form, which can be downloaded from lishment of a small company (Perseroan Terbatas– pays IDR 50,000–200,000. the website jamsostek.go.id or obtained from PT) is based on Government Regulation No. 38 of In Batam, based on the circular letter of the General Jamsostek Branch Offices; 2009 concerning types and tariffs on non–tax state Director of Tax No. 37 of 2009, NPPKP is no longer b. Visit the Jamsostek Office to submit the filled–in revenues replacing the previous regulation which is needed. form; regulation No. 19 of 2007. c. Jamsostek official conducts data input to Jam- sostek data base; LIST OF PROCEDURES 47

d. The applicant receives the company membership The costs for accessing the Electronic Administration Procedure 5. Obtain a taxpayer registration certificate. System of Legal Status (SABH), name checking, and number (NPWP) and a Value Added Tax PNBP are counted separately. From submitting the application form until obtaining (VAT) collector number (NPPKP) from the the membership certificate it usually takes between 1 local Tax Office and 3 days. In practice, if the company doesn’t pick up Procedure 3. Pay the State Treasury for the certificate, the local Jamsostek Office will mail it the non–tax state revenue (PNBP) fees for Time: 2 days to the applicant no later than 7 days from the date of legal services at a bank Cost: No cost the application. In 30 days, the company should pay Time: 1 day Comments: Maximum one month from the start of the first insurance premium. Having received the first Cost: No cost business operations, the company must register with payment, the Jamsostek Office will issue membership the Tax Office. The company must also obtain a VAT certificates for each employee. Comments: This payment is for name clearances and collector number (NPPKP) if it anticipates annual A company is not obliged to enroll its employees in company approval. Because the new computerized revenue of more than IDR 600 million from the the Jamsostek social security program if it offers an system for non–tax state revenue payments (PNBP)— sales of goods and services. The company domicile independent social security program to its employees, which has been implemented by the Ministry of Law certificate, articles of association, and identity cards with comparable or better benefits than those offered and Human Rights—may be accessed only by a notary of the directors must be submitted to obtain the by the Package of Basic Health Maintenance Security public, payment for registering or establishing a com- tax numbers. NPWP and NPPKP can be arranged (according to Government Regulation No. 14/1993, as pany is normally done through a notary. simultaneously in one package. The applicant submits amended by Government Regulation No. 28 /2002). The requirement to pay the non–tax state revenue the required documents to the Tax Office and gets the (PNBP) fee for legal services in relation to the estab- receipt of application. The Tax Officer will inform the * This procedure can be completed simultaneously lishment of a small company (Perseroan Terbatas– applicant when the NPWP and NPPKP cards are ready with previous procedures. PT) is based on Government Regulation No. 38 of for pick up. 2009 concerning types and tariffs on non–tax state STARTING A BUSINESS The NPWP application can also be arranged on–line revenues replacing the previous regulation which is but the applicant still needs to provide hard copies Denpasar, Bali regulation No. 19 of 2007. of documents and visit the Tax Office to pick up the Standard company legal form: Limited Liability Com- NPWP Card. Most applicants visit the Tax Office in Procedure 4. Apply to the Ministry of Law person. pany (LLC)– Perseroan Terbatas (PT) and Human Rights for approval of the deed Paid–in minimum capital requirement: IDR 12,500,000 of establishment Procedure 6. Obtain a package licensing = USD 1,201 Time: 14 days system: Location Permit (SITU), business Data as of: July 2011 Cost: IDR 1,580,000 (IDR 1,000,000 for validation of trading license (Surat Izin Usaha Procedure 1. Arrange for a notary; obtain company as legal entity + IDR 30,000 for publication Perdagangan, SIUP) and registration the standard form of the company deed; in the State Gazette, BNRI + IDR 550,000 for publica- certificate (Tanda Daftar Perusahaan, TDP) obtain clearance for the company name tion in the Supplement to the State Gazette, TBNRI) at Denpasar City Licensing Agency electronically from the Ministry of Law and Comments: Based on Articles 9, 10, 29 and 30 of the Time: 3 days Indonesian Company Law No. 40/ 2007, the public Human Rights Cost: IDR 850,000 (IDR 500,000 for SITU + IDR notary preparing the company deed of establishment 250,000 for SIUP + IDR 100,000 for TDP) Time: 4 days must electronically file the required documents with Cost: IDR 200,000 (name clearance and reservation) the Ministry of Law and Human Rights. The process Comments: Based on the Mayor Regulation no.6 of 2010 (enacted on January 28 2010) concerning a Comments: The uniqueness of the company name will take place as follows: single package licensing system, this procedure can be must be checked to ensure that it has not been used a. The application should be filled no later than 60 done as one package. by another Indonesian company, to avoid a rejection days from the date of the deed; The official fee schedule for SITU, based on Local by the Ministry of Law and Human Rights of the b. Within 30 days of the notice of “no objection” from regulation No. 7 from 2005, is: company’s deed of establishment and articles of as- the Ministry of Law and Human Rights, the original sociation. Because the process must be done through application and supporting documents should be a. Big Company (start–up capital above IDR a computerized processing system, the reservation submitted; 500,000,000): IDR 700,000; and clearance must be done by a public notary (the c. Seven days after the fulfillment of above require- b. Middle company (start–up capital above IDR new computerized system for nontax state revenue ments, the Ministry of Law and Human Rights will 200,000,000): IDR 500,000; payments may be accessed only by a public notary). issue the legalization of the establishment of the c. Small Company (start–up capital below IDR Upon payment and verification, the applicant receives company; 200,000,000): IDR 300,000. an online notification (via email) with the cleared company name. The reserved name will be blocked d. The company data (name, location, object and The official fee schedule for SIUP, as per local regula- for 60 days. purpose, capital) will be inserted in the Company tion No 13. from 2002, is: Registry; Based on the Government Regulation Number 38 of 1. Big Company (start–up capital above IDR 2009 (enacted on May 28, 2009 and entered into e. The Ministry of Law and Human Rights will an- 500,000,000): IDR 500,000; force on June 3, 2009) regarding the Non Tax State nounce the establishment of the company in the 2. Middle company (start–up capital above IDR Revenue for the Ministry of Law and Human Rights, Supplement State Gazette (TBNRI) within 14 days 200,000,000): IDR 250,000; of the Ministry’s Approval Letter. the fee for this procedure is IDR 200,000. 3. Small Company (start–up capital below IDR By virtue of Government Regulation 38/ 2009 (enact- 200,000,000): IDR 100,000. ed on May 28, 2009 and entered into force on June Procedure 2. Notarize company documents The list of fees for TDP is: before a notary public 3, 2009) regarding the Non Tax State Revenue for the Ministry of Law and Human Rights, a new schedule of a. TDP (Limited Liability Company (PT)): Time: 1 day official fees was enforced for the establishment of a IDR 100,000; Cost: IDR 3,520,000 (notary fee) domestic limited liability company (PT). b. TDP (Foreign Direct Investment): IDR 250,000; Comments: Once the notary gets the company name Delays depend on the workload of the Ministry and on c. TDP (civil partnership/CV or cooperation/Firma) approval from the Ministry of Law and Human Rights, the approved courier service used by the Ministry to IDR 25,000; the founders can sign the deed of establishment. deliver its approval to the notary. The process usually d. TDP (sole proprietorship /PO) IDR 10,000; Standard articles of association are available at the takes 7 days for processing and approximately 7 days notary office. e. TDP (other form of business entities/BUL) IDR for courier service. There is improvement in quality of 100,000; The notary fees associated with this procedure cover courier service, by using Pos or TIKI express services the following services: name check, deed drafting now the process to deliver the documents is faster f. TDP (Cooperative/Koperasi) IDR 5,000; and approval, and payment of non tax state revenue within 4–7 days. g. TDP (local state owned firm/BUMD) IDR 50, 000. (PNBP) fees. Commonly, local notary associations set The following documents should be attached: the scale of notary fees. In practice, the fee depends a. Application Form with stamp duty of IDR 6,000; on the agreement between notary and client. b. Copy of NPWP; 48 DOING BUSINESS IN INDONESIA 2012

c. Location map; STARTING A BUSINESS Procedure 4. Apply to the Ministry of Law d. Balance sheet of company; Gorontalo, Gorontalo and Human Rights for approval of the deed e. Environmental recommendation from technical Standard company legal form: Limited Liability Company of establishment team; (LLC)– Perseroan Terbatas (PT) Time: 14 days f. Copy of the deed of establishment approved by Paid–in minimum capital requirement: IDR 12,500,000 Cost: IDR 1,580,000 (IDR 1,000,000 for validation of Ministry of Human Rights; = USD 1,201 company as legal entity + IDR 30,000 for publication g. Copy of ID card; Data as of: July 2011 in the State Gazette, BNRI + IDR 550,000 for publica- h. Certificate of business license (only for renewal tion in the Supplement to the State Gazette, TBNRI) license); Procedure 1. Arrange for a notary; obtain Comments: Based on Articles 9, 10, 29 and 30 of the i. Copy of certificate of land acquisition and owner- the standard form of the company deed; Indonesian Company Law No. 40/ 2007, the public ship of land; obtain clearance for the company name notary preparing the company deed of establishment j. Photographs. electronically from the Ministry of Law and must electronically file the required documents with Human Rights the Ministry of Law and Human Rights. The process will take place as follows: Procedure 7*. Apply for the Workers Social Time: 4 days Security Program (Jamsostek Program) a. The application should be filled no later than 60 Cost: IDR 200,000 (name clearance and reservation) days from the date of the deed; Time: 3 days Comments: The uniqueness of the company name b. Within 30 days of the notice of “no objection” from Cost: No cost must be checked to ensure that it has not been used the Ministry of Law and Human Rights, the original Comments: According to legal provisions on workers’ by another Indonesian company, to avoid a rejection application and supporting documents should be social security (Law No. 3/1992), it is mandatory for by the Ministry of Law and Human Rights of the submitted; every company or individual employing 10 workers company’s deed of establishment and articles of as- c. Seven days after the fulfillment of above require- or more or generating a monthly payroll of at least sociation. Because the process must be done through ments, the Ministry of Law and Human Rights will IDR 1 million to apply for the Workers Social Security a computerized processing system, the reservation issue the legalization of the establishment of the Program (Jamsostek). This social security program and clearance must be done by a public notary (the company; covers occupational accidents, death, old age, and new computerized system for nontax state revenue health security. It is arranged after the company starts payments may be accessed only by a public notary). d. The company data (name, location, object and to recruit workers. Upon payment and verification, the applicant receives purpose, capital) will be inserted in the Company Registry; Arranging for Jamsostek is the same for all Indonesian an online notification (via email) with the cleared locations: company name. The reserved name will be blocked e. The Ministry of Law and Human Rights will an- for 60 days. nounce the establishment of the company in the a. Fill out the form, which can be downloaded from Supplement State Gazette (TBNRI) within 14 days the website jamsostek.go.id or obtained from Based on the Government Regulation Number 38 of of the Ministry’s Approval Letter. Jamsostek Branch Offices; 2009 (enacted on May 28, 2009 and entered into force on June 3, 2009) regarding the Non Tax State By virtue of Government Regulation 38/ 2009 (en- b. Visit the Jamsostek Office to submit the filled–in Revenue for the Ministry of Law and Human Rights, acted on May 28, 2009 and entered into force on June form; the fee for this procedure is IDR 200,000. 3, 2009) regarding the Non Tax State Revenue for the c. Jamsostek official conducts data input to Jamsostek Ministry of Law and Human Rights, a new schedule of data base; Procedure 2. Notarize company documents official fees was enforced for the establishment of a d. The applicant receives the company membership before a notary public domestic limited liability company (PT). certificate. Time: 1 day Delays depend on the workload of the Ministry and on From submitting the application form until obtaining Cost: IDR 3,300,000 (notary fee) the approved courier service used by the Ministry to the membership certificate it usually takes between 1 deliver its approval to the notary. The process usually and 3 days. In practice, if the company doesn’t pick up Comments: Once the notary gets the company name takes 7 days for processing and approximately 7 days the certificate, the local Jamsostek Office will mail it approval from the Ministry of Law and Human Rights, for courier service. There is improvement in quality of to the applicant no later than 7 days from the date of the founders can sign the deed of establishment. courier service, by using Pos or TIKI express services the application. In 30 days, the company should pay Standard articles of association are available at the now the process to deliver the documents is faster the first insurance premium. Having received the first notary office. within 4–7 days. payment, the Jamsostek Office will issue membership The notary fees associated with this procedure cover certificates for each employee. the following services: name check, deed drafting Procedure 5. Obtain a taxpayer registration A company is not obliged to enroll its employees in and approval, and payment of non tax state revenue number (NPWP) and a Value Added Tax the Jamsostek social security program if it offers an (PNBP) fees. Commonly, local notary associations set (VAT) collector number (NPPKP) from the the scale of notary fees. In practice, the fee depends independent social security program to its employees, local Tax Office with comparable or better benefits than those offered on the agreement between notary and client. Time: 2 days by the Package of Basic Health Maintenance Security The costs for accessing the Electronic Administration (according to Government Regulation No. 14/1993, as System of Legal Status (SABH), name checking, and Cost: No cost amended by Government Regulation No. 28 /2002). PNBP are counted separately. Comments: Maximum one month from the start of business operations, the company must register with Procedure 8*. Register with the Ministry of Procedure 3. Pay the State Treasury for the Tax Office. The company must also obtain a VAT Manpower at the local Manpower Office the non–tax state revenue (PNBP) fees for collector number (NPPKP) if it anticipates annual revenue of more than IDR 600 million from the Time: 7 days legal services at a Bank sales of goods and services. The company domicile Time: 1 day Cost: No cost certificate, articles of association, and identity cards Comments: According to Law No. 13/2003, compa- Cost: No cost of the directors must be submitted to obtain the nies with more than 10 workers or a monthly payroll Comments: This payment is for name clearances and tax numbers. NPWP and NPPKP can be arranged of IDR 1 million must register with the Ministry company approval. Because the new computerized simultaneously in one package. The applicant submits of Manpower. This procedure can be completed system for non–tax state revenue payments (PNBP)— the required documents to the Tax Office and gets the concurrently with other post–registration procedures which has been implemented by the Ministry of Law receipt of application. The Tax Officer will inform the by filing the compulsory report with the local office and Human Rights—may be accessed only by a notary applicant when the NPWP and NPPKP cards are ready of the Ministry of Manpower. The applicant gets a public, payment for registering or establishing a com- for pick up. receipt of document submission. The Manpower office pany is normally done through a notary. The NPWP application can also be arranged on–line conducts a verification process and issues an official The requirement to pay the non–tax state revenue but the applicant still needs to provide hard copies copy of the registration to the applicant. The applicant (PNBP) fee for legal services in relation to the estab- of documents and visit the Tax Office to pick up the returns to the office to pick up the official copy of the lishment of a small company (Perseroan Terbatas– PT) NPWP Card. Most applicants visit the Tax Office in registration. is based on Government Regulation No. 38 of 2009 person. * This procedure can be completed simultaneously concerning types and tariffs on non–tax state revenues with previous procedures. replacing the previous regulation which is regulation No. 19 of 2007. LIST OF PROCEDURES 49

Procedure 6. Pay the local fiscal charges at copy of the registration to the applicant. The applicant revenue payments may be accessed only by a notary the Local Revenue and Asset Management returns to the office to pick up the official copy of the public). The reserved name will be blocked for 60 registration. days. If the founding shareholders are confident that Office (Dinas Pendapatan Pengelolaan the same name has not been used by another Indone- Keuangan & Aset Daerah–DPPKAD) Procedure 9*. Apply for the Workers Social sian company, this procedure is not necessary. Time: 1 day Security Program (Jamsostek Program) Cost: IDR 37,500 (for billboard size of 1x1 square Time: 2 days Procedure 2. Notarize company documents meters) before a notary public Cost: No cost Comments: This is a pre–requisite for applying for Time: 4 days Comments: According to legal provisions on workers’ operating licenses. The following documents should social security (Law No. 3/1992), it is mandatory for Cost: IDR 2,526,816 (notary fee) be submitted: every company or individual employing 10 workers a. Copy of ID card; or more or generating a monthly payroll of at least Procedure 3. Pay the State Treasury for b. Receipt of payment of land and building tax; IDR 1 million to apply for the Workers Social Security the non–tax state revenue (PNBP) fees for c. Proof of advertisement payment. Program (Jamsostek). This social security program legal services at a Bank covers occupational accidents, death, old age, and Time: 1 day Procedure 7. Apply for the location health security. It is arranged after the company starts to recruit workers. Cost: No cost permit (SITU), the permanent business Comments: Because the new computerized system trading license (SIUP) and the certificate Arranging for Jamsostek is the same for all Indonesian locations: for nontax state revenue payments (PNBP)—which of company registration (TDP) at the has been implemented by the Ministry of Justice and Licensing office (Kantor Pelayanan a. Fill out the form, which can be downloaded from Human Rights—may be accessed only by a notary Perijinan Terpadu–KPPT) the website jamsostek.go.id or obtained from public, payment for registering or establishing a com- Jamsostek Branch Offices; Time: 2 days pany is normally easier through the notary. b. Visit the Jamsostek Office to submit the filled–in The requirement to pay the non–tax state revenue Cost: IDR 835,000 (IDR 500,000 for SIUP + IDR form; 250,000 for TDP + IDR 75,000 for SITU+ IDR (PNBP) fee for legal services in relation to the estab- c. Jamsostek official conducts data input to Jam- 10,000 local fiscal charges) lishment of a PT is obtained from the information sostek data base; stated in the website of the Legal Entity Administra- Comments: This can be done as a package at the d. The applicant receives the company membership tion System (known as SABH (Sistem Administrasi Licensing office (Kantor Pelayanan Perijinan Terpadu– certificate. Badan Hukum) (www.sisminbakum.go.id), where it KPPT). The following copies of documents should be is informed that there is a PBNP fee to be paid for the attached to obtain SITU, SIUP, and TDP: From submitting the application form until obtaining the membership certificate it usually takes between 1 purpose of company establishment in the amount of a. Copy of ID card; and 3 days. In practice, if the company doesn’t pick up IDR 200,000 and to be paid through the Notary. b. Copy of deed of company establishment; the certificate, the local Jamsostek Office will mail it c. Duty stamp IDR 6,000 4 pcs; to the applicant no later than 7 days from the date of Procedure 4. Apply to the Ministry of Law d. Copy of SITU (only for extension of SIUP & TDP); the application. In 30 days, the company should pay and Human Rights for approval of the deed of establishment e. Proof of payment of local fiscal charges; the first insurance premium. Having received the first payment, the Jamsostek Office will issue membership Time: 7 days f. Balance sheet of the company (If there is no infor- certificates for each employee. mation regarding this in the deed of establishment). Cost: IDR 1,580,000 (IDR 1,000,000 for validation of A company is not obliged to enroll its employees in company as legal entity + IDR 30,000 for publication The applicant submits the complete documents to the Jamsostek social security program if it offers an KPPT and pays the fee. KPPT will verify the documents in the State Gazette, BNRI + IDR 550,000 for publica- independent social security program to its employees, tion in the Supplement to the State Gazette, TBNRI) and will inform the applicant by phone that the appli- with comparable or better benefits than those offered Comments: Based on Article 9, 10, 29 and 30 Indone- cant can pick up the licenses (SITU, SIUP, and TDP). by the Package of Basic Health Maintenance Security sian Company Law No. 40 year 2007, the application The official fee schedule for SIUP based on the local (according to Government Regulation No. 14/1993, as for approval of Ministry of Law and Human Rights regulation No. 21 of 2001 is: amended by Government Regulation No. 28 /2002). (the “Ministry of Law”) on establishment of company Company capital IDR 50,000,000– IDR 100,000,000 should be able to file electronically by attaching with IDR 150,000 * This procedure can be completed simultaneously with previous procedures. the certificate of bank account, copy of the relevant Company capital IDR 150,000,000–IDR 200,000,000 bank transmittal advice, NPWP (Tax Registration IDR 350,000; STARTING A BUSINESS Number), and Certificate of Company Domicile. The process will be taken as follows: Company capital IDR 200,000,000–IDR 500,000,000 Jakarta, DKI Jakarta IDR 500,000; a. The application should be filled at the latest 60 Standard company legal form: Limited Liability Company days from the date of establishment deed; Company capital above IDR 500,000,000 (LLC)– Perseroan Terbatas (PT) b. Since the application has already been fulfilled, IDR 750,000. Paid–in minimum capital requirement: IDR 12,500,000 the Ministry of Law directly electronically stated The fee for TDP (PT) is IDR 250,000. = USD 1,201 no objection on said application. However, if the Based on local regulation No. 12 of 2003 concerning Data as of: July 2011 application is not fulfilled, the Ministry of Law will SITU, the fee for SITU is IDR 75,000. A new local directly electronically stated his objection on said Regulation No. 10 of 2011 regarding SITU will be Procedure 1. Obtain the standard form of application; implemented by July 2011. the company deed; arrange for a notary c. Within 30 days from the date of no objection by electronically; obtain clearance for the Ministry of Law, the applicant should submit the Procedure 8*. Register with the Ministry of Indonesian company’s name at the Ministry original application and supporting documents; Manpower at the local Manpower Office of Law and Human Rights. d. 7 days after fulfillment of above requirements, Time: 2 days Time: 4 days Ministry of Law will issue the approval on the establishment of the company; Cost: No cost Cost: IDR 200,000 (name clearance and reservation) e. Data of company whose establishment has been Comments: According to Law No. 13/2003, compa- Comments: The uniqueness of the company name approved by Ministry of Law (i.e name, domicile, nies with more than 10 workers or a monthly payroll must be checked to ensure that it has not been used object and purpose, period, and capital) will be of IDR 1 million must register with the Ministry of by another Indonesian company, to avoid a rejection inserted into Company Registry; Manpower. This procedure can be completed concur- by the Ministry of Justice and Human Rights of the rently with other post–registration procedures by company’s deed of establishment and articles of as- f. The Ministry of Law will announce the establish- filing the compulsory report with the local office of the sociation. Because the process must be done through ment of company in Supplement State Gazette Ministry of Manpower. The applicant gets a receipt a computerized processing system, the reservation (TBNRI) within 14 days of the Ministry’s Approval of document submission. The Manpower office and clearance must be done by a notary public (be- Letter. conducts a verification process and issues an official cause the new computerized system for nontax state 50 DOING BUSINESS IN INDONESIA 2012

The cost of this procedure is based on the Schedule of Comments: According to legal provisions on workers’ The notary fees associated with this procedure cover the Government Regulation Number 38 of 2009 con- social security (Law No. 3/1992), it is mandatory for the following services: name check, deed drafting cerning Types and Tariffs on Non–Tax State Revenues every company or individual employing 10 workers and approval, and payment of non tax state revenue Applied for in the Department of Law and Human or more or generating a monthly payroll of at least (PNBP) fees. Commonly, local notary associations set Rights which came into effect on 28 May 2009. IDR 1 million a month to apply for the Workers Social the scale of notary fees. In practice, the fee depends Security Program (Jamsostek), operated by the on the agreement between notary and client. Procedure 5. Apply at the One Stop Service executing agency. This social security program covers The costs for accessing the Electronic Administration for the permanent business trading license occupational accident security, death security, old age System of Legal Status (SABH), name checking, and (Surat Izin Usaha Perdagangan, SIUP) and security, and health maintenance. PNBP are counted separately. the company registration certificate (Tanda A company or an individual is not obligated to enroll Daftar Perusahaan/TDP) its employees in the social security program if it offers Procedure 3. Obtain Domicile Letter for an independent employee social security program business location from the Head of Village Time: 15 days with benefits comparable or better than those offered Time: 3 days Cost: IDR 500,000 by the Package of Basic Health Maintenance Security Comments: The Surat Izin Usaha Perdagangan (SIUP) (according to Government Regulation No. 14/1993, as Cost: No cost constitutes the business license for a non–facility amended by Government Regulation No. 28 /2002). Comments: The Domicile letter is designated as con- company engaging in trading business. The SIUP trolling instrument for companies operating in Jambi. contains details about the company activities and the Procedure 8*. Obtain a taxpayer The letter must be approved by the Head of Village person in charge of the company (normally the Presi- registration number (NPWP) and a VAT and Sub District office at the advice of the Head of dent Director). The Ministry of Industry and Trade, collector number (NPPKP) Village. The applicant only needs to bring a copy of which issues the SIUP for a non facility company, may the ID card. Time: 1 day (1–2 days) require a letter of good conduct from the Indone- sian police in support of the person in charge of the Cost: No cost Procedure 4. Pay the State Treasury for company. Normally, the following copy of documents * This procedure can be completed simultaneously the non–tax state revenue (PNBP) fees for should be attached for the application for a SIUP: with previous procedures. legal services at a Bank a. The articles of association (copy); Time: 1 day b. An attestation of location and address of the com- STARTING A BUSINESS Cost: No cost pany’s offices; Jambi, Jambi Comments: This payment is for name clearances and c. Identity card of the company President Director; Standard company legal form: Limited Liability Company company approval. Because the new computerized d. Notary deeds. (LLC)– Perseroan Terbatas (PT) system for non–tax state revenue payments (PNBP)— which has been implemented by the Ministry of Law After reviewing the application, the Municipality Paid–in minimum capital requirement: IDR 12,500,000 passes it to the technical agency at the regional office and Human Rights—may be accessed only by a notary = USD 1,201 for cooperatives for further review. It takes 2 days to public, payment for registering or establishing a com- get the signature of the head of that office as the au- Data as of: July 2011 pany is normally done through a notary. thority is not delegated. Once the application is back, Procedure 1. Arrange for a notary; obtain The requirement to pay the non–tax state revenue the SUIP is provided. (PNBP) fee for legal services in relation to the estab- the standard form of the company deed; lishment of a small company (Perseroan Terbatas– Although there is no official charge, there is usually an obtain clearance for the company name unofficial administrative fee. Fees depend on negotia- PT) is based on Government Regulation No. 38 of tion and usually start from IDR 400,000 to 500,000 electronically from the Ministry of Law and 2009 concerning types and tariffs on non–tax state for a small company, IDR 600,000 to IDR 700,000 Human Rights revenues replacing the previous regulation which is for a medium–size company; and IDR 750,000 to IDR Time: 4 days regulation No. 19 of 2007. 1,000,000 for a large company. The cost is included Cost: IDR 200,000 (name clearance and reservation) in procedure 2. SIUP and TDP can be obtained at the Procedure 5. Apply to the Ministry of Law Comments: The uniqueness of the company name One Stop Shop Service, through the Standard Operat- and Human Rights for approval of the deed must be checked to ensure that it has not been used ing Procedure. of establishment by another Indonesian company, to avoid a rejection Based on Regulation of Ministry of Trading No. by the Ministry of Law and Human Rights of the Time: 14 days 36/M–Dag/PER/9/2007 on Issuing Business Trading company’s deed of establishment and articles of as- Cost: IDR 1,580,000 (IDR 1,000,000 for validation of License (SIUP), the SIUP will be issued within 3 days sociation. Because the process must be done through company as legal entity + IDR 30,000 for publication of receiving the completed documents but in practice a computerized processing system, the reservation in the State Gazette, BNRI + IDR 550,000 for publica- it takes 3–7 days. and clearance must be done by a public notary (the tion in the Supplement to the State Gazette, TBNRI) new computerized system for nontax state revenue Procedure 6. Register with the Ministry of Comments: Based on Articles 9, 10, 29 and 30 of the payments may be accessed only by a public notary). Indonesian Company Law No. 40/ 2007, the public Manpower Upon payment and verification, the applicant receives notary preparing the company deed of establishment Time: 14 days an online notification (via email) with the cleared must electronically file the required documents with Cost: No cost company name. The reserved name will be blocked the Ministry of Law and Human Rights. The process for 60 days. Comments: According to Law No. 13/2003, compa- will take place as follows: nies with more than 10 workers or a monthly payroll Based on the Government Regulation Number 38 of a. The application should be filled no later than 60 of IDR 1 million must register with the Ministry of 2009 (enacted on May 28, 2009 and entered into days from the date of the deed; force on June 3, 2009) regarding the Non Tax State Manpower. This procedure can be completed concur- b. Within 30 days of the notice of “no objection” from Revenue for the Ministry of Law and Human Rights, rently with other post–registration procedures by the Ministry of Law and Human Rights, the original the fee for this procedure is IDR 200,000. filing the manpower compulsory report and company application and supporting documents should be regulations with the Ministry of Manpower. Although submitted; there is no official fee, there may be an unofficial Procedure 2. Notarize company documents before a notary public c. Seven days after the fulfillment of above require- administrative fee that depends on negotiation and ments, the Ministry of Law and Human Rights will usually starts at IDR 100,000. Time: 1 day issue the legalization of the establishment of the Cost: IDR 3,526,000 (notary fee) company; Procedure 7*. Apply for the Workers Social Comments: Once the notary gets the company name d. The company data (name, location, object and Security Program (Jamsostek Program) approval from the Ministry of Law and Human Rights, purpose, capital) will be inserted in the Company Time: 7 days the founders can sign the deed of establishment. Registry; Cost: No cost Standard articles of association are available at the e. The Ministry of Law and Human Rights will an- notary office. nounce the establishment of the company in the Supplement State Gazette (TBNRI) within 14 days of the Ministry’s Approval Letter. LIST OF PROCEDURES 51

By virtue of Government Regulation 38/ 2009 (enact- d. Copy of land ownership (leases the premises); Comments: According to legal provisions on workers’ ed on May 28, 2009 and entered into force on June e. Receipt of payment of the land and building tax; social security (Law No. 3/1992), it is mandatory for 3, 2009) regarding the Non Tax State Revenue for the every company or individual employing 10 workers f. Copy of deed establishment; Ministry of Law and Human Rights, a new schedule of or more or generating a monthly payroll of at least official fees was enforced for the establishment of a g. Letter of no objection from the neighborhood IDR 1 million to apply for the Workers Social Security domestic limited liability company (PT). h. Copy of domicile letter; Program (Jamsostek). This social security program Delays depend on the workload of the Ministry and on i. Copy of SITU; covers occupational accidents, death, old age, and the approved courier service used by the Ministry to j. Copy of Nuisance Permit (for SIUP & TDP); health security. It is arranged after the company starts to recruit workers. deliver its approval to the notary. The process usually k. Copy of NPWP. takes 7 days for processing and approximately 7 days Arranging for Jamsostek is the same for all Indonesian for courier service. There is improvement in quality of Based on local regulation No. 9 of 2005 regarding locations: courier service, by using Pos or TIKI express services Nuisance Permit (HO) for trading business and indus- try, the formula cost to calculate the retribution is: a. Fill out the form, which can be downloaded from now the process to deliver the documents is faster the website jamsostek.go.id or obtained from within 4–7 days. Environmental tariff X Business space area X Location Jamsostek Branch Offices; index X Nuisance index. b. Visit the Jamsostek Office to submit the filled–in Procedure 6. Obtain a taxpayer registration The classification of environmental tariff index is: form; number (NPWP) and a Value Added Tax a. Big nuisance: IDR 500/square meter; c. Jamsostek official conducts data input to Jam- (VAT) collector number (NPPKP) from the b. Medium nuisance: IDR 400/square meter; sostek data base; local Tax Office c. Small nuisance: IDR 300/square meter. d. The applicant receives the company membership Time: 2 days The classification of nuisance index is: certificate. Cost: No cost a. Big: 4; From submitting the application form until obtaining Comments: Maximum one month from the start of b. Medium: 3; the membership certificate it usually takes between 1 business operations, the company must register with and 3 days. In practice, if the company doesn’t pick up the Tax Office. The company must also obtain a VAT c. Small: 2. the certificate, the local Jamsostek Office will mail it collector number (NPPKP) if it anticipates annual The classification of road index is: to the applicant no later than 7 days from the date of revenue of more than IDR 600 million from the a. Provincial road: 4; the application. In 30 days, the company should pay sales of goods and services. The company domicile b. City road: 3; the first insurance premium. Having received the first certificate, articles of association, and identity cards payment, the Jamsostek Office will issue membership c. Local road: 2. of the directors must be submitted to obtain the certificates for each employee. If we assume a business space of 100 square meters, tax numbers. NPWP and NPPKP can be arranged A company is not obliged to enroll its employees in the cost to obtain HO is: simultaneously in one package. The applicant submits the Jamsostek social security program if it offers an the required documents to the Tax Office and gets the = Environmental tariff X Business space area X Loca- independent social security program to its employees, receipt of application. The Tax Officer will inform the tion index X Nuisance index with comparable or better benefits than those offered applicant when the NPWP and NPPKP cards are ready = 300 X 100 X 2 X 2 X by the Package of Basic Health Maintenance Security for pick up. = IDR 120,000 (according to Government Regulation No. 14/1993, as The NPWP application can also be arranged on–line amended by Government Regulation No. 28 /2002). Based on the new regulation of the Ministry of Trade, but the applicant still needs to provide hard copies there is no cost to obtain SIUP & TDP. The fee only ap- of documents and visit the Tax Office to pick up the * This procedure can be completed simultaneously plies for the renewal of these licenses. But in practice with previous procedures. NPWP Card. Most applicants visit the Tax Office in the applicant still pays a fee of around IDR 500,000– person. IDR 800,000. STARTING A BUSINESS There is no official cost regarding this procedure, but Makassar, South Sulawesi in practice the applicant usually pay the unofficial fee Procedure 9*. Register with the Ministry of IDR 50,000. Manpower at the local Manpower Office Standard company legal form: Limited Liability Company (LLC)– Perseroan Terbatas (PT) Procedure 7. Apply for location permit Time: 11 days Paid–in minimum capital requirement: IDR 12,500,000 (SITU) at the City Planning Office Cost: No cost = USD 1,201 Time: 7 days Comments: According to Law No. 13/2003, compa- nies with more than 10 workers or a monthly payroll Data as of: July 2011 Cost: No cost of IDR 1 million must register with the Ministry of Procedure 1. Arrange for a notary; obtain Comments: This procedure is required as a prerequi- Manpower. This procedure can be completed concur- site for SIUP & TDP. rently with other post–registration procedures by the standard form of the company deed; filing the compulsory report with the local office of the obtain clearance for the company name Procedure 8. Apply for the nuisance Ministry of Manpower. The applicant gets a receipt electronically from the Ministry of Law and permit (Hinder Ordinantie– HO), the of document submission. The Manpower office Human Rights. permanent business trading (SIUP) and the conducts a verification process and issues an official Time: 4 days copy of the registration to the applicant. The applicant registration certificate (TDP) at the One Cost: IDR 200,000 (name clearance and reservation) Stop Shop (Kantor Perizinan Terpadu Satu returns to the office to pick up the official copy of the registration. Comments: The uniqueness of the company name Pintu, KPTSP ) must be checked to ensure that it has not been used There is no official cost regarding this procedure but in Time: 7 days by another Indonesian company, to avoid a rejection practice, the applicant pays IDR 100,000. Cost: IDR 120,000 (for HO) by the Ministry of Law and Human Rights of the Comments: SIUP, HO & TDP can be arranged as a Procedure 10*. Apply for the Workers company’s deed of establishment and articles of as- package at KPTSP. There is no inspection required sociation. Because the process must be done through Social Security Program (Jamsostek a computerized processing system, the reservation for the issuance of these 3 licenses. The inspection Program) takes place during the application for location permit and clearance must be done by a public notary (the (SITU). The following documents should be attached Time: 7 days new computerized system for nontax state revenue to obtain HO, SIUP & TDP: Cost: No cost payments may be accessed only by a public notary). Upon payment and verification, the applicant receives a. Application form; an online notification (via email) with the cleared b. Passport photo size 3x4 (3 pcs); company name. The reserved name will be blocked c. Copy of ID card; for 60 days. 52 DOING BUSINESS IN INDONESIA 2012

Based on the Government Regulation Number 38 of Comments: Based on Articles 9, 10, 29 and 30 of the Comments: The applicant is required to get a 2009 (enacted on May 28, 2009 and entered into Indonesian Company Law No. 40/ 2007, the public statement of non objection from the neighbors. An force on June 3, 2009) regarding the Non Tax State notary preparing the company deed of establishment inspector will visit the company location the same Revenue for the Ministry of Law and Human Rights, must electronically file the required documents with day or one day after the application is made. The the fee for this procedure is IDR 200,000. the Ministry of Law and Human Rights. The process entrepreneur doesn’t have to be present to receive the will take place as follows: inspection. The cost of the permit depends on the size Procedure 2. Notarize company documents a. The application should be filled no later than 60 of the business space and the location. It’s stipulated before a notary public days from the date of the deed; in Local Regulation 6/2004 regarding HO levy. The cost formula is: size of location/office space x road Time: 1 day b. Within 30 days from the notice of “no objection” index x nuisance index x IDR 500/square meter. Cost: IDR 4,020,000 (notary fee) from the Ministry of Law and Human Rights, the original application and supporting documents The following copies of documents should be attached Comments: Once the notary gets the company name should be submitted; for the application for HO/SITU: approval from the Ministry of Law and Human Rights, a. A letter of information from the Head of Village the founders can sign the deed of establishment. c. Seven days after the fulfillment of above require- (Domicile Letter from the Head of Village); Standard articles of association are available at the ments, the Ministry of Law and Human Rights will notary office. issue the legalization of the establishment of the b. Copy of ID card; company; The notary fees associated with this procedure cover c. Recommendation letter from related technical the following services: name check, deed drafting d. The company data (name, location, object and agency; and approval, and payment of non tax state revenue purpose, capital) will be inserted in the Company d. Copy of the deed of establishment; Registry; (PNBP) fees. Commonly, local notary associations set e. Copy of Land and Building Tax; the scale of notary fees. In practice, the fee depends e. The Ministry of Law and Human Rights will an- f. Copy of certificate of business location; on the agreement between notary and client. nounce the establishment of the company in the g. Copy of Construction permit and Map of the Build- The costs for accessing the Electronic Administration Supplement State Gazette (TBNRI) within 14 days ing; System of Legal Status (SABH), name checking, and of the Ministry’s Approval Letter. PNBP are counted separately. By virtue of Government Regulation 38/ 2009 (enact- h. A statement letter from the applicant stating that ed on May 28, 2009 and entered into force on June the business does not produce a negative impact to Procedure 3. Obtain a certificate of 3, 2009) regarding the Non Tax State Revenue for the the surrounding area; company domicile from the Village Office Ministry of Law and Human Rights, a new schedule of i. Passport photos size 3 x 4 cm (4 pcs). official fees was enforced for the establishment of a Time: 1 day The applicant will bring the documents to the Licens- domestic limited liability company (PT). ing office (Kantor Pelayanan Administrasi Perizinan– Cost: No cost Delays depend on the workload of the Ministry and on KPAP) and KPAP will verify the documents. The docu- Comments: This certificate is issued by the Head of the approved courier service used by the Ministry to ments will be processed further in the Local Industry the village (the Lurah) where the company is located deliver its approval to the notary. The process usually and Trade agency. The process takes place as follows: or by the building management, if office space is takes 7 days for processing and approximately 7 days a. The applicant submits the application form to the leased. The application form for domicile certificate for courier service. There is improvement in quality of Licensing agency (Kantor Pelayanan Administrasi should be completed with the number and date of the courier service, by using Pos or TIKI express services Perizinan–KPAP); deed of establishment and the name of the notary. A now the process to deliver the documents is faster b. KPAP will verify the documents within 1 day; copy of the signed deed of establishment should also within 4–7 days. be attached. c. If the documents are complete, KPAP will bring the Although there is no official fee for this certificate, an Procedure 6. Obtain a taxpayer registration complete documents on the same day to the local unofficial administrative fee may be charged. The fee number (NPWP) and a Value Added Tax Ministry of Industry and Trade office for further processing; varies from IDR 100,000 to IDR 500,000, depending (VAT) collector number (NPPKP) from the on the Village Office. local Tax Office d. The technical team from the Local Industry and Trade agency (Disperindag) will do the field survey, Procedure 4. Pay the State Treasury for Time: 3 days and the result will be written in the minutes of field the non–tax state revenue (PNBP) fees for Cost: No cost observation (Berita Acara Peninjauan Lapangan, legal services at a Bank Comments: Maximum one month from the start of BAPL). This process takes usually 4–5 days; Time: 1 day business operations, the company must register with e. The field minutes (BAPL) will determine whether the Tax Office. The company must also obtain a VAT the application will be approved or not. If the Cost: No cost collector number (NPPKP) if it anticipates annual application is approved, Disperindag will issue a Comments: This payment is for name clearances and revenue of more than IDR 600 million from the recommendation letter containing the amount of company approval. Because the new computerized sales of goods and services. The company domicile fees to be paid; system for non–tax state revenue payments (PNBP)— certificate, articles of association, and identity cards f. KPAP will inform the applicant by mail or telephone which has been implemented by the Ministry of Law of the directors must be submitted to obtain the to pay the levy at the Bank which is located in the and Human Rights—may be accessed only by a notary tax numbers. NPWP and NPPKP can be arranged same area with KPAP; public, payment for registering or establishing a com- simultaneously in one package. The applicant submits pany is normally done through a notary. g. After the payment process, Disperindag will bring the required documents to the Tax Office and gets the the recommendation letter to KPAP as a recom- The requirement to pay the non–tax state revenue receipt of application. The Tax Officer will inform the mendation to issue the license; (PNBP) fee for legal services in relation to the estab- applicant when the NPWP and NPPKP cards are ready lishment of a small company (Perseroan Terbatas– for pick up. h. The applicant can pick up the license at KPAP on the same day with the payment process. PT) is based on Government Regulation No. 38 of The NPWP application can also be arranged on–line 2009 concerning types and tariffs on non–tax state but the applicant still needs to provide hard copies Procedure 8. Obtain the permanent revenues replacing the previous regulation which is of documents and visit the Tax Office to pick up the regulation No. 19 of 2007. NPWP Card. Most applicants visit the Tax Office in business trading license (Surat Izin Usaha person. Perdagangan–SIUP) and the registration Procedure 5. Apply to the Ministry of Law certificate (Tanda Daftar Perusahaan, TDP) and Human Rights for approval of the deed Procedure 7. Obtain the nuisance permit at the Licensing office (Kantor Pelayanan of establishment (Hinder Ordinantie– HO) at the Licensing Administrasi Perijinan–KPAP) Time: 14 days Office (Kantor Pelayanan Administrasi Time: 5 days Cost: IDR 1,580,000 (IDR 1,000,000 for validation of Perijinan–KPAP) Cost: No cost company as legal entity + IDR 30,000 for publication Time: 6 days Comments: As per Mayor Regulation 14/2005, in the State Gazette, BNRI + IDR 550,000 for publica- Cost: IDR 100,000 (100 square meters x 2 (road the applications for the 2 licenses (SIUP and TDP) tion in the Supplement to the State Gazette, TBNRI) index) x 1 (nuisance index) x IDR 500/square meter) can be submitted at the same time. The applicant submits the documents to the licensing office (Kantor Pelayanan Administrasi Perizinan–KPAP), and then LIST OF PROCEDURES 53

KPAP will do the verification of the documents. After From submitting the application form until obtaining Procedure 3. Obtain a certificate of the verification is done by KPAP (1 day), KPAP will the membership certificate it usually takes between 1 company domicile from the Village Office bring the documents to the Local Industry and Trade and 3 days. In practice, if the company doesn’t pick up Agency to be processed (3–4 days). After processing the certificate, the local Jamsostek Office will mail it Time: 1 day and internal communication between KPAP and the to the applicant no later than 7 days from the date of Cost: No cost Local Industry and Trade Agency, the applicant can the application. In 30 days, the company should pay Comments: The certificate of domicile in Manado return to KPAP and obtain the licenses. the first insurance premium. Having received the first is known as recommendation letter. It is obtained The Surat Izin Usaha Perdagangan (SIUP) constitutes payment, the Jamsostek Office will issue membership from the Head of the village (the Lurah) where the the business license for a non–facility company engag- certificates for each employee. company is located. It is a pre–requisite for obtaining ing in trading business. The SIUP contains details A company is not obliged to enroll its employees in a nuisance permit (HO) and a location permit (SITU). about the company activities and the person in charge the Jamsostek social security program if it offers an The application form for domicile certificate should be of the company. The following copies of documents independent social security program to its employees, completed with the number and date of the deed of should be attached to the application for SIUP/TDP: with comparable or better benefits than those offered establishment and the name of the notary. A copy of a. Copy of the deed of establishment; by the Package of Basic Health Maintenance Security the sign deed should also be attached. (according to Government Regulation No. 14/1993, as b. Copy of ID card; An unofficial administrative fee may apply. The fee amended by Government Regulation No. 28 /2002). varies from IDR 200,000 to IDR 500,000, depend- c. Copy of the taxpayer registration number (NPWP); ing on the municipality (Head of village policy). d. Copy of SITU/HO; * This procedure can be completed simultaneously with previous procedures. e. Copy of balance sheet of the company; Procedure 4. Apply for the nuisance permit f. Duty stamp IDR 6,000 (4 pcs); STARTING A BUSINESS (Hinder Ordinantie, HO) and the location g. Passport photos size 3x4 (3 pcs). Manado, North Sulawesi permit (SITU) at the One Stop Shop (Badan According to the National Law No.28 of 2009, imple- Pelayanan Perijinan Terpadu–BP2T) Standard company legal form: Limited Liability Company mented in January 2011 in Makassar, SIUP & TDP are Time: 4 days (LLC)– Perseroan Terbatas (PT) free of charge. Cost: IDR 355,000 (user charges IDR 300,000 for Paid–in minimum capital requirement: IDR 12,500,000 both permits + administrative costs of IDR 27,500 for Procedure 9*. Register with the Ministry of = USD 1,201 each permit) Manpower at the local Manpower Office Data as of: July 2011 Comments: The entrepreneur applies for both HO and Time: 1 day Procedure 1. Arrange for a notary; obtain SITU at the village or sub–district office. There is only one application needed to obtain both permits. Cost: No cost the standard form of the company deed; Comments: According to Law No. 13/2003, compa- obtain clearance for the company name Procedure 5. Pay local / fiscal charges at nies with more than 10 workers or a monthly payroll electronically from the Ministry of Law and of IDR 1 million must register with the Ministry of the Local Revenue Office Human Rights Manpower. This procedure can be completed concur- Time: 2 days rently with other post–registration procedures by Time: 4 days Cost: IDR 513,281 (billboard minimum one meter IDR filing the compulsory report with the local office of the Cost: IDR 200,000 (name clearance and reservation) 125,781 + cleaning levy for 12 month IDR 360,000 + Ministry of Manpower. The applicant gets a receipt of Comments: The uniqueness of the company name administration fee IDR 27,500) document submission. The Manpower office conducts must be checked to ensure that it has not been used Comments: The charges are related to services such a verification process and issues an official copy of the by another Indonesian company, to avoid a rejection as trash collection and advertisement. This procedure registration to the applicant. The applicant returns to by the Ministry of Law and Human Rights of the is a prerequisite to obtain the local tax identification the office to pick up the official copy of the registra- company’s deed of establishment and articles of as- number (NPWPD), the tax identification number tion. For a company with less than 50 employees, the sociation. Because the process must be done through (NPWP), and the business trading license (SIUP). verification process can be done on the spot. a computerized processing system, the reservation Although there is no official fee, an unofficial adminis- and clearance must be done by a public notary (the Procedure 6. Pay the State Treasury for trative fee may be charged, which is usually between new computerized system for nontax state revenue the non–tax state revenue (PNBP) fees for IDR 100,000 and IDR 200,000. payments may be accessed only by a public notary). legal services at a Bank Upon payment and verification, the applicant receives Procedure 10*. Apply for the Workers an online notification (via email) with the cleared Time: 1 day Social Security Program (Jamsostek company name. The reserved name will be blocked Cost: No cost Program) for 60 days. Comments: This payment is for name clearances and Time: 3 days Based on the Government Regulation Number 38 of company approval. Because the new computerized 2009 (enacted on May 28, 2009 and entered into system for non–tax state revenue payments (PNBP)— Cost: No cost force on June 3, 2009) regarding the Non Tax State which has been implemented by the Ministry of Law Comments: According to legal provisions on workers’ Revenue for the Ministry of Law and Human Rights, and Human Rights—may be accessed only by a notary social security (Law No. 3/1992), it is mandatory for the fee for this procedure is IDR 200,000. public, payment for registering or establishing a com- every company or individual employing 10 workers pany is normally done through a notary. or more or generating a monthly payroll of at least Procedure 2. Notarize company documents The requirement to pay the non–tax state revenue IDR 1 million to apply for the Workers Social Security before a notary public (PNBP) fee for legal services in relation to the estab- Program (Jamsostek). This social security program lishment of a small company (Perseroan Terbatas– covers occupational accidents, death, old age, and Time: 1 day PT) is based on Government Regulation No. 38 of health security. It is arranged after the company starts Cost: IDR 4,520,000 (notary fee) 2009 concerning types and tariffs on non–tax state to recruit workers. Comments: Once the notary gets the company name revenues replacing the previous regulation which is Arranging for Jamsostek is the same for all Indonesian approval from the Ministry of Law and Human regulation No. 19 of 2007. locations: Rights, the founders can sign the deed of establish- a. Fill out the form, which can be downloaded from ment. Standard articles of association are available Procedure 7. Apply to the Ministry of Law the website jamsostek.go.id or obtained from at the notary office. and Human Rights for approval of the deed Jamsostek Branch Offices; The notary fees associated with this procedure cover of establishment the following services: name check, deed drafting b. Visit the Jamsostek Office to submit the filled–in Time: 14 days form; and approval, and payment of non tax state revenue (PNBP) fees. Commonly, local notary associations set Cost: IDR 1,580,000 (IDR 1,000,000 for validation of c. Jamsostek official conducts data input to Jam- the scale of notary fees. In practice, the fee depends company as legal entity + IDR 30,000 for publication sostek data base; on the agreement between notary and client. in the State Gazette, BNRI + IDR 550,000 for publica- d. The applicant receives the company membership The costs for accessing the Electronic Administration tion in the Supplement to the State Gazette, TBNRI) certificate. System of Legal Status (SABH), name checking, and PNBP are counted separately. 54 DOING BUSINESS IN INDONESIA 2012

Comments: Based on Articles 9, 10, 29 and 30 of the Comments: SIUP and TDP can be arranged as a From submitting the application form until obtaining Indonesian Company Law No. 40/ 2007, the public package, at the same time, with the same Officer, at the membership certificate it usually takes between 1 notary preparing the company deed of establishment the One Stop Shop (BP2T) in Manado. The applicant and 3 days. In practice, if the company doesn’t pick up must electronically file the required documents with submits two different application forms, along with the certificate, the local Jamsostek Office will mail it the Ministry of Law and Human Rights. The process the required documents. The applicant gets a confir- to the applicant no later than 7 days from the date of will take place as follows: mation receipt and pays the official user charges. After the application. In 30 days, the company should pay a. The application should be filled no later than 60 verification, the licenses are issued simultaneously. the first insurance premium. Having received the first days from the date of the deed; As per Local Regulation 6/2001 regarding licenses on payment, the Jamsostek Office will issue membership industry and trade, the maximum time to complete certificates for each employee. b. Within 30 days of the notice of “no objection” from this procedure is 5 days. In practice, the licenses can the Ministry of Law and Human Rights, the original A company is not obliged to enroll its employees in be obtained in 3 days. application and supporting documents should be the Jamsostek social security program if it offers an submitted; The Surat Izin Usaha Perdagangan (SIUP) constitutes independent social security program to its employees, the business license for a non–facility company engag- with comparable or better benefits than those offered c. Seven days after the fulfillment of above require- ing in trading business. The SIUP contains details by the Package of Basic Health Maintenance Security ments, the Ministry of Law and Human Rights will about the company activities and the person in charge (according to Government Regulation No. 14/1993, as issue the legalization of the establishment of the of the company. The following copies of documents amended by Government Regulation No. 28 /2002). company; should be attached to the application for SIUP: d. The company data (name, location, object and * This procedure can be completed simultaneously a. The articles of association; purpose, capital) will be inserted in the Company with previous procedures. Registry; b. An attestation of location and address of the com- pany’s offices; e. The Ministry of Law and Human Rights will an- STARTING A BUSINESS nounce the establishment of the company in the c. The tax registration number; Mataram, West Nusa Tenggara Supplement State Gazette (TBNRI) within 14 days d. The identity card of the company president or Standard company legal form: Limited Liability Company of the Ministry’s Approval Letter. director. (LLC)– Perseroan Terbatas (PT) By virtue of Government Regulation 38/ 2009 (enact- e. Proof of payment of Local fiscal; Paid–in minimum capital requirement: IDR 12,500,000 ed on May 28, 2009 and entered into force on June f. SITU/HO. 3, 2009) regarding the Non Tax State Revenue for the = USD 1,201 Ministry of Law and Human Rights, a new schedule of Procedure 10*. Register with the Ministry Data as of: July 2011 official fees was enforced for the establishment of a of Manpower at the local Manpower Office domestic limited liability company (PT). Procedure 1. Arrange for a notary; obtain Time: 1 day Delays depend on the workload of the Ministry and on the standard form of the company deed; the approved courier service used by the Ministry to Cost: No cost obtain clearance for the company name deliver its approval to the notary. The process usually Comments: According to Law No. 13/2003, compa- electronically from the Ministry of Law and takes 7 days for processing and approximately 7 days nies with more than 10 workers or a monthly payroll Human Rights for courier service. There is improvement in quality of of IDR 1 million must register with the Ministry of Time: 4 days courier service, by using Pos or TIKI express services Manpower. This procedure can be completed concur- Cost: IDR 200,000 (name clearance and reservation) now the process to deliver the documents is faster rently with other post–registration procedures by within 4–7 days. filing the compulsory report with the local office of the Comments: The uniqueness of the company name Ministry of Manpower. The applicant gets a receipt of must be checked to ensure that it has not been used Procedure 8. Obtain a taxpayer registration document submission. The Manpower office conducts by another Indonesian company, to avoid a rejection number (NPWP) and a Value Added Tax a verification process and issues an official copy of the by the Ministry of Law and Human Rights of the (VAT) collector number (NPPKP) from the registration to the applicant. The applicant returns to company’s deed of establishment and articles of as- sociation. Because the process must be done through local Tax Office the office to pick up the official copy of the registra- tion. For a company with less than 50 employees, the a computerized processing system, the reservation Time: 2 days verification process can be done on the spot. and clearance must be done by a public notary (the Cost: No cost Although there is no official fee, an unofficial adminis- new computerized system for nontax state revenue Comments: Maximum one month from the start of trative fee (around IDR 200,000) may be charged. payments may be accessed only by a public notary). business operations, the company must register with Upon payment and verification, the applicant receives the Tax Office. The company must also obtain a VAT Procedure 11*. Apply for the Workers Social an online notification (via email) with the cleared company name. The reserved name will be blocked collector number (NPPKP) if it anticipates annual Security Program (Jamsostek Program) revenue of more than IDR 600 million from the for 60 days. Time: 3 days sales of goods and services. The company domicile Based on the Government Regulation Number 38 of certificate, articles of association, and identity cards Cost: No cost 2009 (enacted on May 28, 2009 and entered into of the directors must be submitted to obtain the Comments: According to legal provisions on workers’ force on June 3, 2009) regarding the Non Tax State tax numbers. NPWP and NPPKP can be arranged social security (Law No. 3/1992), it is mandatory for Revenue for the Ministry of Law and Human Rights, simultaneously in one package. The applicant submits every company or individual employing 10 workers the fee for this procedure is IDR 200,000. the required documents to the Tax Office and gets the or more or generating a monthly payroll of at least receipt of application. The Tax Officer will inform the IDR 1 million to apply for the Workers Social Security Procedure 2. Notarize company documents applicant when the NPWP and NPPKP cards are ready Program (Jamsostek). This social security program before a notary public for pick up. covers occupational accidents, death, old age, and Time: 1 day health security. It is arranged after the company starts The NPWP application can also be arranged on–line Cost: IDR 4,220,000 (notary fee) but the applicant still needs to provide hard copies to recruit workers. Comments: Once the notary gets the company name of documents and visit the Tax Office to pick up the Arranging for Jamsostek is the same for all Indonesian approval from the Ministry of Law and Human Rights, NPWP Card. Most applicants visit the Tax Office in locations: the founders can sign the deed of establishment. person. a. Fill out the form, which can be downloaded from Standard articles of association are available at the the website jamsostek.go.id or obtained from notary office. Procedure 9. Apply for the permanent Jamsostek Branch Offices; The notary fees associated with this procedure cover business trading license (Surat Izin Usaha b. Visit the Jamsostek Office to submit the filled–in Perdagangan, SIUP) and the registration the following services: name check, deed drafting form; and approval, and payment of non tax state revenue certificate (Tanda Daftar Perusahaan, TDP) c. Jamsostek official conducts data input to Jam- (PNBP) fees. Commonly, local notary associations set at the One Stop Shop (BP2T) sostek data base; the scale of notary fees. In practice, the fee depends Time: 3 days d. The applicant receives the company membership on the agreement between notary and client. Cost: IDR 1,105,000 (IDR 300,000 for SIUP + IDR certificate. The costs for accessing the Electronic Administration 27,500 for administrative fees + IDR 750,000 for System of Legal Status (SABH), name checking, and TDP + IDR 27,500 administrative fees) PNBP are counted separately. LIST OF PROCEDURES 55

Procedure 3. Pay the State Treasury for Cost: No cost For a new company, the application for SIUP and TDP the non–tax state revenue (PNBP) fees for Comments: Local regulation No. 6 of 2003 governs can be arranged at the same time, with the same officer, at the One Stop Shop Agency (KPPT). The legal services at a Bank the SITU process in Mataram. The Letter of Business location permit (SITU) can be obtained from the One applicant submits the same application form along Time: 1 day Stop Service. SITU is a requirement to obtain the with the required documents. After verification, the Cost: No cost permanent business trading license (Surat Izin Usaha licenses will be issued. This procedure is govern by Comments: This payment is for name clearances and Perdagangan, SIUP). This procedure can be done in 4 local regulation No. 3 of 2001 concerning the business company approval. days (statutory time limit based on local regulation is trading license and is based on local regulation No. 4 15 days) if the documents are complete. The following of 2006 concerning the certificate company registry Because the new computerized system for non–tax (TDP). state revenue payments (PNBP)—which has been documents should be attached: a. Application form; implemented by the Ministry of Law and Human Procedure 8*. Register with the Ministry of Rights—may be accessed only by a notary public, b. Copy of ID card; Manpower at the local Manpower Office payment for registering or establishing a company is c. Copy of deed of establishment; normally done through a notary. Time: 4 days d. Map of the business location; The requirement to pay the non–tax state revenue Cost: No cost e. Proof of payment of tax on land and building (if the (PNBP) fee for legal services in relation to the estab- Comments: According to Law No. 13/2003, compa- company leases the premises, proof of payment by lishment of a small company (Perseroan Terbatas– nies with more than 10 workers or a monthly payroll the owner would be required); PT) is based on Government Regulation No. 38 of of IDR 1 million must register with the Ministry of 2009 concerning types and tariffs on non–tax state f. Passport Photo size 3x4 color 2pcs. Manpower. This procedure can be completed concur- revenues replacing the previous regulation which is rently with other post–registration procedures by regulation No. 19 of 2007. Procedure 6. Obtain a taxpayer registration filing the compulsory report with the local office of the number (NPWP) and a Value Added Tax Ministry of Manpower. The applicant gets a receipt Procedure 4. Apply to the Ministry of Law (VAT) collector number (NPPKP) from the of document submission. The Manpower office and Human Rights for approval of the deed local Tax Office conducts a verification process and issues an official of establishment Time: 2 days copy of the registration to the applicant. The applicant returns to the office to pick up the official copy of the Time: 14 days Cost: No cost registration. Cost: IDR 1,580,000 (IDR 1,000,000 for validation of Comments: Maximum one month from the start of As per new Local Regulation, the official time to obtain company as legal entity + IDR 30,000 for publication business operations, the company must register with the registration in Mataram is 4 days. in the State Gazette, BNRI + IDR 550,000 for publica- the Tax Office. The company must also obtain a VAT tion in the Supplement to the State Gazette, TBNRI) collector number (NPPKP) if it anticipates annual Procedure 9*. Apply for the Workers Social Comments: Based on Articles 9, 10, 29 and 30 of the revenue of more than IDR 600 million from the Security Program (Jamsostek Program) Indonesian Company Law No. 40/ 2007, the public sales of goods and services. The company domicile notary preparing the company deed of establishment certificate, articles of association, and identity cards Time: 1 day must electronically file the required documents with of the directors must be submitted to obtain the Cost: No cost the Ministry of Law and Human Rights. The process tax numbers. NPWP and NPPKP can be arranged Comments: According to legal provisions on workers’ will take place as follows: simultaneously in one package. The applicant submits social security (Law No. 3/1992), it is mandatory for a. The application should be filled no later than 60 the required documents to the Tax Office and gets the every company or individual employing 10 workers days from the date of the deed; receipt of application. The Tax Officer will inform the or more or generating a monthly payroll of at least applicant when the NPWP and NPPKP cards are ready b. Within 30 days since the notice of “no objection” IDR 1 million to apply for the Workers Social Security for pick up. from the Ministry of Law and Human Rights, the Program (Jamsostek). This social security program original application and supporting documents The NPWP application can also be arranged on–line covers occupational accidents, death, old age, and should be submitted; but the applicant still needs to provide hard copies health security. It is arranged after the company starts of documents and visit the Tax Office to pick up the to recruit workers. c. Seven days after the fulfillment of above require- NPWP Card. Most applicants visit the Tax Office in ments, the Ministry of Law and Human Rights will Arranging for Jamsostek is the same for all Indonesian person. issue the legalization of the establishment of the locations: company; Procedure 7. Apply for the permanent a. Fill out the form, which can be downloaded from d. The company data (name, location, object and the website jamsostek.go.id or obtained from business trading license (Surat Izin Usaha Jamsostek Branch Offices; purpose, capital) will be inserted in the Company Perdagangan, SIUP) and the registration Registry; b. Visit the Jamsostek Office to submit the filled–in certificate (Tanda Daftar Perusahaan, TDP) form; e. The Ministry of Law and Human Rights will an- at the One Stop Shop (KPPT) nounce the establishment of the company in the c. Jamsostek official conducts data input to Jam- Supplement State Gazette (TBNRI) within 14 days Time: 5 days sostek data base; of the Ministry’s Approval Letter. Cost: No cost d. The applicant receives the company membership By virtue of Government Regulation 38/ 2009 (enact- Comments: The Business Trading License (SIUP) certificate. ed on May 28, 2009 and entered into force on June constitutes the business license for a non–facility From submitting the application form until obtaining 3, 2009) regarding the Non Tax State Revenue for the company engaging in trading business. The SIUP the membership certificate it usually takes between 1 Ministry of Law and Human Rights, a new schedule of contains details about the company activities and the and 3 days. In practice, if the company doesn’t pick up official fees was enforced for the establishment of a person in charge of the company. The following copies the certificate, the local Jamsostek Office will mail it domestic limited liability company (PT). of documents should be attached to the application to the applicant no later than 7 days from the date of Delays depend on the workload of the Ministry and on for SIUP and TDP: the application. In 30 days, the company should pay the approved courier service used by the Ministry to a. Copy of the deed of establishment; the first insurance premium. Having received the first deliver its approval to the notary. The process usually b. Map of business location; payment, the Jamsostek Office will issue membership takes 7 days for processing and approximately 7 days certificates for each employee. c. NPWP of the applicant; for courier service. There is improvement in quality of A company is not obliged to enroll its employees in d. Copy of ID card of the director; courier service, by using Pos or TIKI express services the Jamsostek social security program if it offers an now the process to deliver the documents is faster e. Passport photo size 4x6; independent social security program to its employees, within 4–7 days. f. Copy of articles association and company approval with comparable or better benefits than those offered from Ministry of Law and Human Rights; by the Package of Basic Health Maintenance Security Procedure 5. Apply for location permit g. Copy of SITU; (according to Government Regulation No. 14/1993, as (Surat Izin Tempat Usaha–SITU) at One amended by Government Regulation No. 28 /2002). h. Copy SIUP (for TDP); Stop Shop (Kantor Pelayanan Perijinan i. Application letter with stamp duty (IDR 6,000). * This procedure can be completed simultaneously Terpadu–KPPT) with previous procedures. Time: 4 days 56 DOING BUSINESS IN INDONESIA 2012

STARTING A BUSINESS The requirement to pay the non–tax state revenue Comments: Maximum one month from the start of Medan, North Sumatra (PNBP) fee for legal services in relation to the estab- business operations, the company must register with lishment of a small company (Perseroan Terbatas– the Tax Office. The company must also obtain a VAT Standard company legal form: Limited Liability Company PT) is based on Government Regulation No. 38 of collector number (NPPKP) if it anticipates annual (LLC)– Perseroan Terbatas (PT) 2009 concerning types and tariffs on non–tax state revenue of more than IDR 600 million from the Paid–in minimum capital requirement: IDR 12,500,000 revenues replacing the previous regulation which is sales of goods and services. The company domicile = USD 1,201 regulation No. 19 of 2007. certificate, articles of association, and identity cards Data as of: July 2011 of the directors must be submitted to obtain the Procedure 4. Obtain Domicile Letter from tax numbers. NPWP and NPPKP can be arranged Procedure 1. Arrange for a notary; obtain the Head of Village simultaneously in one package. The applicant submits the required documents to the Tax Office and gets the the standard form of the company deed; Time: 2 days obtain clearance for the company name receipt of application. The Tax Officer will inform the Cost: No cost applicant when the NPWP and NPPKP cards are ready electronically from the Ministry of Law and Comments: Based on local Regulation No. 22 of 2002 for pick up. Human Rights regarding nuisance permit, this procedure is required The NPWP application can also be arranged on–line Time: 4 days as a prerequisite to apply nuisance permit (HO). but the applicant still needs to provide hard copies Cost: IDR 200,000 (name clearance and reservation) of documents and visit the Tax Office to pick up the Comments: The uniqueness of the company name Procedure 5. Apply to the Ministry of Law NPWP Card. Most applicants visit the Tax Office in must be checked to ensure that it has not been used and Human Rights for approval of the deed person. by another Indonesian company, to avoid a rejection of establishment by the Ministry of Law and Human Rights of the Time: 14 days Procedure 7. Apply for the nuisance permit company’s deed of establishment and articles of as- Cost: IDR 1,580,000 (IDR 1,000,000 for validation of (HO) at the Integrated Licensing Agency sociation. Because the process must be done through company as legal entity + IDR 30,000 for publication (Badan Perijinan Pelayanan Terpadu, a computerized processing system, the reservation in the State Gazette, BNRI + IDR 550,000 for publica- BPPT) and clearance must be done by a public notary (the tion in the Supplement to the State Gazette, TBNRI) Time: 5 days new computerized system for nontax state revenue Comments: Based on Articles 9, 10, 29 and 30 of the payments may be accessed only by a public notary). Cost: IDR 191,250 Indonesian Company Law No. 40/ 2007, the public Upon payment and verification, the applicant receives Comments: Based on the local regulation No. 22 of notary preparing the company deed of establishment an online notification (via email) with the cleared 2002 concerning the nuisance permit (article 1 point must electronically file the required documents with company name. The reserved name will be blocked 1&2), the following copies of documents should be the Ministry of Law and Human Rights. The process for 60 days. attached to apply for HO: will take place as follows: Based on the Government Regulation Number 38 of a. Filled out application form; a. The application should be filled no later than 60 2009 (enacted on May 28, 2009 and entered into days from the date of the deed; b. Copy of ID card; force on June 3, 2009) regarding the Non Tax State c. Passport photos in color size 3x4 (3 pcs); Revenue for the Ministry of Law and Human Rights, b. Within 30 days of the notice of “no objection” from the fee for this procedure is IDR 200,000. the Ministry of Law and Human Rights, the original d. Copy of NPWP; application and supporting documents should be e. Copy of the deed of establishment legalized by Procedure 2. Notarize company documents submitted; Kemenhukham; before a notary public c. Seven days after the fulfillment of above require- f. Copy of status of the building (lease or owned); ments, the Ministry of Law and Human Rights will Time: 1 day g. Copy of proof of payment of land and building tax issue the legalization of the establishment of the (PBB) and yearly taxes (SPPT); Cost: IDR 3,125,000 (notary fee) company; h. Copy of domicile letter from the Head of Village Comments: Once the notary gets the company name d. The company data (name, location, object and approval from the Ministry of Law and Human Rights, and letter of no objection from the neighborhood purpose, capital) will be inserted in the Company (especially for non industry company). the founders can sign the deed of establishment. Registry; Standard articles of association are available at the The cost for HO is based on the formula below: e. The Ministry of Law and Human Rights will an- notary office. nounce the establishment of the company in the Environmental tariff x location index x nuisance index The notary fees associated with this procedure cover Supplement State Gazette (TBNRI) within 14 days x business area x business area index x type of busi- the following services: name check, deed drafting of the Ministry’s Approval Letter. ness index x type of building index and approval, and payment of non tax state revenue By virtue of Government Regulation 38/2009 (enact- = IDR 425 (mix) x 1 (Environmental city road) x 1 (PNBP) fees. Commonly, local notary associations set 2 ed on May 28, 2009 and entered into force on June (minor) x 100m x 2,25 (up to 100) x 1 (trade) x 2 the scale of notary fees. In practice, the fee depends 3, 2009) regarding the Non Tax State Revenue for the (permanent) on the agreement between notary and client. Ministry of Law and Human Rights, a new schedule of = IDR 191,250. The costs for accessing the Electronic Administration official fees was enforced for the establishment of a System of Legal Status (SABH), name checking, and domestic limited liability company (PT). Procedure 8. Apply for the permanent PNBP are counted separately. Delays depend on the workload of the Ministry and on business trading license (Surat Izin Usaha Perdagangan, SIUP) at the Integrated Procedure 3. Pay the State Treasury for the approved courier service used by the Ministry to deliver its approval to the notary. The process usually Licensing Agency (Badan Perijinan the non–tax state revenue (PNBP) fees for takes 7 days for processing and approximately 7 days Pelayanan Terpadu, BPPT) legal services at a Bank for courier service. There is improvement in quality of Time: 3 days Time: 1 day courier service, by using Pos or TIKI express services Cost: IDR 300,000 Cost: No cost now the process to deliver the documents is faster within 4–7 days. Comments: Based on Mayor Regulation No. 6 of 2010 Comments: This payment is for name clearances and concerning the function of the Integrated Licensing company approval. Procedure 6. Obtain a taxpayer registration Agency (BPPT), SIUP can be arranged in BPPT. Ac- Because the new computerized system for non–tax number (NPWP) and a Value Added Tax cording to the local Regulation No. 10 of 2002 article state revenue payments (PNBP)—which has been 7 point 2, the following documents should be attached implemented by the Ministry of Law and Human (VAT) collector number (NPPKP) from the local Tax Office to apply for SIUP: Rights—may be accessed only by a notary public, a. Filled out application form; payment for registering or establishing a company is Time: 3 days b. Copy of ID card; normally done through a notary. Cost: No cost c. Passport photo in color size 3x4 (3 pcs); d. Copy of NPWP; e. Copy of nuisance permit legalized; f. The company balance sheet; LIST OF PROCEDURES 57

g. Copy of the deed establishment legalized by c. Jamsostek official conducts data input to Jam- The costs for accessing the Electronic Administration Kemenhukham. sostek data base; System of Legal Status (SABH), name checking, and The list of fees for SIUP is based on the capital of the d. The applicant receives the company membership PNBP are counted separately. company: certificate. 1. Small SIUP The membership certificate is malied to the applicant. Procedure 3. Pay the State Treasury for the non–tax state revenue (PNBP) fees for a. IDR 5,000,000 – IDR 50,000,000= IDR 75,000 In 30 days, the company should pay the first insur- ance premium. Having received the first payment, the legal services at a Bank b. IDR 50,000,000 – IDR 200,000,000= IDR Jamsostek Office will issue membership certificates 150,000 Time: 1 day for each employee. 2. Middle SIUP: IDR 300,000 Cost: No cost A company is not obliged to enroll its employees in 3. Large SIUP: IDR 450,000. Comments: This payment is for name clearances and the Jamsostek social security program if it offers an company approval. independent social security program to its employees, Procedure 9*. Register with the Company with comparable or better benefits than those offered Because the new computerized system for non–tax Register and obtain a registration by the Package of Basic Health Maintenance Security state revenue payments (PNBP)—which has been certificate (Tanda Daftar Perusahaan, TDP) (according to Government Regulation No. 14/1993, as implemented by the Ministry of Law and Human at the Integrated Licensing Agency (Badan amended by Government Regulation No. 28 /2002). Rights—may be accessed only by a notary public, payment for registering or establishing a company is Perijinan Pelayanan Terpadu, BPPT) * This procedure can be completed simultaneously normally done through a notary. Time: 2 days with previous procedures. The requirement to pay the non–tax state revenue Cost: IDR 300,000 (PNBP) fee for legal services in relation to the estab- Comments: Based on local regulation No. 10 of 2002 STARTING A BUSINESS lishment of a small company (Perseroan Terbatas– article 22 (points 4, 5, and 6), the cost for TDP (for Palangka Raya, Central Kalimantan PT) is based on Government Regulation No. 38 of 2009 concerning types and tariffs on non–tax state PT) is IDR 300,000. The following copies of docu- Standard company legal form: Limited Liability Company ments are needed to apply for TDP: revenues replacing the previous regulation which is (LLC)– Perseroan Terbatas (PT) a. Filled out application form; regulation No. 19 of 2007. Paid–in minimum capital requirement: IDR 12,500,000 b. Letter of power of attorney if the applicant uses a = USD 1,201 Procedure 4. Apply to the Ministry of Law service company; Data as of: July 2011 and Human Rights for approval of the deed c. Copy of ID card; of establishment d. Copy of NPWP; Procedure 1. Arrange for a notary; obtain Time: 14 days e. Copy of SIUP; the standard form of the company deed; obtain clearance for the company name Cost: IDR 1,580,000 (IDR 1,000,000 for validation of f. Copy of nuisance permit (HO) legalized by the company as legal entity + IDR 30,000 for publication related agency; electronically from the Ministry of Law and in the State Gazette, BNRI + IDR 550,000 for publica- g. Copy of the deed of establishment legalized by Human Rights tion in the Supplement to the State Gazette, TBNRI) Kemenhukham. Time: 4 days Comments: Based on Articles 9, 10, 29 and 30 of the Cost: IDR 200,000 (name clearance and reservation) Indonesian Company Law No. 40/ 2007, the public Procedure 10*. Register with the Ministry Comments: The uniqueness of the company name notary preparing the company deed of establishment of Manpower at the local Manpower Office must be checked to ensure that it has not been used must electronically file the required documents with Time: 7 days by another Indonesian company, to avoid a rejection the Ministry of Law and Human Rights. The process will take place as follows: Cost: No cost by the Ministry of Law and Human Rights of the a. The application should be filled no later than 60 Comments: According to Law No. 13/2003, compa- company’s deed of establishment and articles of as- days from the date of the deed; nies with more than 10 workers or a monthly payroll sociation. Because the process must be done through of IDR 1 million must register with the Ministry of a computerized processing system, the reservation b. Within 30 days of the notice of “no objection” from Manpower. This procedure can be completed concur- and clearance must be done by a public notary (the the Ministry of Law and Human Rights, the original rently with other post–registration procedures by new computerized system for nontax state revenue application and supporting documents should be filing the compulsory report with the local office of the payments may be accessed only by a public notary). submitted; Ministry of Manpower. The applicant gets a receipt Upon payment and verification, the applicant receives c. Seven days after the fulfillment of above require- of document submission. The Manpower office an online notification (via email) with the cleared ments, the Ministry of Law and Human Rights will conducts a verification process and issues an official company name. The reserved name will be blocked issue the legalization of the establishment of the copy of the registration to the applicant. The applicant for 60 days. company; returns to the office to pick up the official copy of the Based on the Government Regulation Number 38 of d. The company data (name, location, object and registration. 2009 (enacted on May 28, 2009 and entered into purpose, capital) will be inserted in the Company force on June 3, 2009) regarding the Non Tax State Registry; Procedure 11*. Apply for the Workers Social Revenue for the Ministry of Law and Human Rights, the fee for this procedure is IDR 200,000. e. The Ministry of Law and Human Rights will an- Security Program (Jamsostek Program) nounce the establishment of the company in the Time: 6 days An additional unofficial fee of 500,000 might apply. Supplement State Gazette (TBNRI) within 14 days of the Ministry’s Approval Letter. Cost: No cost Procedure 2. Notarize company documents Comments: According to legal provisions on workers’ before a notary public By virtue of Government Regulation 38/ 2009 (enact- social security (Law No. 3/1992), it is mandatory for ed on May 28, 2009 and entered into force on June every company or individual employing 10 workers Time: 1 day 3, 2009) regarding the Non Tax State Revenue for the or more or generating a monthly payroll of at least Cost: IDR 4,020,000 (notary fee) Ministry of Law and Human Rights, a new schedule of IDR 1 million to apply for the Workers Social Security Comments: Once the notary gets the company name official fees was enforced for the establishment of a Program (Jamsostek). This social security program approval from the Ministry of Law and Human Rights, domestic limited liability company (PT). covers occupational accidents, death, old age, and the founders can sign the deed of establishment. Delays depend on the workload of the Ministry and on health security. It is arranged after the company starts Standard articles of association are available at the the approved courier service used by the Ministry to to recruit workers. notary office. deliver its approval to the notary. The process usually Arranging for Jamsostek is the same for all Indonesian The notary fees associated with this procedure cover takes 7 days for processing and approximately 7 days locations: the following services: name check, deed drafting for courier service. There is improvement in quality of courier service, by using Pos or TIKI express services a. Fill out the form, which can be downloaded from and approval, and payment of non tax state revenue now the process to deliver the documents is faster the website jamsostek.go.id or obtained from (PNBP) fees. Commonly, local notary associations set within 4–7 days. Jamsostek Branch Offices; the scale of notary fees. In practice, the fee depends b. Visit the Jamsostek Office to submit the filled–in on the agreement between notary and client. form; 58 DOING BUSINESS IN INDONESIA 2012

Procedure 5. Obtain a taxpayer registration According to the National Law No. 28 of 2009, in STARTING A BUSINESS number (NPWP) and a Value Added Tax January 2010, the City of Palangkaraya issued a new Palembang, South Sumatra policy eliminating the fees for SIUP, SITU & TDP. (VAT) collector number (NPPKP) from the There is no local Regulation governing this new policy. Standard company legal form: Limited Liability Company local Tax Office This policy was issued during a coordinating meeting (LLC)– Perseroan Terbatas (PT) Time: 2 days between the related agencies. Paid–in minimum capital requirement: IDR 12,500,000 Cost: No cost = USD 1,201 Comments: Maximum one month from the start of Procedure 7*. Register with the Ministry of Data as of: July 2011 business operations, the company must register with Manpower at the local Manpower Office the Tax Office. The company must also obtain a VAT Time: 4 days Procedure 1. Arrange for a notary; obtain collector number (NPPKP) if it anticipates annual Cost: IDR 100,000 (as per Local Regulation) the standard form of the company deed; revenue of more than IDR 600 million from the obtain clearance for the company name Comments: According to Law No. 13/2003, compa- sales of goods and services. The company domicile nies with more than 10 workers or a monthly payroll electronically from the Ministry of Law and certificate, articles of association, and identity cards of IDR 1 million must register with the Ministry of Human Rights of the directors must be submitted to obtain the Manpower. This procedure can be completed concur- Time: 4 days tax numbers. NPWP and NPPKP can be arranged rently with other post–registration procedures by simultaneously in one package. The applicant submits Cost: IDR 200,000 (name clearance and reservation) filing the compulsory report with the local office of the the required documents to the Tax Office and gets the Comments: The uniqueness of the company name Ministry of Manpower. The applicant gets a receipt receipt of application. The Tax Officer will inform the must be checked to ensure that it has not been used of document submission. The Manpower office applicant when the NPWP and NPPKP cards are ready by another Indonesian company, to avoid a rejection conducts a verification process and issues an official for pick up. by the Ministry of Law and Human Rights of the copy of the registration to the applicant. The applicant company’s deed of establishment and articles of as- The NPWP application can also be arranged on–line returns to the office to pick up the official copy of the sociation. Because the process must be done through but the applicant still needs to provide hard copies registration. of documents and visit the Tax Office to pick up the a computerized processing system, the reservation and clearance must be done by a public notary (the NPWP Card. Most applicants visit the Tax Office in Procedure 8*. Apply for the Workers Social person. new computerized system for nontax state revenue Security Program (Jamsostek Program) payments may be accessed only by a public notary). Although there is no official fee, an unofficial adminis- Time: 3 days Upon payment and verification, the applicant receives trative fee of IDR 200,000 may apply. Cost: No cost an online notification (via email) with the cleared Comments: According to legal provisions on workers’ company name. The reserved name will be blocked Procedure 6. Apply for the location permit for 60 days. (SITU), the permanent business trading social security (Law No. 3/1992), it is mandatory for every company or individual employing 10 workers Based on the Government Regulation Number 38 of license (Surat Izin Usaha Perdagangan, 2009 (enacted on May 28, 2009 and entered into SIUP), and the registration certificate or more or generating a monthly payroll of at least IDR 1 million to apply for the Workers Social Security force on June 3, 2009) regarding the Non Tax State (Tanda Daftar Perusahaan, TDP) at the Program (Jamsostek). This social security program Revenue for the Ministry of Law and Human Rights, One Stop Shop (KPPT) covers occupational accidents, death, old age, and the fee for this procedure is IDR 200,000. Time: 5 days health security. It is arranged after the company starts Cost: No cost to recruit workers. Procedure 2. Notarize company documents before a notary public Comments: The applications for SITU, SIUP and Arranging for Jamsostek is the same for all Indonesian TDP can be submitted at the same time, at the same locations: Time: 1 day window, and with the same Officer at One Stop Shop a. Fill out the form, which can be downloaded from Cost: IDR 3,020,000 (notary fee) (KPPT). Following the application, a field inspection the website jamsostek.go.id or obtained from Comments: Once the notary gets the company name takes place to ensure the location of the company. Jamsostek Branch Offices; approval from the Ministry of Law and Human Rights, The entrepreneur doesn’t need to be present at the b. Visit the Jamsostek Office to submit the filled–in the founders can sign the deed of establishment. time of inspection. The inspection usually happens form; Standard articles of association are available at the on the same day of the application or one day after. c. Jamsostek official conducts data input to Jam- notary office. Following the inspection, those 3 permits are issued sostek data base; The notary fees associated with this procedure cover simultaneously. d. The applicant receives the company membership the following services: name check, deed drafting 1. The application form for domicile certificate (SITU) certificate. and approval, and payment of non tax state revenue should be accompanied by: From submitting the application form until obtaining (PNBP) fees. Commonly, local notary associations set a. A copy of the signed deed of establishment; the membership certificate it usually takes between 1 the scale of notary fees. In practice, the fee depends b. A copy of the rental agreement; and 3 days. In practice, if the company doesn’t pick up on the agreement between notary and client. c. Proof of payment of Land and Building Tax (PBB) by the certificate, the local Jamsostek Office will mail it The costs for accessing the Electronic Administration the owner of the place where the company oper- to the applicant no later than 7 days from the date of System of Legal Status (SABH), name checking, and ates; the application. In 30 days, the company should pay PNBP are counted separately. d. Proof of building permit of the place where the the first insurance premium. Having received the first company operates; payment, the Jamsostek Office will issue membership Procedure 3. Obtain a certificate certificates for each employee. of company domicile from the local e. The tax registration number (NPWP). A company is not obliged to enroll its employees in municipality 2. The Surat Izin Usaha Perdagangan (SIUP) consti- the Jamsostek social security program if it offers an tutes the business license for a non–facility company Time: 2 days independent social security program to its employees, engaging in trading business. The SIUP contains Cost: No cost with comparable or better benefits than those offered details about the company activities and the person in by the Package of Basic Health Maintenance Security Comments: This procedure is a pre–requisite for charge of the company. The following copies of docu- (according to Government Regulation No. 14/1993, as the location permit (SITU), the permanent business ments should be attached to the application for SIUP: amended by Government Regulation No. 28 /2002). trading license (SIUP), and the registration certificate a. The articles of association; (TDP), which are arranged at the Licensing Office b. An attestation of location and address of the com- * This procedure can be completed simultaneously (Kantor Pelayanan Perijinan Terpadu–KPPT). Accord- with previous procedures. pany’s offices; ing to Law No. 28 of 2009 and Mayor letter No. 1 of 2011 (enacted in January 2011), there is no longer a fee c. The tax registration number; for this procedure. d. The identity card of the company president or director. LIST OF PROCEDURES 59

Procedure 4. Pay the State Treasury for Cost: No cost f. Original and copy of approval of the deed of estab- the non–tax state revenue (PNBP) fees for Comments: Maximum one month from the start of lishment; legal services at a Bank business operations, the company must register with g. Copy of a taxpayer registration number (NPWP) the Tax Office. The company must also obtain a VAT and SITU; Time: 1 day collector number (NPPKP) if it anticipates annual h. The balance sheet of the company. Cost: No cost revenue of more than IDR 600 million from the According to the new Law No. 28 of 2009 and Mayor sales of goods and services. The company domicile Comments: This payment is for name clearances and letter No. 188.342/002031, enacted in October 2010, certificate, articles of association, and identity cards company approval. there is no fee to apply for SIUP or TDP. Because the new computerized system for non–tax of the directors must be submitted to obtain the state revenue payments (PNBP)—which has been tax numbers. NPWP and NPPKP can be arranged Procedure 9*. Register with the Ministry of simultaneously in one package. The applicant submits implemented by the Ministry of Law and Human Manpower at the local Manpower Office Rights—may be accessed only by a notary public, the required documents to the Tax Office and gets the payment for registering or establishing a company is receipt of application. The Tax Officer will inform the Time: 2 days normally done through a notary. applicant when the NPWP and NPPKP cards are ready Cost: No cost for pick up. The requirement to pay the non–tax state revenue Comments: According to Law No. 13/2003, compa- (PNBP) fee for legal services in relation to the estab- The NPWP application can also be arranged on–line nies with more than 10 workers or a monthly payroll lishment of a small company (Perseroan Terbatas– but the applicant still needs to provide hard copies of IDR 1 million must register with the Ministry of PT) is based on Government Regulation No. 38 of of documents and visit the Tax Office to pick up the Manpower. This procedure can be completed concur- 2009 concerning types and tariffs on non–tax state NPWP Card. Most applicants visit the Tax Office in rently with other post–registration procedures by revenues replacing the previous regulation which is person. filing the compulsory report with the local office of the regulation No. 19 of 2007. Ministry of Manpower. The applicant gets a receipt Procedure 7. Obtain a location permit of document submission. The Manpower office Procedure 5. Apply to the Ministry of Law (SITU) from the Licensing office (Kantor conducts a verification process and issues an official and Human Rights for approval of the deed Pelayanan Perijinan Terpadu, KPPT) copy of the registration to the applicant. The applicant of establishment Time: 3 days returns to the office to pick up the official copy of the registration. Time: 14 days Cost: IDR 300,000 Although there is no official fee, an unofficial adminis- Cost: IDR 1,580,000 (IDR 1,000,000 for validation of Comments: SITU is a pre–requisite for obtaining the trative fee may be charged, which is usually between company as legal entity + IDR 30,000 for publication permanent business trading license (Surat Izin Usaha 100,000 and 250,000. in the State Gazette, BNRI + IDR 550,000 for publica- Perdagangan, SIUP) and the registration certificate tion in the Supplement to the State Gazette, TBNRI) (Tanda Daftar Perusahaan, TDP). Procedure 10*. Apply for the Workers Comments: Based on Articles 9, 10, 29 and 30 of the The following copies of documents should be attached Social Security Program (Jamsostek Indonesian Company Law No. 40/ 2007, the public to the application for SITU: Program) notary preparing the company deed of establishment a. Copy of ID card; Time: 4 days must electronically file the required documents with b. Passport photo size 3x4 2 pcs; the Ministry of Law and Human Rights. The process Cost: No cost c. Copy of the deed of establishment; will take place as follows: Comments: According to legal provisions on workers’ a. The application should be filled no later than 60 d. Copy of the payment of the land and building tax; social security (Law No. 3/1992), it is mandatory for days from the date of the deed; e. Recommendation letter from the Head of Sub every company or individual employing 10 workers b. Within 30 days of the notice of “no objection” from district; or more or generating a monthly payroll of at least the Ministry of Law and Human Rights, the original f. Business location map. IDR 1 million to apply for the Workers Social Security Program (Jamsostek). This social security program application and supporting documents should be The list of fees for SITU for minor nuisance is: submitted; covers occupational accidents, death, old age, and a. Type I 25 square meters: IDR 125,000; health security. It is arranged after the company starts c. Seven days after the fulfillment of above require- b. Type II 50 square meters: IDR 200,000; to recruit workers. ments, the Ministry of Law and Human Rights will c. Type III 100 square meters: IDR 300,000; issue the legalization of the establishment of the Arranging for Jamsostek is the same for all Indonesian company; d. Type IV 200 square meters: IDR 400,000; locations: d. The company data (name, location, object and e. Type n V 300 square meters: IDR 450,000; a. Fill out the form, which can be downloaded from purpose, capital) will be inserted in the Company f. Type VI 400 square meters: IDR 500,000; the website jamsostek.go.id or obtained from Jamsostek Branch Offices; Registry; g. Type VII >400 square meters: IDR 2,500,000. e. The Ministry of Law and Human Rights will an- b. Visit the Jamsostek Office to submit the filled–in nounce the establishment of the company in the Procedure 8. Apply for the permanent form; Supplement State Gazette (TBNRI) within 14 days business trading license (Surat Izin Usaha c. Jamsostek official conducts data input to Jam- of the Ministry’s Approval Letter. Perdagangan, SIUP) and the registration sostek data base; By virtue of Government Regulation 38/ 2009 (enact- certificate (Tanda Daftar Perusahaan, TDP) d. The applicant receives the company membership ed on May 28, 2009 and entered into force on June at the Licensing office (Kantor Pelayanan certificate. 3, 2009) regarding the Non Tax State Revenue for the Perijinan Terpadu, KPPT) A company is not obliged to enroll its employees in Ministry of Law and Human Rights, a new schedule of the Jamsostek social security program if it offers an official fees was enforced for the establishment of a Time: 5 days independent social security program to its employees, domestic limited liability company (PT). Cost: No cost with comparable or better benefits than those offered Delays depend on the workload of the Ministry and on Comments: The statutory time limit is 7 days, but by the Package of Basic Health Maintenance Security the approved courier service used by the Ministry to usually SIUP and TDP can be obtained in less than 7 (according to Government Regulation No. 14/1993, as deliver its approval to the notary. The process usually days. amended by Government Regulation No. 28 /2002). takes 7 days for processing and approximately 7 days The following copies of documents should be attached * This procedure can be completed simultaneously for courier service. There is improvement in quality of to the application for SIUP and TDP: with previous procedures. courier service, by using Pos or TIKI express services a. Application form; now the process to deliver the documents is faster within 4–7 days. b. Copy of ID card; c. Original and copy of the deed of establishment; Procedure 6. Obtain a taxpayer registration d. Copy of the approval from the Ministry of Law and number (NPWP) and a Value Added Tax Human Rights; (VAT) collector number (NPPKP) from the e. Original and copy of annulment of the deed of local Tax Office establishment (if any); Time: 3 days 60 DOING BUSINESS IN INDONESIA 2012

STARTING A BUSINESS The requirement to pay the non–tax state revenue receipt of application. The Tax Officer will inform the Pekanbaru, Riau (PNBP) fee for legal services in relation to the estab- applicant when the NPWP and NPPKP cards are ready lishment of a small company (Perseroan Terbatas– for pick up. Standard company legal form: Limited Liability Company PT) is based on Government Regulation No. 38 of The NPWP application can also be arranged on–line (LLC)– Perseroan Terbatas (PT) 2009 concerning types and tariffs on non–tax state but the applicant still needs to provide hard copies Paid–in minimum capital requirement: IDR 12,500,000 revenues replacing the previous regulation which is of documents and visit the Tax Office to pick up the = USD 1,201 regulation No. 19 of 2007. NPWP Card. Most applicants visit the Tax Office in Data as of: July 2011 person. Procedure 4. Apply to the Ministry of Law Although there is no official fee, an unofficial adminis- Procedure 1. Arrange for a notary; obtain and Human Rights for approval of the deed trative fee of IDR 50,000 might apply. the standard form of the company deed; of establishment obtain clearance for the company name Time: 14 days Procedure 6. Obtain a local taxpayer electronically from the Ministry of Law and Cost: IDR 1,580,000 (IDR 1,000,000 for validation of registration number (NPWPD) and pay Human Rights company as legal entity + IDR 30,000 for publication local/fiscal charges at the Local Revenue Time: 4 days in the State Gazette, BNRI + IDR 550,000 for publica- Office Cost: IDR 200,000 (name clearance and reservation) tion in the Supplement to the State Gazette, TBNRI) Time: 1 day Comments: The uniqueness of the company name Comments: Based on Articles 9, 10, 29 and 30 of the Cost: IDR 77,000 Indonesian Company Law No. 40/ 2007, the public must be checked to ensure that it has not been used Comments: The applicant brings a proof of payment by another Indonesian company, to avoid a rejection notary preparing the company deed of establishment must electronically file the required documents with of the land and building taxes (PBB) for the last 2 by the Ministry of Law and Human Rights of the years and pays the billboard tax. This procedure is company’s deed of establishment and articles of as- the Ministry of Law and Human Rights. The process will take place as follows: governed by a local regulation which mandates that sociation. Because the process must be done through every company must have a billboard complete with a computerized processing system, the reservation a. The application should be filled no later than 60 the company address. The documents needed to and clearance must be done by a public notary (the days from the date of the deed; apply are: new computerized system for nontax state revenue b. Within 30 days of the notice of “no objection” from a. Copy of ID card; payments may be accessed only by a public notary). the Ministry of Law and Human Rights, the original Upon payment and verification, the applicant receives application and supporting documents should be b. The deed of company establishment; an online notification (via email) with the cleared submitted; c. Proof of payment of land and building tax; company name. The reserved name will be blocked c. Seven days after the fulfillment of above require- d. Copy of lease of the building. for 60 days. ments, the Ministry of Law and Human Rights will Based on the Government Regulation Number 38 of issue the legalization of the establishment of the Procedure 7. Obtain a location permit 2009 (enacted on May 28, 2009 and entered into company; (SITU) from the Integrated Service Agency force on June 3, 2009) regarding the Non Tax State d. The company data (name, location, object and (BPT) Revenue for the Ministry of Law and Human Rights, purpose, capital) will be inserted in the Company Time: 2 days the fee for this procedure is IDR 200,000. Registry; Cost: IDR 750,000 (see comments) Procedure 2. Notarize company documents e. The Ministry of Law and Human Rights will an- Comments: As per Local Regulation 7/2000 concern- nounce the establishment of the company in the before a notary public ing location permit (Surat Izin Tempat Usaha–SITU), Supplement State Gazette (TBNRI) within 14 days and according to Instruction of Mayor No. 503 of Time: 1 day of the Ministry’s Approval Letter. 2002, the applicant should submit, along with the offi- Cost: IDR 4,520,000 (notary fee) By virtue of Government Regulation 38/ 2009 (enact- cial application form, the following documents: Comments: Once the notary gets the company name ed on May 28, 2009 and entered into force on June a. Location map; approval from the Ministry of Law and Human Rights, 3, 2009) regarding the Non Tax State Revenue for the b. Land Certificate; the founders can sign the deed of establishment. Ministry of Law and Human Rights, a new schedule of Standard articles of association are available at the official fees was enforced for the establishment of a c. Agreement/approval letter of the land/building notary office. domestic limited liability company (PT). owner and/or leasing agreement between land/ building owner and the applicant (if the land/build- The notary fees associated with this procedure cover Delays depend on the workload of the Ministry and on ing doesn’t belong to the applicant); the following services: name check, deed drafting the approved courier service used by the Ministry to and approval, and payment of non tax state revenue deliver its approval to the notary. The process usually d. Proof of payment of tax on land and building (if the (PNBP) fees. Commonly, local notary associations set takes 7 days for processing and approximately 7 days company leases the premises, proof of payment by the scale of notary fees. In practice, the fee depends for courier service. There is improvement in quality of the owner would be required); on the agreement between notary and client. courier service, by using Pos or TIKI express services e. Letter issued by the local Fire Department office; The costs for accessing the Electronic Administration now the process to deliver the documents is faster f. Commercial tax on billboards (local fiscal charges), System of Legal Status (SABH), name checking, and within 4–7 days. which is mandatory for all companies; PNBP are counted separately. Procedure 5. Obtain a taxpayer registration g. Copy of deed of company establishment; h. Copy of ID card; Procedure 3. Pay the State Treasury for number (NPWP) and a Value Added Tax the non–tax state revenue (PNBP) fees for (VAT) collector number (NPPKP) from the i. Passport photos size 3x4 (2 pcs). legal services at a Bank local Tax Office As per new regulation from May 2009, the statutory Time: 2 days time limit to obtain SITU is 5 days, but practically it Time: 1 day can be done within 2–3 days. An inspection of the Cost: No cost Cost: No cost premises, following the application, is mandatory for Comments: This payment is for name clearances and Comments: Maximum one month from the start of all new buildings. The entrepreneur does not have to company approval. business operations, the company must register with be present during the inspection since this is only for the Tax Office. The company must also obtain a VAT Because the new computerized system for non–tax address verification. The inspection done as randomly, collector number (NPPKP) if it anticipates annual state revenue payments (PNBP)—which has been especially for the company which is not includes the revenue of more than IDR 600 million from the implemented by the Ministry of Law and Human complete address. sales of goods and services. The company domicile Rights—may be accessed only by a notary public, The payment for SITU is done at a bank counter lo- certificate, articles of association, and identity cards payment for registering or establishing a company is cated at the Integrated Service Agency. The formula to of the directors must be submitted to obtain the normally done through a notary. calculate the cost is specified in article 11 (2), point b, tax numbers. NPWP and NPPKP can be arranged as follows: (business area) x (tariff) x (location index). simultaneously in one package. The applicant submits the required documents to the Tax Office and gets the 1. Business area: a. For a business area of 1 to 100 square meters, the official fee is IDR 7,500; LIST OF PROCEDURES 61

b. For a business area of 101to 200 square meters, the Although there is no official fee, an unofficial adminis- sociation. Because the process must be done through official fee is IDR 10,000; trative fee may be charged, which is usually between a computerized processing system, the reservation c. For a business area above 200 square meters, the IDR 50,000 and IDR 500,000. The fee can depend and clearance must be done by a public notary (the official fee is IDR 20,000; on the number of pages in the Working Contract new computerized system for nontax state revenue (KK) and in the Standard of Procedures (SOP) of the payments may be accessed only by a public notary). d. Any additional square meter costs IDR 200. company. Upon payment and verification, the applicant receives 2. Location index: an online notification (via email) with the cleared a. For a road width of 6 meters, the location index is 1; Procedure 10*. Apply for the Workers company name. The reserved name will be blocked b. For a road width of 6 to 12 meters, the location Social Security Program (Jamsostek for 60 days. index is 1.5; Program) Based on the Government Regulation Number 38 of c. For a road width above 12 meters, the location Time: 1 day 2009 (enacted on May 28, 2009 and entered into force on June 3, 2009) regarding the Non Tax State index is 2. Cost: No cost For a company with a business space of 100 square Revenue for the Ministry of Law and Human Rights, Comments: According to legal provisions on workers’ the fee for this procedure is IDR 200,000. meters, the cost for SITU is 100 x IDR 7,500 x 1 = IDR social security (Law No. 3/1992), it is mandatory for 750,000. every company or individual employing 10 workers Procedure 2. Notarize company documents or more or generating a monthly payroll of at least before a notary public Procedure 8. Apply for the permanent IDR 1 million to apply for the Workers Social Security business trading license (Surat Izin Usaha Program (Jamsostek). This social security program Time: 1 day Perdagangan, SIUP) and the registration covers occupational accidents, death, old age, and Cost: IDR 3,000,000 (notary fee) certificate (Tanda Daftar Perusahaan, TDP) health security. It is arranged after the company starts Comments: Once the notary gets the company name at the Integrated Service Agency (BPT) to recruit workers. approval from the Ministry of Law and Human Rights, Time: 4 days Arranging for Jamsostek is the same for all Indonesian the founders can sign the deed of establishment. Standard articles of association are available at the Cost: No cost locations: notary office. Comments: SIUP and TDP can be arranged as a pack- a. Fill out the form, which can be downloaded from The notary fees associated with this procedure cover age, at the same time, with the same Officer at the the website jamsostek.go.id or obtained from the following services: name check, deed drafting Integrated Service Agency (BPT). The applicant sub- Jamsostek Branch Offices; and approval, and payment of non tax state revenue mits two different application forms, along with the b. Visit the Jamsostek Office to submit the filled–in (PNBP) fees. Commonly, local notary associations set required documentation, gets a confirmation receipt, form; the scale of notary fees. In practice, the fee depends and pays the official user charges. After verification, c. Jamsostek official conducts data input to Jam- on the agreement between notary and client. the licenses are issued. Payment for SIUP and TDP is sostek data base; done at the bank counter located inside the BPT office. The costs for accessing the Electronic Administration d. The applicant receives the company membership System of Legal Status (SABH), name checking, and 1. The Surat Izin Usaha Perdagangan (SIUP) consti- certificate. PNBP are counted separately. tutes the business license for a non–facility company From submitting the application form until obtaining engaging in trading business. The SIUP contains the membership certificate it usually takes between 1 Procedure 3. Pay the State Treasury for details about the company activities and the person in and 3 days. In practice, if the company doesn’t pick up charge of the company. The following copies of docu- the non–tax state revenue (PNBP) fees for the certificate, the local Jamsostek Office will mail it legal services at a Bank ments should be attached to the application for SIUP: to the applicant no later than 7 days from the date of a. The articles of association; the application. In 30 days, the company should pay Time: 1 day b. An attestation of location and address of the com- the first insurance premium. Having received the first Cost: No cost pany’s offices (location permit– SITU); payment, the Jamsostek Office will issue membership Comments: This payment is for name clearances and c. The tax registration number; certificates for each employee. company approval. d. The identity card of the company president or A company is not obliged to enroll its employees in Because the new computerized system for non–tax director; the Jamsostek social security program if it offers an state revenue payments (PNBP)—which has been independent social security program to its employees, implemented by the Ministry of Law and Human e. The ministerial decree on the legalization of the with comparable or better benefits than those offered business entity. Rights—may be accessed only by a notary public, by the Package of Basic Health Maintenance Security payment for registering or establishing a company is According to the Law No. 28 of 2009, since January (according to Government Regulation No. 14/1993, as normally done through a notary. 2011, in Pekanbaru, SIUP & TDP are issued free of amended by Government Regulation No. 76 /2007). charge. This new policy was determined during a The requirement to pay the non–tax state revenue coordinating meeting of all related agencies in Peka- * This procedure can be completed simultaneously (PNBP) fee for legal services in relation to the estab- nbaru. There is no local regulation governing this new with previous procedures. lishment of a small company (Perseroan Terbatas– policy, the annulment of the previous regulation is still PT) is based on Government Regulation No. 38 of under way. STARTING A BUSINESS 2009 concerning types and tariffs on non–tax state Pontianak, West Kalimantan revenues replacing the previous regulation which is Procedure 9*. Register with the Ministry of regulation No. 19 of 2007. Standard company legal form: Limited Liability Company Manpower at the local Manpower Office (LLC)– Perseroan Terbatas (PT) Procedure 4. Obtain the location permit Time: 1 day Paid–in minimum capital requirement: IDR 12,500,000 (SITU) at the One Stop Shop (Badan Cost: No cost = USD 1,201 Pelayanan Perijinan Terpadu–BP2T) Comments: According to Law No. 13/2003, compa- Data as of: July 2011 Time: 10 days nies with more than 10 workers or a monthly payroll Cost: No cost of IDR 1 million must register with the Ministry of Procedure 1. Arrange for a notary; obtain Manpower. This procedure can be completed concur- the standard form of the company deed; Comments: The location permit (Surat Izin Tempat rently with other post–registration procedures by Usaha–SITU) is required for a company which has no obtain clearance for the company name direct impact to the surrounding environment. The filing the compulsory report with the local office of the electronically from the Ministry of Law and Ministry of Manpower. The applicant gets a receipt of following copies of documents should be attached to document submission. The Manpower office conducts Human Rights the application for SITU: a verification process and issues an official copy of the Time: 4 days a. Copy of ID card; registration to the applicant. The applicant returns to Cost: IDR 200,000 (name clearance and reservation) b. Passport photos in color size 3x4 (3 pieces); the office to pick up the official copy of the registra- Comments: The uniqueness of the company name c. Original and copies of proof of payment of land and tion. For a company with less than 50 employees, the must be checked to ensure that it has not been used building tax; verification process can be done on the spot. by another Indonesian company, to avoid a rejection d. Copy of land ownership/lease of the premises; by the Ministry of Law and Human Rights of the e. Copy of IMB (if the company owned the business company’s deed of establishment and articles of as- space); 62 DOING BUSINESS IN INDONESIA 2012

f. Copy of deed of establishment; Comments: Maximum one month from the start of d. Copy of the deed of establishment; g. Map of location. business operations, the company must register with e. Copy of SITU/HO; the Tax Office. The company must also obtain a VAT Based on Mayor Regulation No. 469 of 2011, con- f. The amendment of the company (if there is a collector number (NPPKP) if it anticipates annual cerning this procedure and the mechanism for the change); revenue of more than IDR 600 million from the business licensing process in Pontianak, and based on sales of goods and services. The company domicile g. Copy of the Company approval from the Ministry of local Regulation No. 10 of 1989 concerning SITU, the certificate, articles of association, and identity cards Law and Human Rights. detail process is as follows: of the directors must be submitted to obtain the The application process is similar to obtain the SIUP a. The applicant fills in the application form and tax numbers. NPWP and NPPKP can be arranged (see above). submits the complete documentation to the BP2T simultaneously in one package. The applicant submits counter; the required documents to the Tax Office and gets the Procedure 9*. Register with the Ministry of b. The documents will be verified by BP2T together receipt of application. The Tax Officer will inform the Manpower at the local Manpower Office with the technical team; applicant when the NPWP and NPPKP cards are ready Time: 3 days c. If the documents are complete and the permit is for pick up. Cost: No cost approved, BP2T will print the license and the appli- The NPWP application can also be arranged on–line cant can obtain the license at the counter of BP2T. but the applicant still needs to provide hard copies Comments: According to Law No. 13/2003, compa- nies with more than 10 workers or a monthly payroll Based on the Mayor regulation, the time to complete of documents and visit the Tax Office to pick up the of IDR 1 million must register with the Ministry of this procedure is 10 days. NPWP Card. Most applicants visit the Tax Office in person. Manpower. This procedure can be completed concur- rently with other post–registration procedures by Procedure 5. Apply to the Ministry of Law filing the compulsory report with the local office of the and Human Rights for approval of the deed Procedure 7. Apply for the permanent business trading license (Surat Izin Usaha Ministry of Manpower. The applicant gets a receipt of establishment of document submission. The Manpower office Perdagangan, SIUP) at the One Stop Shop Time: 14 days conducts a verification process and issues an official (Badan Pelayanan Perijinan Terpadu–BP2T) Cost: IDR 1,580,000 (IDR 1,000,000 for validation of copy of the registration to the applicant. The applicant company as legal entity + IDR 30,000 for publication Time: 7 days returns to the office to pick up the official copy of the in the State Gazette, BNRI + IDR 550,000 for publica- Cost: No cost registration. tion in the Supplement to the State Gazette, TBNRI) Comments: The Surat Izin Usaha Perdagangan (SIUP) The statutory time limit for this procedure is 30 days. Comments: Based on Articles 9, 10, 29 and 30 of the constitutes the business license for a non–facility Although there is no official fee for this procedure, the Indonesian Company Law No. 40/ 2007, the public company engaging in trading business. The SIUP applicant usually pays around IDR 200,000. notary preparing the company deed of establishment contains details about the company activities and the must electronically file the required documents with person in charge of the company. Based on the Local Procedure 10*. Apply for the Workers the Ministry of Law and Human Rights. The process Regulation No. 21 of 2002 concerning SIUP and Mayor Social Security Program (Jamsostek will take place as follows: Regulation No. 62 of 2005 concerning the licensing Program) a. The application should be filled no later than 60 process in Pontianak, the following copies of docu- Time: 7 days ments should be attached to the application for SIUP: days from the date of the deed; Cost: No cost a. Copy of ID card; b. Within 30 days of the notice of “no objection” from Comments: According to legal provisions on workers’ the Ministry of Law and Human Rights, the original b. Passport photos in color size 3x4, (4 pcs); social security (Law No. 3/1992), it is mandatory for application and supporting documents should be c. Copy of NPWP; every company or individual employing 10 workers submitted; d. Copy of the deed of establishment; or more or generating a monthly payroll of at least c. Seven days after the fulfillment of above require- e. Copy of SITU/HO; IDR 1 million to apply for the Workers Social Security ments, the Ministry of Law and Human Rights will Program (Jamsostek). This social security program issue the legalization of the establishment of the f. Copy of the Company approval from the Ministry of covers occupational accidents, death, old age, and company; Law and Human Rights; health security. It is arranged after the company starts d. The company data (name, location, object and g. Copy of the receipt payment of PNBP. to recruit workers. purpose, capital) will be inserted in the Company The process will take place as follows: Arranging for Jamsostek is the same for all Indonesian Registry; a. The applicant fills in the application form and locations: e. The Ministry of Law and Human Rights will an- submits the complete documents to the BP2T; a. Fill out the form, which can be downloaded from nounce the establishment of the company in the b. BP2T will verify the documents; the website jamsostek.go.id or obtained from Supplement State Gazette (TBNRI) within 14 days c. The complete documents will be further processed Jamsostek Branch Offices; of the Ministry’s Approval Letter. by the licensing service sector and the technical b. Visit the Jamsostek Office to submit the filled–in By virtue of Government Regulation 38/ 2009 (enact- team. The team will conduct the field survey and form; ed on May 28, 2009 and entered into force on June the result will be discussed to determine whether c. Jamsostek official conducts data input to Jam- 3, 2009) regarding the Non Tax State Revenue for the the license can be issued or not; sostek data base; Ministry of Law and Human Rights, a new schedule of d. BP2T will print the license and will be signed by the d. The applicant receives the company membership official fees was enforced for the establishment of a Head of BP2T; certificate. domestic limited liability company (PT). e. The applicant obtains the document at the counter The membership certificate will be mailed to the Delays depend on the workload of the Ministry and on of BP2T. applicant no later than 7 days from the date of the the approved courier service used by the Ministry to application. In 30 days, the company should pay the deliver its approval to the notary. The process usually According to the national law and Mayor Regulation first insurance premium. Having received the first takes 7 days for processing and approximately 7 days No. 469 of 2011, enacted in June 2011, there is no fee payment, the Jamsostek Office will issue membership for courier service. There is improvement in quality of to apply for SIUP. certificates for each employee. courier service, by using Pos or TIKI express services now the process to deliver the documents is faster Procedure 8*. Apply for the registration A company is not obliged to enroll its employees in within 4–7 days. certificate (Tanda Daftar Perusahaan, TDP) the Jamsostek social security program if it offers an at the One Stop Shop (Badan Pelayanan independent social security program to its employees, Procedure 6. Obtain a taxpayer registration Perijinan Terpadu–BP2T) with comparable or better benefits than those offered number (NPWP) and a Value Added Tax by the Package of Basic Health Maintenance Security Time: 7 days (according to Government Regulation No. 14/1993, as (VAT) collector number (NPPKP) from the Cost: No cost amended by Government Regulation No. 76 /2007). local Tax Office Comments: To obtain a TDP certificate, the following Time: 2 days * This procedure can be completed simultaneously copies of documents should be attached: with previous procedures. Cost: No cost a. Copy of ID card; b. Passport photos in color size 3x4 (4 pcs); c. Copy of NPWP; LIST OF PROCEDURES 63

STARTING A BUSINESS The requirement to pay the non–tax state revenue receipt of application. The Tax Officer will inform the Semarang, Central Java (PNBP) fee for legal services in relation to the estab- applicant when the NPWP and NPPKP cards are ready lishment of a small company (Perseroan Terbatas– for pick up. Standard company legal form: Limited Liability Company PT) is based on Government Regulation No. 38 of The NPWP application can also be arranged on–line (LLC)– Perseroan Terbatas (PT) 2009 concerning types and tariffs on non–tax state but the applicant still needs to provide hard copies Paid–in minimum capital requirement: IDR 12,500,000 revenues replacing the previous regulation which is of documents and visit the Tax Office to pick up the = USD 1,201 regulation No. 19 of 2007. NPWP Card. Most applicants visit the Tax Office in Data as of: July 2011 person. Procedure 4. Apply to the Ministry of Law There is no official fee but in practice, unofficial fees Procedure 1. Arrange for a notary; obtain and Human Rights for approval of the deed may apply (around IDR 50,000). the standard form of the company deed; of establishment obtain clearance for the company name Time: 14 days Procedure 6. Apply for the permanent electronically from the Ministry of Law and Cost: IDR 1,580,000 (IDR 1,000,000 for validation of business trading license (Surat Izin Usaha Human Rights company as legal entity + IDR 30,000 for publication Perdagangan, SIUP) at the One Stop Shop Time: 4 days in the State Gazette, BNRI + IDR 550,000 for publica- (Badan Pelayanan Perijinan Terpadu, Cost: IDR 200,000 (name clearance and reservation) tion in the Supplement to the State Gazette, TBNRI) BPPT) Comments: The uniqueness of the company name Comments: Based on Articles 9, 10, 29 and 30 of the Time: 3 days Indonesian Company Law No. 40/ 2007, the public must be checked to ensure that it has not been used Cost: No cost by another Indonesian company, to avoid a rejection notary preparing the company deed of establishment must electronically file the required documents with Comments: The Surat Izin Usaha Perdagangan (SIUP) by the Ministry of Law and Human Rights of the constitutes the business license for a non–facility company’s deed of establishment and articles of as- the Ministry of Law and Human Rights. The process will take place as follows: company engaging in trading business. The SIUP sociation. Because the process must be done through contains details about the company activities and a. The application should be filled no later than 60 a computerized processing system, the reservation the person in charge of the company. Based on Local days from the date of the deed; and clearance must be done by a public notary (the Regulation No. 6 of 2009 regarding SIUP, the follow- new computerized system for nontax state revenue b. Within 30 days of the notice of “no objection” from ing copies of documents should be attached to the payments may be accessed only by a public notary). the Ministry of Law and Human Rights, the original application for SIUP: Upon payment and verification, the applicant receives application and supporting documents should be a. Proof of payment of PNBP; an online notification (via email) with the cleared submitted; b. An attestation of location and address of the com- company name. The reserved name will be blocked c. Seven days after the fulfillment of above require- pany’s offices made by the entrepreneurs; for 60 days. ments, the Ministry of Law and Human Rights will Based on the Government Regulation Number 38 of issue the legalization of the establishment of the c. Photo of the Director size 3x4 ; 2009 (enacted on May 28, 2009 and entered into company; d. The identity card of the company president or force on June 3, 2009) regarding the Non Tax State d. The company data (name, location, object and director. Revenue for the Ministry of Law and Human Rights, purpose, capital) will be inserted in the Company the fee for this procedure is IDR 200,000. Registry; Procedure 7*. Register with the Company Register (Department of Trade) and obtain Procedure 2. Notarize company documents e. The Ministry of Law and Human Rights will an- nounce the establishment of the company in the a registration certificate (Tanda Daftar before a notary public Supplement State Gazette (TBNRI) within 14 days Perusahaan, TDP) at the One Stop Shop Time: 1 day of the Ministry’s Approval Letter. (BPPT) Cost: IDR 3,520,000 (notary fee) By virtue of Government Regulation 38/ 2009 (enact- Time: 3 days Comments: Once the notary gets the company name ed on May 28, 2009 and entered into force on June Cost: No cost 3, 2009) regarding the Non Tax State Revenue for the approval from the Ministry of Law and Human Rights, Comments: To obtain a TDP certificate, the applica- Ministry of Law and Human Rights, a new schedule of the founders can sign the deed of establishment. tion has to be accompanied by: Standard articles of association are available at the official fees was enforced for the establishment of a notary office. domestic limited liability company (PT). a. Proof of company legal status; The notary fees associated with this procedure cover Delays depend on the workload of the Ministry and on b. Deed of establishment; the following services: name check, deed drafting the approved courier service used by the Ministry to c. Business permanent license (SIUP). and approval, and payment of non tax state revenue deliver its approval to the notary. The process usually SIUP & TDP can be submitted at the same time, but (PNBP) fees. Commonly, local notary associations set takes 7 days for processing and approximately 7 days SIUP will be processed first, and will be followed by the scale of notary fees. In practice, the fee depends for courier service. There is improvement in quality of TDP, because SIUP is pre requisite to obtain TDP. on the agreement between notary and client. courier service, by using Pos or TIKI express services The costs for accessing the Electronic Administration now the process to deliver the documents is faster Procedure 8*. Register with the Ministry of System of Legal Status (SABH), name checking, and within 4–7 days. Manpower at the local Manpower Office PNBP are counted separately. Procedure 5. Obtain a taxpayer registration Time: 3 days Procedure 3. Pay the State Treasury for number (NPWP) and a Value Added Tax Cost: No cost the non–tax state revenue (PNBP) fees for (VAT) collector number (NPPKP) from the Comments: According to Law No. 13/2003, compa- legal services at a Bank local Tax Office nies with more than 10 workers or a monthly payroll of IDR 1 million must register with the Ministry of Time: 2 days Time: 1 day Manpower. This procedure can be completed concur- Cost: No cost Cost: No cost rently with other post–registration procedures by filing Comments: This payment is for name clearances and Comments: Maximum one month from the start of the compulsory report at the local Manpower and company approval. business operations, the company must register with Transmigration (Disnakertrans) office, in accordance the Tax Office. The company must also obtain a VAT to Mayor’s Regulation– SPM. The applicant gets a Because the new computerized system for non–tax collector number (NPPKP) if it anticipates annual receipt of document submission. The office conducts state revenue payments (PNBP)—which has been revenue of more than IDR 600 million from the a verification process and issues an official copy of the implemented by the Ministry of Law and Human sales of goods and services. The company domicile registration to the applicant. The applicant returns to Rights—may be accessed only by a notary public, certificate, articles of association, and identity cards the office to pick up the official copy of the registra- payment for registering or establishing a company is of the directors must be submitted to obtain the tion. normally done through a notary. tax numbers. NPWP and NPPKP can be arranged simultaneously in one package. The applicant submits Procedure 9*. Apply for the Workers Social the required documents to the Tax Office and gets the Security Program (Jamsostek Program) Time: 3 days Cost: No cost 64 DOING BUSINESS IN INDONESIA 2012

Comments: According to legal provisions on workers’ Based on the Government Regulation Number 38 of d. The company data (name, location, object and social security (Law No. 3/1992), it is mandatory for 2009 (enacted on May 28, 2009 and entered into purpose, capital) will be inserted in the Company every company or individual employing 10 workers force on June 3, 2009) regarding the Non Tax State Registry; or more or generating a monthly payroll of at least Revenue for the Ministry of Law and Human Rights, e. The Ministry of Law and Human Rights will an- IDR 1 million to apply for the Workers Social Security the fee for this procedure is IDR 200,000. nounce the establishment of the company in the Program (Jamsostek). This social security program Supplement State Gazette (TBNRI) within 14 days covers occupational accidents, death, old age, and Procedure 2. Notarize company documents of the Ministry’s Approval Letter. health security. It is arranged after the company starts before a notary public By virtue of Government Regulation 38/ 2009 (enact- to recruit workers. Time: 1 day ed on May 28, 2009 and entered into force on June Arranging for Jamsostek is the same for all Indonesian Cost: IDR 4,520,000 (notary fee) 3, 2009) regarding the Non Tax State Revenue for the locations: Ministry of Law and Human Rights, a new schedule of Comments: Once the notary gets the company name a. Fill out the form, which can be downloaded from official fees was enforced for the establishment of a approval from the Ministry of Law and Human Rights, the website jamsostek.go.id or obtained from domestic limited liability company (PT). the founders can sign the deed of establishment. Jamsostek Branch Offices; Standard articles of association are available at the Delays depend on the workload of the Ministry and on b. Visit the Jamsostek Office to submit the filled–in notary office. the approved courier service used by the Ministry to form; deliver its approval to the notary. The process usually The notary fees associated with this procedure cover takes 7 days for processing and approximately 7 days c. Jamsostek official conducts data input to Jam- the following services: name check, deed drafting for courier service. There is improvement in quality of sostek data base; and approval, and payment of non tax state revenue courier service, by using Pos or TIKI express services d. The applicant receives the company membership (PNBP) fees. Commonly, local notary associations set now the process to deliver the documents is faster certificate. the scale of notary fees. In practice, the fee depends within 4–7 days. From submitting the application form until obtaining on the agreement between notary and client. the membership certificate it usually takes 1 day. In The costs for accessing the Electronic Administration Procedure 5. Obtain a taxpayer registration practice, if the company doesn’t pick up the certificate, System of Legal Status (SABH), name checking, and number (NPWP) and a Value Added Tax the local Jamsostek Office will mail it to the applicant PNBP are counted separately. no later than 7 days from the date of the application. (VAT) collector number (NPPKP) from the In 30 days, the company should pay the first insur- Procedure 3. Pay the State Treasury for local Tax Office ance premium. Having received the first payment, the the non–tax state revenue (PNBP) fees for Time: 3 days Jamsostek Office will issue membership certificates legal services at a Bank Cost: No cost for each employee. Time: 1 day Comments: Maximum one month from the start of A company is not obliged to enroll its employees in Cost: No cost business operations, the company must register with the Jamsostek social security program if it offers an the Tax Office. The company must also obtain a VAT independent social security program to its employees, Comments: This payment is for name clearances and collector number (NPPKP) if it anticipates annual with comparable or better benefits than those offered company approval. revenue of more than IDR 600 million from the by the Package of Basic Health Maintenance Security Because the new computerized system for non–tax sales of goods and services. The company domicile (according to Government Regulation No. 14/1993, as state revenue payments (PNBP)—which has been certificate, articles of association, and identity cards amended by Government Regulation No. 78 /2007). implemented by the Ministry of Law and Human of the directors must be submitted to obtain the Rights—may be accessed only by a notary public, * This procedure can be completed simultaneously tax numbers. NPWP and NPPKP can be arranged with previous procedures. payment for registering or establishing a company is simultaneously in one package. The applicant submits normally done through a notary. the required documents to the Tax Office and gets the STARTING A BUSINESS The requirement to pay the non–tax state revenue receipt of application. The Tax Officer will inform the (PNBP) fee for legal services in relation to the estab- applicant when the NPWP and NPPKP cards are ready Surabaya, East Java lishment of a small company (Perseroan Terbatas– for pick up. Standard company legal form: Limited Liability Company PT) is based on Government Regulation No. 38 of The NPWP application can also be arranged on–line (LLC)– Perseroan Terbatas (PT) 2009 concerning types and tariffs on non–tax state but the applicant still needs to provide hard copies revenues replacing the previous regulation which is Paid–in minimum capital requirement: IDR 12,500,000 of documents and visit the Tax Office to pick up the regulation No. 19 of 2007. NPWP Card. Most applicants visit the Tax Office in = USD 1,201 person. Data as of: July 2011 Procedure 4. Apply to the Ministry of Law In practice, unofficial fees may apply and range from Procedure 1. Arrange for a notary; obtain and Human Rights for approval of the deed IDR 50,000 to IDR 300,000 specifically for the the standard form of the company deed; of establishment technical surveyor. obtain clearance for the company name Time: 14 days Procedure 6. Apply for the permanent electronically from the Ministry of Law and Cost: IDR 1,580,000 (IDR 1,000,000 for validation of business trading license (Surat Izin Usaha Human Rights company as legal entity + IDR 30,000 for publication in the State Gazette, BNRI + IDR 550,000 for publica- Perdagangan, SIUP) at the City Agency of Time: 4 days tion in the Supplement to the State Gazette, TBNRI) Trade and Industry Affairs Cost: IDR 200,000 (name clearance and reservation) Comments: Based on Articles 9, 10, 29 and 30 of the Time: 3 days Comments: The uniqueness of the company name Indonesian Company Law No. 40/ 2007, the public Cost: No cost must be checked to ensure that it has not been used notary preparing the company deed of establishment Comments: The Surat Izin Usaha Perdagangan (SIUP) by another Indonesian company, to avoid a rejection must electronically file the required documents with constitutes the business license for a non–facility by the Ministry of Law and Human Rights of the the Ministry of Law and Human Rights. The process company engaging in trading business. The SIUP company’s deed of establishment and articles of as- will take place as follows: sociation. Because the process must be done through contains details about the company activities and the a. The application should be filled no later than 60 person in charge of the company. The following docu- a computerized processing system, the reservation days from the date of the deed; and clearance must be done by a public notary (the ments should be attached (based on local regulation new computerized system for nontax state revenue b. Within 30 days of the notice of “no objection” from No. 1 of 2010, enacted in April 2010): payments may be accessed only by a public notary). the Ministry of Law and Human Rights, the original a. Copy of ID card; application and supporting documents should be Upon payment and verification, the applicant receives b. An attestation from the applicant (stamp duty IDR submitted; an online notification (via email) with the cleared 6,000) regarding the business area; c. Seven days after the fulfillment of above require- company name. The reserved name will be blocked c. Copy of the deed of company establishment; for 60 days. ments, the Ministry of Law and Human Rights will issue the legalization of the establishment of the d. Passport photo size 3 x 4 cm (2 pieces); company; e. Copy of NPWP. LIST OF PROCEDURES 65

Based on Mayor Regulation No. 35 of 2010 and Local From submitting the application form until obtaining Procedure 3. Pay the State Treasury for regulation No.1 of 2010, SIUP for middle size company the membership certificate it usually takes between 1 the non–tax state revenue (PNBP) fees for is obtained at the Industry and Trade Office. Only and 3 days. In practice, if the company doesn’t pick up small companies (below IDR 50,000,000) can apply the certificate, the local Jamsostek Office will mail it legal services at a Bank at the One Stop Shop (Unit Pelayanan Terpadu Satu to the applicant no later than 7 days from the date of Time: 1 day Pintu, UPTSA). the application. In 30 days, the company should pay Cost: No cost the first insurance premium. Having received the first Comments: This payment is for name clearances and Procedure 7*. Obtain Registration payment, the Jamsostek Office will issue membership company approval. Because the new computerized Certificate (Tanda Daftar Perusahaan/ certificates for each employee. system for non–tax state revenue payments (PNBP)— TDP) at the City Agency of the Trade and A company is not obliged to enroll its employees in which has been implemented by the Ministry of Law Industry Affairs the Jamsostek social security program if it offers an and Human Rights—may be accessed only by a notary independent social security program to its employees, Time: 3 days public, payment for registering or establishing a com- with comparable or better benefits than those offered pany is normally done through a notary. Cost: No cost by the Package of Basic Health Maintenance Security The requirement to pay the non–tax state revenue Comments: TDP cannot be applied for at the same (according to Government Regulation No. 14/1993, as (PNBP) fee for legal services in relation to the estab- time as SIUP because SIUP is a pre–requisite for TDP. amended by Government Regulation No. 28 /2002). lishment of a small company (Perseroan Terbatas– The following documents should be attached: * This procedure can be completed simultaneously PT) is based on Government Regulation No. 38 of a. Copy of deed of establishment; with previous procedures. 2009 concerning types and tariffs on non–tax state b. Copy of ID card; revenues replacing the previous regulation which is regulation No. 19 of 2007. c. Copy of technical permit related the business; STARTING A BUSINESS d. Copy of NPWP; Surakarta, Central Java Procedure 4. Apply to the Ministry of Law e. Copy of SIUP. Standard company legal form: Limited Liability Company and Human Rights for approval of the deed Based on Mayor Regulation No. 35 of 2010 concern- (LLC)– Perseroan Terbatas (PT) of establishment ing the business services industry and the trade sector, Paid–in minimum capital requirement: IDR 12,500,000 Time: 14 days it is mandatory to register the company no later than 3 = USD 1,201 month after the business operations started. Accord- Cost: IDR 1,580,000 (IDR 1,000,000 for validation of Data as of: July 2011 ing to the Decree, TDP for a middle size company is company as legal entity + IDR 30,000 for publication in the State Gazette, BNRI + IDR 550,000 for publica- obtained from the Trade and Industry office and not Procedure 1. Arrange for a notary; obtain the One Stop Shop (UPTSA). tion in the Supplement to the State Gazette, TBNRI) the standard form of the company deed; Comments: Based on Articles 9, 10, 29 and 30 of the Procedure 8*. Register with the Ministry of obtain clearance for the company name Indonesian Company Law No. 40/ 2007, the public Manpower at the local Manpower Office electronically from the Ministry of Law and notary preparing the company deed of establishment Human Rights must electronically file the required documents with Time: 7 days Time: 4 days the Ministry of Law and Human Rights. The process Cost: No cost will take place as follows: Cost: IDR 200,000 (name clearance and reservation) Comments: According to Law No. 13/2003, compa- a. The application should be filled no later than 60 Comments: The uniqueness of the company name nies with more than 10 workers or a monthly payroll days from the date of the deed; of IDR 1 million must register with the Ministry of must be checked to ensure that it has not been used by another Indonesian company, to avoid a rejection b. Within 30 days since the notice of “no objection” Manpower. This procedure can be completed concur- from the Ministry of Law and Human Rights, the rently with other post–registration procedures by by the Ministry of Law and Human Rights of the company’s deed of establishment and articles of as- original application and supporting documents filing the compulsory report with the local office of the should be submitted; Ministry of Manpower. The applicant gets a receipt sociation. Because the process must be done through of document submission. The Manpower office a computerized processing system, the reservation c. Seven days after the fulfillment of above require- conducts a verification process and issues an official and clearance must be done by a public notary (the ments, the Ministry of Law and Human Rights will copy of the registration to the applicant. The applicant new computerized system for nontax state revenue issue the legalization of the establishment of the returns to the office to pick up the official copy of the payments may be accessed only by a public notary). company; registration. Upon payment and verification, the applicant receives d. The company data (name, location, object and an online notification (via email) with the cleared purpose, capital) will be inserted in the Company Procedure 9*. Apply for the Workers Social company name. The reserved name will be blocked Registry; Security Program (Jamsostek Program) for 60 days. e. The Ministry of Law and Human Rights will an- Based on the Government Regulation Number 38 of Time: 3 days nounce the establishment of the company in the 2009 (enacted on May 28, 2009 and entered into Supplement State Gazette (TBNRI) within 14 days Cost: No cost force on June 3, 2009) regarding the Non Tax State of the Ministry’s Approval Letter. Comments: According to legal provisions on workers’ Revenue for the Ministry of Law and Human Rights, By virtue of Government Regulation 38/ 2009 (enact- social security (Law No. 3/1992), it is mandatory for the fee for this procedure is IDR 200,000. ed on May 28, 2009 and entered into force on June every company or individual employing 10 workers 3, 2009) regarding the Non Tax State Revenue for the or more or generating a monthly payroll of at least Procedure 2. Notarize company documents Ministry of Law and Human Rights, a new schedule of IDR 1 million to apply for the Workers Social Security before a notary public official fees was enforced for the establishment of a Program (Jamsostek). This social security program Time: 1 day domestic limited liability company (PT). covers occupational accidents, death, old age, and health security. It is arranged after the company starts Cost: IDR 3,520,000 (notary fee) Delays depend on the workload of the Ministry and on to recruit workers. Comments: Once the notary gets the company name the approved courier service used by the Ministry to approval from the Ministry of Law and Human Rights, deliver its approval to the notary. The process usually Arranging for Jamsostek is the same for all Indonesian takes 7 days for processing and approximately 7 days locations: the founders can sign the deed of establishment. Standard articles of association are available at the for courier service. There is improvement in quality of a. Fill out the form, which can be downloaded from notary office. courier service, by using Pos or TIKI express services the website jamsostek.go.id or obtained from now the process to deliver the documents is faster The notary fees associated with this procedure cover Jamsostek Branch Offices; within 4–7 days. the following services: name check, deed drafting b. Visit the Jamsostek Office to submit the filled–in and approval, and payment of non tax state revenue Procedure 5. Obtain a taxpayer registration form; (PNBP) fees. Commonly, local notary associations set c. Jamsostek official conducts data input to Jam- the scale of notary fees. In practice, the fee depends number (NPWP) and a Value Added Tax sostek data base; on the agreement between notary and client. (VAT) collector number (NPPKP) from the d. The applicant receives the company membership The costs for accessing the Electronic Administration local Tax Office certificate. System of Legal Status (SABH), name checking, and Time: 3 days PNBP are counted separately. Cost: No cost 66 DOING BUSINESS IN INDONESIA 2012

Comments: Maximum one month from the start of filing the compulsory report with the local office of the Comments: The uniqueness of the company name business operations, the company must register with Ministry of Manpower. The applicant gets a receipt must be checked to ensure that it has not been used the Tax Office. The company must also obtain a VAT of document submission. The Manpower office by another Indonesian company, to avoid a rejection collector number (NPPKP) if it anticipates annual conducts a verification process and issues an official by the Ministry of Law and Human Rights of the revenue of more than IDR 600 million from the copy of the registration to the applicant. The applicant company’s deed of establishment and articles of as- sales of goods and services. The company domicile returns to the office to pick up the official copy of the sociation. Because the process must be done through certificate, articles of association, and identity cards registration. a computerized processing system, the reservation of the directors must be submitted to obtain the Although there is no official fee, an unofficial adminis- and clearance must be done by a public notary (the tax numbers. NPWP and NPPKP can be arranged trative fee may be charged, which is usually between new computerized system for nontax state revenue simultaneously in one package. The applicant submits IDR 50,000 and IDR 100,000. payments may be accessed only by a public notary). the required documents to the Tax Office and gets the Upon payment and verification, the applicant receives receipt of application. The Tax Officer will inform the Procedure 8*. Apply for the Workers Social an online notification (via email) with the cleared applicant when the NPWP and NPPKP cards are ready Security Program (Jamsostek Program) company name. The reserved name will be blocked for pick up. for 60 days. Time: 3 days The NPWP application can also be arranged on–line Based on the Government Regulation Number 38 of but the applicant still needs to provide hard copies Cost: No cost 2009 (enacted on May 28, 2009 and entered into of documents and visit the Tax Office to pick up the Comments: According to legal provisions on workers’ force on June 3, 2009) regarding the Non Tax State NPWP Card. Most applicants visit the Tax Office in social security (Law No. 3/1992), it is mandatory for Revenue for the Ministry of Law and Human Rights, person. every company or individual employing 10 workers the fee for this procedure is IDR 200,000. or more or generating a monthly payroll of at least Procedure 6. Apply for the nuisance permit IDR 1 million to apply for the Workers Social Security Procedure 2. Notarize company documents (Hinder Ordinantie– HO), the permanent Program (Jamsostek). This social security program before a notary public covers occupational accidents, death, old age, and business trading license (Surat Izin Usaha Time: 1 day Perdagangan– SIUP), and the registration health security. It is arranged after the company starts to recruit workers. Cost: IDR 3,020,000 (notary fee) certificate (Tanda Daftar Perusahaan– Comments: Once the notary gets the company name TDP) at the One Stop Shop (KPPT) Arranging for Jamsostek is the same for all Indonesian locations: approval from the Ministry of Law and Human Rights, Time: 6 days the founders can sign the deed of establishment. a. Fill out the form, which can be downloaded from Standard articles of association are available at the Cost: IDR 200,000 (for HO) the website jamsostek.go.id or obtained from notary office. Comments: HO, SIUP and TDP can be arranged as Jamsostek Branch Offices; The notary fees associated with this procedure cover a package, at the same time, with the same Officer, b. Visit the Jamsostek Office to submit the filled–in the following services: name check, deed drafting at the One Stop Shop (KPPT). The applicant submits form; different application forms, along with the required and approval, and payment of non tax state revenue c. Jamsostek official conducts data input to Jam- documents, gets a confirmation receipt, and pays the (PNBP) fees. Commonly, local notary associations set sostek data base; official user charges. After verification, the licenses are the scale of notary fees. In practice, the fee depends issued. A provincial regulation establishes a 7 days’ d. The applicant receives the company membership on the agreement between notary and client. time limit for issuance of licenses. certificate. The costs for accessing the Electronic Administration 1. HO: the applicant is required to get a statement of From submitting the application form until obtaining System of Legal Status (SABH), name checking, and non objection from the neighbors. After the submis- the membership certificate it usually takes between 1 PNBP are counted separately. sion of all required documents, the One Stop Shop and 3 days. In practice, if the company doesn’t pick up (OSS) Officer verifies the documents. OSS coordinates the certificate, the local Jamsostek Office will mail it Procedure 3. Pay the State Treasury for internally with the technical agency (Planning Agency) to the applicant no later than 7 days from the date of the non–tax state revenue (PNBP) fees for to conduct a field inspection to verify the company ad- the application. In 30 days, the company should pay legal services at a Bank the first insurance premium. Having received the first dress. The inspection usually happens 2 days after the Time: 1 day receipt of the application. The entrepreneur presence payment, the Jamsostek Office will issue membership during the inspection is not needed. The inspection certificates for each employee. Cost: No cost team will recommend to OSS management whether A company is not obliged to enroll its employees in Comments: This payment is for name clearances and to approve or reject the application. The official cost the Jamsostek social security program if it offers an company approval. is calculated based on several factors such as: office independent social security program to its employees, Because the new computerized system for non–tax space, company scale, and business location. with comparable or better benefits than those offered state revenue payments (PNBP)—which has been 2. The Surat Izin Usaha Perdagangan (SIUP) consti- by the Package of Basic Health Maintenance Security implemented by the Ministry of Law and Human tutes the business license for a non–facility company (according to Government Regulation No. 14/1993, as Rights—may be accessed only by a notary public, engaging in trading business. The SIUP contains amended by Government Regulation No. 28 /2002). payment for registering or establishing a company is normally done through a notary. details about the company activities and the person in * This procedure can be completed simultaneously charge of the company. The following copies of docu- with previous procedures. The requirement to pay the non–tax state revenue ments should be attached to the application for SIUP: (PNBP) fee for legal services in relation to the estab- a. The articles of association; STARTING A BUSINESS lishment of a small company (Perseroan Terbatas– PT) is based on Government Regulation No. 38 of b. An attestation of location and address of the com- Yogyakarta, DI Yogyakarta pany’s offices; 2009 concerning types and tariffs on non–tax state Standard company legal form: Limited Liability Company revenues replacing the previous regulation which is c. The tax registration number; (LLC)– Perseroan Terbatas (PT) regulation No. 19 of 2007. d. The identity card of the company president or Paid–in minimum capital requirement: IDR 12,500,000 director. Procedure 4. Apply to the Ministry of Law = USD 1,201 Based on the Letter of Secretary of Surakarta City No. and Human Rights for approval of the deed 974/364, there is no fee for obtaining SIUP and TDP. Data as of: July 2011 of establishment Procedure 1. Arrange for a notary; obtain Time: 14 days Procedure 7*. Register with the Ministry of the standard form of the company deed; Manpower at the local Manpower Office Cost: IDR 1,580,000 (IDR 1,000,000 for validation of obtain clearance for the company name company as legal entity + IDR 30,000 for publication Time: 3 days electronically from the Ministry of Law and in the State Gazette, BNRI + IDR 550,000 for publica- Cost: No cost Human Rights tion in the Supplement to the State Gazette, TBNRI) Comments: According to Law No. 13/2003, compa- Time: 4 days nies with more than 10 workers or a monthly payroll Cost: IDR 200,000 (name clearance and reservation) of IDR 1 million must register with the Ministry of Manpower. This procedure can be completed concur- rently with other post–registration procedures by LIST OF PROCEDURES 67

Comments: Based on Articles 9, 10, 29 and 30 of the Comments: The applications for HO, SIUP and TDP a. Large: 1.2; Indonesian Company Law No. 40/ 2007, the public can be submitted at the same time, at the same win- b. Medium: 1.0; notary preparing the company deed of establishment dow, with the same Officer at the Licensing Agency c. Minor: 0.8. must electronically file the required documents with (One Stop Shop). To calculate the cost for HO: the Ministry of Law and Human Rights. The process 1. The Surat Izin Usaha Perdagangan (SIUP) consti- will take place as follows: Business space X Tariff X ((Environmental Index X tutes the business license for a non–facility company weighted environmental index 0.3 + Location Index a. The application should be filled no later than 60 engaging in trading business. The SIUP contains X weighted location index 0.2 + Interference Index X days from the date of the deed; details about the company activities and the person in weighted interference index 0.5) = b. Within 30 days of the notice of “no objection” from charge of the company. The following copies of docu- ments should be attached to the application for SIUP: 100 X 2000 X (0.9 (office space) x 0.3 + 0.8 (arterial the Ministry of Law and Human Rights, the original road) x 0.2 + 0.8 (Minor) x 0.5)= IDR 166,000 application and supporting documents should be a. Copy of ID card; submitted; b. Copy of the nuisance permit (HO); Procedure 7*. Register with the Ministry of c. Seven days after the fulfillment of above require- c. The balance sheet of the company; Manpower at the local Manpower Office ments, the Ministry of Law and Human Rights will d. Copy of Taxpayer number (NPWP); issue the legalization of the establishment of the Time: 6 days company; e. Copy of the deed of establishment; Cost: No cost d. The company data (name, location, object and f. Copy of technical license (for TDP); Comments: According to Law No. 13/2003, compa- purpose, capital) will be inserted in the Company g. Power of attorney must be enclosed if the applicant nies with more than 10 workers or a monthly payroll Registry; cannot apply on his own. of IDR 1 million must register with the Ministry of e. The Ministry of Law and Human Rights will an- According to the National Law No. 28 of 2009 and as Manpower. This procedure can be completed concur- nounce the establishment of the company in the per Local Regulation 5/2009 regarding “User Charges rently with other post–registration procedures by Supplement State Gazette (TBNRI) within 14 days for SIUP/ TDP”, there is no official fee to obtain SIUP filing the compulsory report with the local office of the of the Ministry’s Approval Letter. and TDP. An official charge is implemented only for Ministry of Manpower. The applicant gets a receipt extension of SIUP and TDP. of document submission. The Manpower office By virtue of Government Regulation 38/ 2009 (enact- conducts a verification process and issues an official ed on May 28, 2009 and entered into force on June 2. As per local Regulation No. 2 of 2005, HO is copy of the registration to the applicant. The applicant 3, 2009) regarding the Non Tax State Revenue for the required for any type of business except for companies returns to the office to pick up the official copy of the Ministry of Law and Human Rights, a new schedule of located in special designated areas such as traditional registration. official fees was enforced for the establishment of a markets. Based on Local Regulation 7/1999, concern- domestic limited liability company (PT). ing levy of HO, the component costs for HO are: As per new Local Regulation, the official time to obtain the registration in Yogyakarta is 6 days. Delays depend on the workload of the Ministry and on a. Environmental index; the approved courier service used by the Ministry to b. Location index; Procedure 8*. Apply for the Workers Social deliver its approval to the notary. The process usually c. Index on the size of disturbance; Security Program (Jamsostek Program) takes 7 days for processing and approximately 7 days for courier service. There is improvement in quality of d. The businesses space area. Time: 3 days courier service, by using Pos or TIKI express services Based on Decree of Mayor No. 37 of 2011, enacted Cost: No cost now the process to deliver the documents is faster on 12th of May 2011, the nuisance permit (HO) can Comments: According to legal provisions on workers’ within 4–7 days. be arranged as a package with SIUP and TDP. The social security (Law No. 3/1992), it is mandatory for following copies of documents should be attached to every company or individual employing 10 workers Procedure 5. Obtain a taxpayer registration the application for HO: or more or generating a monthly payroll of at least number (NPWP) and a Value Added Tax a. Copy of ID card; IDR 1 million to apply for the Workers Social Security (VAT) collector number (NPPKP) from the b. Map of the business space and business location; Program (Jamsostek). This social security program local Tax Office c. Field survey (exception for the small nuisance); covers occupational accidents, death, old age, and health security. It is arranged after the company starts Time: 2 days d. Copy of the deed of establishment; to recruit workers. Cost: No cost e. A letter of no objection from the owner of the build- Arranging for Jamsostek is the same for all Indonesian ing or the leasing agreement if the company leases Comments: Maximum one month from the start of locations: business operations, the company must register with the building. a. Fill out the form, which can be downloaded from the Tax Office. The company must also obtain a VAT The schedule of fess for the business space tariff is: collector number (NPPKP) if it anticipates annual the website jamsostek.go.id or obtained from 1. Businesses space up to 100 square meters = IDR Jamsostek Branch Offices; revenue of more than IDR 600 million from the 2,000/ square meter; sales of goods and services. The company domicile b. Visit the Jamsostek Office to submit the filled–in certificate, articles of association, and identity cards 2. Businesses space more than 100 square meters = form; imposed tariffs as stated above, plus multiplication of the directors must be submitted to obtain the c. Jamsostek official conducts data input to Jam- of the tariff over the rest of the business surface, as tax numbers. NPWP and NPPKP can be arranged sostek data base; follows: simultaneously in one package. The applicant submits d. The applicant receives the company membership a. above 100 square meters and up to 500 square the required documents to the Tax Office and gets the certificate. receipt of application. The Tax Officer will inform the meters = IDR 1,500/ square meter; From submitting the application form until obtaining applicant when the NPWP and NPPKP cards are ready b. above 500 square meters and up to 1,000 square the membership certificate it usually takes between 1 for pick up. meters = IDR 1,000/ square meter; and 3 days. In practice, if the company doesn’t pick up c. above 1000 square meters = IDR 500/ square The NPWP application can also be arranged on–line the certificate, the local Jamsostek Office will mail it meter. but the applicant still needs to provide hard copies to the applicant no later than 7 days from the date of of documents and visit the Tax Office to pick up the The schedule of fees for the three indexes is: the application. In 30 days, the company should pay NPWP Card. Most applicants visit the Tax Office in A. Environmental Index (weight 30%): the first insurance premium. Having received the first person. a. Special area: 1.2; payment, the Jamsostek Office will issue membership b. Education area: 1.1; certificates for each employee. Procedure 6. Apply for the nuisance permit c. Settlement area: 1.0; A company is not obliged to enroll its employees in (Hinder Ordinantie, HO), the permanent d. Office area: 0.9; the Jamsostek social security program if it offers an business trading license (Surat Izin Usaha e. Trade/Tourism area: 0.8; independent social security program to its employees, Perdagangan, SIUP), and the registration B. Location Index (weight 20%): with comparable or better benefits than those offered certificate (Tanda Daftar Perusahaan, TDP) by the Package of Basic Health Maintenance Security a. Street Environment: 1.2; at the Licensing Agency (One Stop Shop) (according to Government Regulation No. 14/1993, as b. Local Road: 1.0; amended by Government Regulation No. 28 /2002). Time: 5 days c. Collector Road: 0.9; Cost: IDR 166,000 (for HO– see comments) d. Arterial Road: 0.8; * This procedure can be completed simultaneously with previous procedures. C. Interference Index (weight 50%): 68 DOING BUSINESS IN INDONESIA 2012

d. Design drawings in 1:50, 1:100, and 1:200 scale DEALING WITH CONSTRUCTION PERMITS LIST OF PROCEDURES (which include: site plan, side projection, cut Banda Aceh, Aceh Province projection, foundation drawings, foundation details, DEALING WITH CONSTRUCTION roof drawings, and landscape drawings). Warehouse value: IDR 4,552,100,000 = USD 437,498 PERMITS The one–stop shop reviews the documents submitted Data as of: July 2011 and distributes them to the other agencies involved. Procedure 1. Verify land ownership with the More specifically: the City Planning Agency registers Balikpapan, East Kalimantan the application and evaluates the documents; the Head of the Village (Geuchik) Warehouse value: IDR 4,552,100,000 = USD 437,498 Sub–Agency of Construction Control assesses the Time: 1 day Data as of: July 2011 structure, recommends the building ratio to land (in Cost: No cost size and number of storeys), draws the voids, and, if Comments: The tsunami of 2004 has modified the Procedure 1. Request Principal Permit (Izin necessary, carries out an additional inspection; the landscape making it impossible to determine the bor- Prinsip) from Balikpapan one-stop shop Sub–Agency of Zoning reviews the location clearance, ders of each property. Because of this, in order to be (Badan Penanaman Modal dan Pelayanan makes the landscaping, plots the map and prepares its able to obtain the Construction Permit (IMB), BuildCo Perizinan Terpadu / BPMP2T) recommendation. Once the process is completed the needs to verify the ownership of the plot of land with agencies send their feedback to Balikpapan one–stop the Head of the Village (Geuchik). Time: 1 day shop (BPMPPT) that signs the permit. Under the Cost: No cost coordination of the one–stop shop, the City Planning In order to verify the ownership of the plot, BuildCo Agency calculates the fees that have to be paid in has to submit the following documents to the Head of Comments: In order to obtain the Principal Permit, the Village: BuildCo must submit the following documents to the order to obtain the permit. BuildCo pays the fees and Balikpapan one–stop shop: collects the permit directly at the Balikpapan one–stop a. Photocopy of the Land Ownership Certificate; shop. a. Application form; b. Photocopy of the applicant’s identity card; b. Project proposal; c. Building Permit application form, obtained from the Procedure 5. Register with Local Tax Office Banda Aceh one–stop shop (KPPTSP). c. Copy of land certificate; (Kantor Pajak Pratama, KPP) After verifying that the land belongs to BuildCo, the d. Copy of identity card of directors and company Time: 11 days Head of the Village signs the application for the build- establishment deeds; Cost: No cost ing permit and returns it to BuildCo. e. Copy of Taxpayer registration number (NPWP). Comments: The registration is done by completing Procedure 2. Verify land ownership with Procedure 2. Receive inspection from the Tax Object Notification Letter (SPOP) available in certain government offices. The SPOP must be signed the Head of the Sub–district (Camat) Balikpapan one–stop shop (Badan by the taxpayer and submitted to the Local Tax Office Time: 1 day Penanaman Modal dan Perijinan Terpadu) in the area where the warehouse is to be built, no later Cost: No cost Time: 1 day than 30 days after receipt of the SPOP. The following Comments: The tsunami of 2004 has modified the documents should be included: Cost: No cost landscape making it impossible to determine the bor- Comments: This inspection is conducted jointly by a. The latest Payable Tax Notification Letter; ders of each property. Because of this, in order to be several agencies. Such agencies include: One–stop b. Copy of the land certificate; able to obtain the construction permit (IMB), BuildCo shop (BPMP2T), local City Planning (BAPPEDA), c. Copy of the identity card of the land title holder or needs to verify the ownership of the plot of land with local Environmental Agency, City Planning Agency, articles of association if the land is registered under the Head of the Sub–district (Camat). local Civil Works Agency, local Transportation Office a company name. In order to verify the ownership of the plot, BuildCo (Dinas perhubungan), local Land Office (BPN), Fire has to submit the following documents to the Head of Agency, Public Health Agency and Sub–district staff Procedure 6. Register the warehouse the Sub–district: and Head of Village staff. with Balikpapan one–stop shop (Badan a. Photocopy of the Land Ownership Certificate; Penanaman Modal dan Perizinan Terpadu) Procedure 3. Obtain Principal Permit b. Photocopy of the applicant’s identity Card; from Balikpapan one–stop shop (Badan Time: 9 days c. Building Permit application form, obtained from the Penanaman Modal dan Perizinan Terpadu) Cost: No cost Banda Aceh one–stop shop (KPPTSP). Time: 15 days Comments: In order to register the warehouse, After verifying that the land belongs to BuildCo, the BuildCo must submit the following documents to the Head of the Sub–district signs the application for the Cost: No cost Balikpapan one–stop shop: building permit and returns it to BuildCo. Comments: After the inspection, the inspecting a. Permanent Business Trading License (SUIP); team prepares a report with recommendations for Procedure 3. Request Building Construction b. Company Registration (TDP); approval and submits it to the one–stop shop. The Permit (IMB) from Banda Aceh one–stop one–stop shop receives the report and prepares the c. Warehouse Inventory Report, prepared by BuildCo. shop (KPPTSP) permit. After the reports are ready, BuildCo receives a notification letter/call with an invitation to visit the Procedure 7*. Request and connect to Time: 1 day one–stop shop to collect the permit. water and sewage with PDAM Cost: No cost Time: 7 days Comments: In order to obtain the Building Construc- Procedure 4. Obtain Building Construction Cost: IDR 7,000,000 tion Permit, BuildCo must submit the following docu- Permit (IMB) from Balikpapan one–stop ments to Banda Aceh one–stop shop: shop (Badan Penanaman Modal dan Comments: The company notifies the Industrial Man- ager that the warehouse is ready for utility hook–ups. a. Completed application form (obtained from Perizinan Terpadu) KPPTSP), signed by Head of the Village (Geuchik) Time: 15 days Procedure 8*. Request and connect and the Head of the Sub–district (Camat); Cost: IDR 9,363,057 (Floor size coefficient x building to telephone with PT Telekomunikasi b. Photocopy of the applicant’s identity card; storey coefficient x building usage coefficient x build- Indonesia Tbk (Telkom) c. Photocopy of Land Ownership Certificate; ing construction coefficient x base valuation) Time: 4 days d. Statement indicating that the warehouse owner Comments: In order to apply for the Building Con- might give up the ownership of part of the land if it Cost: IDR 500,000 struction Permit, BuildCo must submit an applica- overlaps with road expansion plans (specifically for tion to the one–stop shop along with the following Comments: The company notifies the Industrial Man- commercial buildings); ager that the warehouse is ready for utility hook–ups. documents: e. Site plan of the building and technical specifica- a. Principal permit, obtained from Balikpapan one– * This procedure can be completed simultaneously tions, prepared by BuildCo’s architect. stop shop; with previous procedures b. Photocopy of identification card of the applicant; c. Structural calculations; LIST OF PROCEDURES 69

After the Banda Aceh one–stop shop receives all the Procedure 8. Register with Local Tax Office k. Authorization letter (if applicant is renting the documents required, the application is registered (Kantor Pajak Pratama, KPP) property); and forwarded to the Civil Works Agency. The Civil l. License to use the land (IPPT, Izin Prinsip Peruntu- Time: 4 days Works Agency coordinates with the local Office of the kan Tanah: required if the project is not in line with National Land Board for the location clearances and Cost: No cost the City masterplan). carries out the necessary internal verifications. Comments: The registration is done by completing Once all documents have been submitted to the Band- the Tax Object Notification Letter (SPOP) available in ung one–stop shop (BPMPPT), the officer in charge Procedure 4. Receive inspection by Civil certain government offices. The SPOP must be signed checks completeness of the documents and registers Works Agency by the taxpayer and submitted to the Local Tax Office the application. Time: 1 day in the area where the warehouse is to be built, no later than 30 days after receipt of the SPOP. The following Cost: No cost Procedure 2. Receive inspection documents should be included: Comments: A technical team composed by represen- from Zoning (Dinas Tata Ruang) and a. The latest Payable Tax Notification Letter; tatives of the different agencies (Transportation Agen- Construction Control Agency (Cipta Karya) cy, Banda Aceh one–stop shop, Local Environment b. Copy of the land certificate; Time: 1 day Control Agency, Civil Service) lead by a representative c. Copy of the identity card of the land title holder or Cost: No cost of the Civil Works Agency carries out an inspection on articles of association if the land is registered under the future building site. The inspection aims at evalu- a company name. Comments: Officers from the Zoning and Construc- ating the area mentioned in the application, measuring tion Control Agencies (Dinas Tata Ruang dan Cipta the future building site and confirming its conditions. Procedure 9*. Request and connect to Karya, Distarcip) inspect the site in order to gather the necessary data, such as, for instance the location of The presence of BuildCo representatives is necessary water and sewage with PDAM during the inspection. the border. Representatives of BuildCo must be pres- Time: 7 days ent during the inspection in order to show the borders Procedure 5. Obtain Building Construction Cost: IDR 1,500,000 of the plot and sign the inspection minutes. Permit (IMB) from Banda Aceh one–stop Comments: The company notifies the Industrial Man- ager that the warehouse is ready for utility hook–ups. Procedure 3. Make payment for Building shop (KPPTSP) Construction Permit at Bank Jabar Banten Time: 22 days Procedure 10*. Request and connect (BJB) Cost: IDR 15,851,063 [(tariff for first floor: IDR 9,750 to telephone with PT Telekomunikasi Time: 1 day multiplied by area of first floor) + (tariff for second Indonesia Tbk (Telkom) floor: IDR 14,625, multiplied by area of second floor) Cost: No cost Time: 5 days Comments: After the inspection has taken place, the Comments: BuildCo carries out the payment after Agency personnel evaluate the application, confirm Cost: IDR 500,000 receiving a notification by Bandung one–stop shop its adherence to the zoning requirements and existing Comments: The company notifies the Industrial Man- (BPPT). After paying the relevant fees, BuildCo or planned roads, and prepare Advis Planning and ager that the warehouse is ready for utility hook–ups. receives a payment receipt that must be submitted at Border Clearance Statement (KSB). If the application Bandung one–stop shop (BPPT) in order to obtain the * This procedure can be completed simultaneously Building Construction Permit. is approved, the Civil Works Agency forwards the with previous procedures Advis Planning and Border Clearance Statement to The relevant laws that apply to this procedure are the the Banda Aceh one–stop shop. Based on the Advis following: DEALING WITH CONSTRUCTION PERMITS Planning and the Border Clearance Statement, and a. Local regulation No. 14/1998 on building permits; considering the size and type of building, the Banda Bandung, West Java b. Local regulation No. 24/1998 on construction Aceh one–stop shop calculates the fees to be paid for Warehouse value: IDR 4,552,100,000 = USD 437,498 permit retribution; the building construction permit. After the fees have Data as of: July 2011 c. Mayor Decree No. 640/Kep.554–Huk/2004 on been paid by BuildCo, the Banda Aceh Mayor’s Office building base tariff. signs the building permit. The permit is filed by the Procedure 1. Request Building Construction Banda Aceh one–stop shop and collected by BuildCo. Permit (IMB) from the Bandung one–stop Procedure 4. Obtain Building Construction Together with the Building Construction Permit, shop (Badan Pelayanan Perijinan Terpadu, Permit (IMB) from the Bandung one–stop BuildCo receives the following documents: BPPT) shop (Badan Pelayanan Perijinan Terpadu, a. Advis Planning and Border Clearance Statement; Time: 1 day BPPT) b. Spatial approval; Cost: No cost Time: 16 days c. Road clearances. Comments: In order to obtain the Building Construc- Cost: IDR 15,594,194 (building size x base tariff of Procedure 6. Obtain official report on tion Permit (IMB), BuildCo must submit the following 1,100,000 x coefficient 1.09 x 1%) documents to the Bandung one–stop shop: completion of construction and compliance Comments: After paying the relevant fees at the Bank with building permit from City Works a. Application form, duly filled; Jabar Banten (BJB), BuildCo submits the receipt of b. Photocopy of land ownership certificate; payment to the Bandung one–stop shop (BPPT) and Agency (Dinas Tata Kota, DTK) obtains the Building Construction Permit (IMB). The c. Copy of company articles of association and estab- Time: 7 days statutory time for the Bandung one–stop shop to issue lishment deed; Cost: No cost the Building Construction Permit is 12 working days. d. Technical drawing of the warehouse with scale 1 : Procedure 7. Obtain warehouse license 100 (4 copies); Procedure 5. Register with Local Tax Office with local Industry and Trade Agency e. Technical drawing and steel construction calcula- (Kantor Pajak Pratama, KPP) tion if the warehouse is more than 1 floor (2 cop- (Disperindag) Time: 11 days ies); Cost: No cost Time: 1 day f. Technical plan/drawing of electrical, clean water, Cost: No cost and sewerage system; Comments: The registration is done by completing the Tax Object Notification Letter (SPOP) available in Comments: In order to obtain the warehouse license g. Photocopy of identity card of the applicant; certain government offices. The SPOP must be signed from the local Industry and Trade Agency, BuildCo h. Property tax receipt of the latest year; needs to submit the following documents to the local by the taxpayer and submitted to the Local Tax Office Industry and Trade Agency: i. Supporting documents: Permanent Business Trad- in the area where the warehouse is to be built, no later ing License (SIUP), Company Registration (TDP), than 30 days after receipt of the SPOP. The following a. Building Construction Permit (IMB); and Construction Business License (SIUJK). documents should be included: b. Official report on completion of construction and Depending on the case, some additional documents a. The latest Payable Tax Notification Letter; compliance with the building permit. may be required: b. Copy of the land certificate; j. Statement/agreement letter for land use (if ap- plicant is not the owner of the land); 70 DOING BUSINESS IN INDONESIA 2012

c. Copy of the identity card of the land title holder or Comments: The company notifies the Industrial Man- d. Batam Regional Regulation No. 2/2004, Attach- articles of association if the land is registered under ager that the warehouse is ready for utility hook–ups. ment 2 Regarding the Batam Land Area Manage- a company name. ment Planning, Rencana tata Ruang Wilayah Procedure 10*. Request and connect (RTRW); Procedure 6. Request the registration of to telephone with PT Telekomunikasi e. Decree of Chairman of Batam Industrial Develop- the warehouse with Bandung one–stop Indonesia Tbk (Telkom) ment Authority No. 078/Ren/Kpt8/W1994; shop (Badan Pelayanan Perijinan Terpadu, Time: 8 days f. Decree of Chairman of Batam Industrial Develop- BPPT) Cost: IDR 720,000 ment Authority No. 078/Ren/Ap–Kpts/III/1992. Time: 1 day Comments: The company notifies the Industrial Man- Procedure 2. Obtain Advis planning from Cost: No cost ager that the warehouse is ready for utility hook–ups. City Planning Agency (Dinas Tata Kota) Comments: In order to register the warehouse, * This procedure can be completed simultaneously BuildCo must submit the following documents to the Time: 2 days with previous procedures Bandung one–stop shop (BPMPPT): Cost: No cost

a. Application form, duly filled; DEALING WITH CONSTRUCTION PERMITS Comments: In order to obtain the Advis Planning, b. Site location map of the warehouse, prepared by BuildCo must submit the following documents to the BuildCo; Batam, Riau Islands City Planning Agency (Dinas Tata Kota): c. Photocopy of applicant identity card; Warehouse value: IDR 4,552,100,000 = USD 437,498 a. Application letter and application form, duly filled; d. Trading license (SIUP); Data as of: July 2011 b. Copy of company establishment deeds; e. Company registration license (TDP); Procedure 1. Obtain City Planning c. Copy of Tax Registration (NPWP); f. Tax Registration Number of Applicant/Company Chart (Fatwa Planologi) from Batam d. Copy of identity card of BuildCo’s directors; (NPWP); Industrial Development Authority (Badan e. Copy of domicile letter, in possession of BuildCo g. Nuisance Permit (HO); Pengusahaan Batam, BP Batam) since it started its business; h. Copy of designer’s license. Time: 7 days f. Copy of Land Allocation Permit; The statutory time for this procedure to be carried out Cost: IDR 3,000,000 g. Two recent photographs of BuildCo director(s)– 3x4cm. by the Bandung one–stop shop is 10 working days. Comments: In order to obtain the City Planning Chart Usually, however, the procedure is carried out in a (Fatwa Planologi), BuildCo must submit the following shorter amount of time. Procedure 3. Request Building Construction documents to the Batam Industrial Development Permit (IMB) from Batam one–stop shop This procedure is based on: Authority: a. Bandung Local Regulation No. 12/2002, regarding a. Proof of identity: ID card, company establishment Time: 1 day regulations and procedures for issuing Industrial deeds, Trading Business Permit (SIUP), Company Cost: No cost Business Permit (Ijin Usaha Industri), Starting Registration (TDP), Taxpayer registration number Comments: In order to obtain the building construc- Business Permit (SIUP), Registering Business and (NPWP); tion permit, BuildCo must submit the following docu- Registering Warehouses. b. Copy of Location Allocation Drawings (Penetapan ments to the Batam one–stop shop: b. Bandung Local Regulation No. 13/2002 regarding Lokasi), obtained when the land was allocated to 1. Application form, duly filled; retribution charges on Industrial Business Permit BuildCo; 2. Administrative requirements (3 copies): (Ijin Usaha Industri), Starting Business Permit c. Copy of Commercial Invoice of Land Lease (Uang (SIUP), Registering Business and Registering Ware- a. Copy of applicant identity card and company estab- Wajib Tahunan Otorita), obtained when the land lishment deed; houses. was allocated to BuildCo; b. Starting Business License (SIUP), Company Procedure 7. Receive inspection from d. Copy of Letter of Decree (Surat Keputusan), Registration (TDP) and Tax registration number Bandung one–stop shop (Badan Pelayanan obtained when the land was allocated to BuildCo; (NPWP); Perijinan Terpadu, BPPT) e. Copy of Letter of Agreement (Surat Perjanjian), c. Copy of annual authority preemie charge (Uang obtained when the land was allocated to BuildCo; Time: 1 day Wajib Tahunan Otorita, UWTO), obtained when f. Copy of Principal Permit, obtained when the land the land was allocated to BuildCo; Cost: No cost was allocated to BuildCo; d. Copy of Land Allocation Permit (Penetapan Alokasi Comments: After BuildCo submits the application, g. Copy of Designer License (SIBP); Lahan, PL), obtained when the land was allocated the technical team from the Bandung one–stop shop h. Orientation plan, prepared by BuildCo’s architect; to BuildCo; conducts the inspection. The presence of Buildco representatives is required as they have to sign the i. Site plan, prepared by BuildCo’s architect; e. Copy the Letter Agreement (Surat Perjanjian, SPJ), minutes of the inspection. j. Drainage plan, prepared by BuildCo’s architect; obtained when the land was allocated to BuildCo; k. Utility plan, prepared by BuildCo’s architect; f. Copy of Letter of and Decree (Surat Keputusan, Procedure 8. Register the warehouse with SKEP), obtained when the land was allocated to l. City Planning Chart with information about number BuildCo; Bandung one–stop shop (Badan Pelayanan of floors and building coefficient, prepared by Perijinan Terpadu, BPPT) BuildCo’s architect. g. Copy of City Planning Chart (Fatwa Planologi); Time: 8 days The City Planning Chart contains information (e.g. h. BuildCo’s statement that the waste produced in the warehouse is not dangerous or toxic; Cost: IDR 2,025,000 [First Component 1: construc- coordinates and borders of the plot) and provides tion size (first 100m2) x location index (3) x base technical requirements (e.g. allowed building perim- i. Copy of Designer License (SIBP); tariff (IDR 750)] + [Second Component: construction eter and size, green areas, drainage system design) 3. Technical Requirements (3 copies): (remaining 1200 m2) x location index (3) x base tariff that are necessary for planning the construction of the a. Architectural drawings; warehouse. (IDR 500)] b. Structure drawings; The procedure is regulated by the following laws: Comments: After receiving the inspection, BuildCo c. Shop drawings; obtains the warehouse registration document from the a. Decree of Ministry of Home Affairs No. 43/1977 d. Structure calculations; Bandung one–stop shop (Badan Pelayanan Perijinan regarding management and usage of Land in the Terpadu, BPPT). Batam Industrial Area; e. Utility drawings. b. Decree of Ministry of Public Work No. 378/ After the application has been submitted to the Batam Procedure 9*. Request and connect to Kpts/1987, attachment No. 22 on Housing Plan one–stop shop, the files are forwarded to the City water and sewage with PDAM Location; Planning Office. The City Planning Office verifies with the local Planning Agency (Bappedo) if the project Time: 11 days c. Decree of Ministry of Industry No. 291/M/ suits the masterplan of Batam and carries out an Sk/10/1989, Attachment No. 1 regarding Technical Cost: IDR 2,202,000 (IDR 2,190,000 for connection inspection of the future construction site in order to Standards of Industrial Estate; cost for category 3B + IDR 12,000 for Stamp Duties) evaluate the information contained in the application. LIST OF PROCEDURES 71

After the site has been approved by the City Planning DEALING WITH CONSTRUCTION PERMITS Comments: During the construction process, when Agency, BuildCo is invited to pay the fees and collect Denpasar, Bali the ground work is finished, the applicant must report the permit at the Batam one–stop shop. to the City Planning and Construction Agency within Warehouse values: IDR 4,552,100,000 = USD 437,498 24 hours and the Agency will carry out an inspec- Procedure 4. Receive inspection from City Data as of: July 2011 tion. This procedure is based on local regulation No. Planning Agency (Dinas Tata Kota) 6/2001. Procedure 1. Obtain Letter of Introduction Time: 1 day (Surat Penyanding) from Head of Sub– Procedure 7. Receive an inspection from Cost: No cost district City Planning and Housing Agency (Dinas Comments: A technical team of the City Planning Time: 3 days Tata Ruang dan Perumahan) Agency carries out an inspection on the building site. Cost: No cost Time: 1 day Procedure 5. Obtain Building Construction Comments: According to Mayor Regulation No. Cost: No cost Permit (IMB) at Batam one–stop shop 6/2010, the Letter of Introduction (Surat Penyanding) is now a mandatory requirement for obtaining a build- Procedure 8. Obtain Environmental Time: 24 days ing permit. The Letter of Introduction, prepared by the Management Plan and Environmental Cost: IDR 29,056,801 (Size of building x Integrated Head of the Sub–district, guarantees that there will be Monitoring Plan (UKL/UPL) approval from Index x 1,00 x Base tariff of charges) no conflicts with the neighbors once the warehouse is built. local Environmental Agency Procedure 6. Register warehouse with Local Time: 21 days Tax Office (Kantor Pajak Pratama, KPP) Procedure 2. Obtain statement of land Cost: No cost Time: 1 day dispute from Local Office of National Land Procedure 9. Register with Local Tax Office Cost: No cost Board (BPN) (Kantor Pajak Pratama, KPP) Comments: The registration is conducted by complet- Time: 3 days ing the Tax Object Notification Letter (SPOP) available Cost: No cost Time: 25 days in certain government offices. The SPOP must be Cost: No cost signed by the taxpayer and submitted to the Land and Procedure 3. Request building permit Comments: The registration is done by completing Building Tax Office in the area where the warehouse (Package Permit: IMB and PPM) from the Tax Object Notification Letter (SPOP) available in is to be built, no later than 30 days after receipt of the Licensing Agency (Dinas Perizinan) certain government offices. The SPOP must be signed SPOP. The following documents should be included: Time: 1 day by the taxpayer and submitted to the Local Tax Office a. The latest Payable Tax Notification Letter; in the area where the warehouse is to be built, no later Cost: No cost b. Copy of the land certificate; than 30 days after receipt of the SPOP. The following Comments: In order to obtain the Package Permit documents should be included: c. Copy of the identity card of the land title holder or (IMB and PPM), BuildCo must submit the following a. The latest Payable Tax Notification Letter; articles of association if the land is registered under documents to the Permit Registration Agency: a company name. b. Copy of land certificate; a. Building Construction Permit (IMB) application form, duly filled; c. Copy of identity card of the land title holder or Procedure 7. Register the warehouse articles of association if the land is registered under with Local Industry and Trade Agency b. Photocopy of identity card; a company name. (Disperindag) c. Photocopy of land ownership title; Time: 7 days d. Letter of Introduction (Surat Penyanding); Procedure 10. Register the warehouse (Package Permit: TDG, SITU, HO) with the Cost: IDR 1,475,000 (based on Local regulation No. e. Four copies of building plans (location map, site 14/2001: IDR 1,500 each for each square meter of plan, and shop drawings); Licensing Agency (Dinas Perizinan) building area up to 100 + IDR 1,250 for each ad- f. Photocopy of proof of payment of land and building Time: 12 days ditional square meter of building area up to 500 + IDR tax. Cost: IDR 100,000 (cost for a warehouse that has an 1,000 for each additional square meter) area between 36 and 2500 square meters) Comments: In order to register the warehouse with Procedure 4. Make payment for Building Comments: In order to register the warehouse and the Local Industry and Trade Agency, BuildCo must Construction Permit (IMB) at Bank obtain the package permit (TDG, SITU, HO), BuildCo submit the following documents: Pembangunan Daerah (BPD) must submit the following documents: a. Copy of Trading Business License (SIUP) and Com- Time: 1 day a. Application form, duly filled; pany Registration (TDP); Cost: IDR 12,310,670 (Cost of construction permit b. Site map; b. Land Allocation Permit (PL); + Border Administrator Service Duty; the Principal c. Photocopy of the identity card of the applicant; Construction Approval is free of cost) c. Domicile statement with location of the warehouse. d. Number of taxpayer registration (NPWP); Procedure 8*. Request and connect to Procedure 5. Obtain building permit e. Environmental Monitoring Plan and Environmental Management Plan (UKL/UPL), approved by the water and sewage with PDAM (Package Permit: IMB and PPM) from Licensing Agency (Dinas Perizinan) local Environmental Agency; Time: 7 days f. BuildCo business licenses; Time: 11 days Cost: IDR 150,000 g. Recent photographs of the applicant (4x6cm); Cost: No cost Comments: The company notifies the Industrial Man- h. Photocopy of the Company Establishment Deed. ager that the warehouse is ready for utility hook–ups. Comments: The Package Permit (IMB and PPM) includes the following items: Procedure 11*. Request and connect to Procedure 9*. Request and connect a. Building Construction Permit (IMB); water and sewage with PDAM to telephone with PT Telekomunikasi b. Principal Construction Approval (PPM). Time: 1 day Indonesia Tbk (Telkom) There is a 13-day statutory limit for the Licensing Cost: IDR 6,255,700 Time: 7 days Agency to issue the Package Permit (IMB and PPM). Comments: The company notifies the Industrial Man- Cost: IDR 500,000 The statutory limit is usually respected. ager that the warehouse is ready for utility hook–ups. Comments: The company notifies the Industrial Man- ager that the warehouse is ready for utility hook–ups. Procedure 6. Notify City Planning and Housing Agency (Dinas Tata Ruang Procedure 12*. Request and connect * This procedure can be completed simultaneously dan Perumahan) about progress of the to telephone with PT Telekomunikasi with previous procedures construction Indonesia Tbk (Telkom) Time: 1 day Time: 25 days Cost: No cost Cost: IDR 500,000 72 DOING BUSINESS IN INDONESIA 2012

Comments: The company notifies the Industrial Man- Cost: IDR 25,000 g. Company’s Deed of Establishment; ager that the warehouse is ready for utility hook–ups. Comments: Builder needs to notarize a copy of the h. Completed Application Form; * This procedure can be completed simultaneously Land Ownership certificate before applying for the i. Receipt of UKL–UPL or UKL–UPL Recommendation with previous procedures building permit. from the BPLHD.

DEALING WITH CONSTRUCTION PERMITS Procedure 5. Request and obtain the Procedure 8. Request and obtain building preparation of the Environmental Gorontalo, Gorontalo completion and compliance minutes Management Plan (UKL) and Time: 28 days Warehouse value: IDR 4,552,100,000 = USD 437,498 Environmental Monitoring Plan (UPL) Cost: IDR 62,500 Data as of: July 2011 Time: 8 days Comments: The construction completion and compli- Cost: IDR 15,000,000 ance report is a prerequisite for obtaining a usage No Practice Comments: BuildCo hires an external consultant that permit. The party issuing the official report on the will prepare the Environmental Management Plan completion of the construction and compliance with DEALING WITH CONSTRUCTION PERMITS (UKL) and Environmental Monitoring Plan (UPL). the building permit is the Supervising Director, who When this is ready BuildCo will submit the documents can be an individual, a group of experts, or an entity Jakarta, DKI Jakarta to the Local Environmental Management Agency appointed by the project owner to supervise the Warehouse value: IDR 4,552,100,000 = USD 437,498 (BPLHD) for the Province of DKI Jakarta for approval. construction work. The individual or group of experts Data as of: July 2011 must be independent of BuildCo and cannot be its Procedure 6. Request and obtain employees. Procedure 1. Request Pre–approval letter the approval for the Environmental from Zoning Department Management Plan (UKL) and Procedure 9. Obtain building usage permit Time: 1 day Environmental Monitoring Plan (UPL) (IPB) Cost: IDR 1,482,000 Time: 10 days Time: 49 days Comments: The total cost to obtain Pre–approval Cost: No cost Cost: No cost letter is IDR 1,482,000 according to Article 123 of the Comments: The legal basis for this procedure is: Comments: BuildCo must submit the following docu- Regional Regulation No. 1 Year 2006. ments to the City Planning Office: a. Law No. 32 of 2009 regarding the Environment; The following is the detailed calculation: a. Building drawings; b. Decision of the Minister of the Environment No. 86 a. Land measurement (based on the land certifi- of 2002 on Implementation of UKL and UPL. b. Copy of the building permit (IMB); cate, namely 500–1,000 m2) a retribution of IDR c. Warehouse Construction Completion Report from 750,000; Procedure 7. Request and obtain Building the Supervising Directors/Consultant appointed by b. Print out of the map (scale of 1:10000), a retribu- Construction Permit (IMB) BuildCo; tion of IDR 1,000/copy x 12 copies or a total of IDR Time: 21 days d. An official report from the Supervising Director 12,000; comprising (Minutes of completion of the ware- Cost: IDR 9,104,200 c. KRK for plans to use of a land for warehouse con- house construction and compliance); Comments: When applicant has the complete set of struction (Karya pergudangan/Kpg) for a land area e. A copy of the letter of appointment of the contrac- 2 documents (see below) and the application is submit- of up to 1,000 m is subject to a fee of IDR 40,000; tor and Supervising Director and the Coordinator of ted, the Permit Office will conduct an inspection. d. RTLB for plans to build warehouse construction the Supervising Director; Given that the plot where the warehouse will be built is subject to a fee of IDR 40,000/ 100 m2 of is empty, no representative from BuildCo needs to f. A copy of the TDR of the contractor and work floor surface, so the total fee for the RTLB: IDR be present. Officials from the Permit Office will only permit of the Supervising Director; 40,000.00 x 13 (based on a 1,300.6 m2 floor verify that the plot is vacant. g. A report on construction stages from the Supervis- surface) = IDR 520,000; The legal basis for this procedure is: ing Director; e. Land marking for city planning implementation h. A statement from the Coordinator of the Su- purposes (pematokan penerapan rencana kota) a. Decree of the Governor of the Province of DKI pervising Director that the warehouse has been is subject to a fee of IDR 80,000 x 2 (because Jakarta No. 76 Year 2000, Article 2 paragraph (2)b; completed in accordance with the building permit the building exceeds 1,000 m2), or a total of IDR b. Regulation of the Head of the Local Building Super- (IMB). 160,000. vision and Control (P2B) Office No. 21 Year 2009, Annex I point I.b; The legal basis for this procedure is: Procedure 2. Receive inspection from c. The legal basis for the time to complete this step a. Decree of the Governor of the Province of DKI Zoning Department in 14 days working days (21 calendar days) is the Jakarta No. 76 Year 2000, Article 9 paragraph (4) b; Time: 1 day Regulation of the Governor of DKI Jakarta No. 85 of 2006, Article 11 paragraph; b. Regulation of the Head of the Local Building Super- Cost: No cost d. According to the Regional Regulation of the vision and Control Office No. 21 Year 2009, Annex I Comments: Zoning Office inspects the site to confirm Province of DKI Jakarta No. 1 Year 2006 concerning point II.b. that the application submitted by the builder meets Regional Retribution, the formula to calculate the the requirements. fee for this permit is IDR 7,000 per square meter. Procedure 10. Register with Land and Since the warehouse considered in the case study Building Tax Office Procedure 3. Obtain Pre–approval letter has an area of 1,300.6 square meters the cost then Time: 11 days from Zoning Department will be 7,000 * 1,300.6 = IDR 9,104,200. Cost: No cost Time: 20 days The supporting documents required are: Comments: After the warehouse is built BuildCo Cost: No cost a. Photocopy of the ID card; needs to update its records at the Land and Building Comments: After the inspection, the application is b. Photocopy of the Land Certificate (notarized); Tax Office. Even if this update is supposed to be done forwarded to different offices within the Zoning Office c. KRK and RTLB from City Planning Office from the automatically, many builders do it personally to avoid for approval. The location officer, the roads officer Local City Zoning Office (included in Pre–approval delays. This is critical when the builder wants to sell or and the architectural officer approve the application. letter); obtain a loan with the property. When internal procedures are completed, the builder is notified (by phone, mail or electronically) and can d. As Built Drawing (Architecture; Construction, and Installation) for the Warehouse Construction to be Procedure 11. Register the warehouse pick up the pre–approval letter. The recommendation with the regional office of the Ministry of letter includes the documents listed in procedure 1. built ; e. Photocopy of the license to operate as a Building Industry and Trade Procedure 4*. Request and obtain notarized Planner; Time: 9 days copy of Land Ownership certificate f. Statement of uncontested ownership of the land for Cost: IDR 100,000 Time: 1 day which IMB is applied; LIST OF PROCEDURES 73

Comments: The company must submit the following Procedure 3. Receive inspection from City Procedure 6. Obtain Nuisance Permit (HO) documents: Planning Agency (Dinas Tata Kota) from City Planning Agency (Dinas Tata a. Copy of the trade business license; Time: 1 day Kota) b. Copy of company registration code; Cost: No cost Time: 6 days c. Copy of the owner’s or shareholders’ identity Comments: After receiving all the required docu- Cost: IDR 120,000 card(s); ments, the City Planning Office conducts an inspec- Comments: The Nuisance Permit (Izin Gangguan) d. Copy of the taxpayer number; tion on the location of the future construction site. formally acknowledges that the warehouse does not e. Copy of warehouse lease agreement (if the ware- The purpose of such an inspection is to: cause any problem to the neighbors. The document house is leased); a. Check the conditions of the plot (and whether they has to be obtained from City Planning Office (Dinas f. Copy of the building permit (IMB); comply with zoning and road planning require- Tata Kota), after submitting an application. g. Copy of the map of the warehouse. ments); Procedure 7. Register the warehouse Warehouses in a privately owned port, warehouses in b. Carry out land measurement; (Tanda Daftar Gudang, TDG) with Jambi a bonded zone, and warehouses adjacent to the plant c. Carry out land marking. are exempted from the registration requirement. one–stop shop (KPTSP) Under the new government, the Ministry of Industry Procedure 4. Obtain Advis Planning from Time: 7 days and Trade has been divided into the Ministry of City Planning Agency (Dinas Tata Kota) Cost: No cost Industry and the Ministry of Trade. The warehouse Time: 27 days Comments: In order to register the warehouse, registration is conducted with the regional office of the BuildCo must submit the following documents to the Cost: IDR 1,482,000 Ministry of Trade. Jambi one–stop shop: Comments: After the inspection has taken place, a. Copy of the permanent business trading license Procedure 12*. Obtain water and sewerage the Advis Planning is processed for approval. After (SIUP); connection approval, BuildCo receives a notification that the Advis Planning is ready for pick up. b. Copy of registration certificate (TDP); Time: 8 days The Advis Planning includes the following items: c. Copy of the owner’s or shareholders’ identity cards Cost: IDR 2,000,000 (KTP); a. Allowed use of building; Comments: The company notifies the Industrial Man- d. Copy of the taxpayer number (NPWP); ager that the warehouse is ready for utility hook–ups. b. Allowed size of building; e. Copy of the Building Construction Permit (IMB); c. Allowed number of storeys; f. Copy of the Nuisance Permit (Izin HO) for the Procedure 13*. Obtain phone connection d. Building ‘s line perimeter (Garis Sempadan Bangu- warehouse; Time: 4 days nan); g. Copy of the location map of the warehouse. Cost: IDR 500,000 e. Base Foundation Coefficient (BFC) and Building Size Coefficient (BSC); Since Law No. 28/2009 has been implemented in Comments: The company notifies the Industrial Man- Jambi, this procedure is free of cost. ager that the warehouse is ready for utility hook–ups. f. Minimum green area; g. Building specifications for designated area; * This procedure can be completed simultaneously Procedure 8. Register with Local Tax Office with previous procedures h. Requirements and indications for construction (Kantor Pajak Pratama, KPP) supervisor, contractor and controlling method. Time: 10 days DEALING WITH CONSTRUCTION PERMITS Procedure 5. Obtain Building Construction Cost: No cost Jambi, Jambi Permit (IMB) from City Planning Agency Comments: The registration is done by completing Warehouse value: IDR 4,552,100,000 = USD 437,498 (Dinas Tata Kota) the Tax Object Notification Letter (SPOP) available in Data as of: July 2011 certain government offices. The SPOP must be signed Time: 14 days by the taxpayer and submitted to the Local Tax Office Procedure 1. Obtain Legalized Copy of Land Cost: IDR 4,942,280 (Application form of IDR 1,500 in the area where the warehouse is to be built, no later Certificate from National Land Board (BPN) + Landscape drawing of IDR 10,000 + Measurement than 30 days after receipt of the SPOP. The following and review charges of IDR 400/m2 + Supervision documents should be included: Time: 2 days charges of IDR 25,000 + IMB retribution charges, a. The latest Payable Tax Notification Letter; Cost: IDR 50,000 calculated by the City Planning Office considering b. Copy of the land certificate; Comments: In order to be able to undertake some of the Construction Base Value, the Size Coefficient, the necessary administrative procedures for the con- the Number of Floors Coefficient, and the Usage c. Copy of the identity card of the land title holder or struction of the warehouse, BuildCo must legalize a coefficient) articles of association if the land is registered under copy of the Land Ownership Certificate at the National Comments: In order to apply for the Building Con- a company name. Land Board (BPN). struction Permit, BuildCo has to submit the following documents to the City Planning Agency: Procedure 9*. Request and connect to Procedure 2. Request Advis Planning from a. Copy of identity cards of the company’s managers; water and sewage with PDAM City Planning Agency (Dinas Tata Kota) b. Legalized copy of land certificate; Time: 7 days Time: 1 day c. Advis Planning; Cost: IDR 1,500,000 Cost: No cost d. Construction drawings, prepared by BuildCo’s Comments: The company notifies the Industrial Man- Comments: In order to obtain the Advis Planning, engineer/architect; ager that the warehouse is ready for utility hook–ups. BuildCo has to submit the following documents to the e. Copy of engineer and/or architect’s license; City Planning Agency: Procedure 10*. Request and connect f. Company establishment deeds; a. Copy of company establishment deed; to telephone with PT Telekomunikasi g. Application forms duly filled. b. Copy of Land Ownership Certificate; Indonesia Tbk (Telkom) The relevant regulations for this procedure are the Time: 5 days c. Location map; following: Cost: IDR 500,000 d. Copy Latest Payable Tax Receipt (Surat Tanda a. Local Regulation No. 05/2002 (Local Gazette No. Comments: The company notifies the Industrial Man- Terima Setoran); 06/2002), regarding City masterplan, effective ager that the warehouse is ready for utility hook–ups. e. Copy of Permanent Business Trading License since 2002; (SIUP), Company Registration (TDP), Contractor b. Local Regulation No. 06/2002 (Local Gazette No. * This procedure can be completed simultaneously permit letter (SIJK); 07/2002), regarding construction procedures, ef- with previous procedures f. Drawings. fective since March 2002; The procedure is mandatory as per Local Regulation c. Mayor Decree No. 07/2009, regarding approval No. 6/2002, effective since March 2002. power of the different authorities. 74 DOING BUSINESS IN INDONESIA 2012

DEALING WITH CONSTRUCTION PERMITS Procedure 5. Register with Local Tax Office Procedure 3. Request Environment Makassar, South Sulawesi (Kantor Pajak Pratama, KPP) Management Plan and Environment Warehouse value: IDR 4,552,100,000 = USD 437,498 Time: 11 days Monitoring Plan (UKL/UPL) approval from Data as of: July 2011 Cost: No cost local Environment Agency (Bapedalda) Time: 1 day Procedure 1. Obtain approval of Comments: The registration is done by completing the Tax Object Notification Letter (SPOP) available in Cost: No cost applicant statement from Head of Village certain government offices. The SPOP must be signed (Persetujuan surat pernyataan pemohon by the taxpayer and submitted to Local Tax Office in Procedure 4. Receive inspection from local dari Lurah) the area where the warehouse is to be built, no later Environment Agency (Bapedalda) than 30 days after receipt of the SPOP. The following Time: 7 days Time: 1 day documents should be included: Cost: No cost Cost: No cost Comments: Based on Mayor regulation No. 14 year a. The latest Payable Tax Notification Letter; 2005, implemented since 2005, BuildCo needs to b. Copy of the land certificate; Procedure 5. Obtain Environmental obtain the approval from the Head of the Village c. Copy of the identity card of the land title holder or Management Plan and Environmental (Lurah) on a statement that will later be submitted to articles of association if the land is registered under Monitoring Plan (UKL/UPL) approval from the Makassar one–stop shop when applying for the a company name. Building Construction Permit (IMB). In order to obtain local Environmental Agency (Bapedalda) such approval, BuildCo must submit a copy of the land Procedure 6. Register the warehouse with Time: 8 days ownership certificate to the Head of the Village thus Makassar one–stop shop (KPAP) Cost: No cost showing that the plot of land where the warehouse is to be built belongs to BuildCo. Time: 10 days Procedure 6. Obtain Building Construction Cost: IDR 650,300 (construction area x IDR 500) Permit (IMB) from the Manado one–stop Procedure 2. Request Building Construction Comments: The fees for warehouse registration are shop (BP2T) Permit (IMB) from Makassar one–stop based on Mayor Regulation No. 14/2005. Time: 30 days shop (KPAP) Cost: IDR 23,040,000 [Tot = ( 3% x coefficient of Time: 1 day Procedure 7*. Request and connect to water and sewage with PDAM roads classification x construction estimate valuation, Cost: No cost NB) + supervision cost (15% x ( 3% x coefficient of Time: 8 days Comments: In order to obtain the Building Construc- roads classification x construction estimate valuation, tion Permit, BuildCo submits the following documents Cost: IDR 2,500,000 NB))] where NB=Nilai Bangunan = Construction to Makassar one–stop shop: Comments: The company notifies the Industrial Man- Estimate Valuation a. Application form, duly filled; ager that the warehouse is ready for utility hook–ups. Comments: In order to obtain the Building Construc- b. Photocopy of identity card and/or company estab- tion Permit, BuildCo must submit the following docu- lishment deeds; Procedure 8*. Request and connect ments to the one–stop shop: to telephone with PT Telekomunikasi c. Copy of land ownership certificate; a. Advis Planning Permit; Indonesia Tbk (Telkom) d. Copy of proof of Land and Building Tax Payment of b. Statement of land dispute; the current year; Time: 3 days c. Environmental Management Plan and Environmen- e. Approval of applicant statement from Head of Vil- Cost: IDR 380,000 tal Monitoring Plan, approved by local Environmen- lage (Lurah); Comments: The company notifies the Industrial Man- tal Agency; f. Construction drawings and calculations, made by ager that the warehouse is ready for utility hook–ups. d. Drawings; licensed construction planner (BuildCo’s Engineer); * This procedure can be completed simultaneously e. Copy of identification card of the applicant. g. Photo of the applicant. with previous procedures The cost of this procedure is based on local regula- The necessary zoning and environmental clearances tion No. 8/2001 about building construction permit are processed internally by the municipality, once the DEALING WITH CONSTRUCTION PERMITS (article 19), implemented in 2001. application has been submitted. The approvals and Manado, North Sulawesi the calculation of building construction permit fees Procedure 7. Request official report of Warehouse value: IDR 4,552,100,000 = USD 437,498 are processed by the City Planning Agency. City Plan- completion of construction and compliance ning Agency officials may visit the area of the future Data as of: July 2011 with building permit from the Manado one– building site prior to issuing the permit. Such a visit, stop shop (BP2T) Procedure 1. Obtain Advis Planning Permit however, does not require the presence of BuildCo Time: 1 day representatives as all the necessary information has from the Manado one–stop shop (BP2T) Cost: No cost been provided by BuildCo when applying for the Time: 1 day permit. Cost: No cost Procedure 8. Receive inspection from the Comments: The Advis Planning Permit includes the Manado one–stop shop (BP2T) Procedure 3. Make payment for Building following items: Construction Permit (IMB) at BPD South Time: 1 day a. Land usage permit; Sulawesi Cost: No cost b. Building usage permit; Time: 1 day c. Allowed building size and number of floors; Procedure 9. Obtain official report of Cost: No cost d. Architectural specifications; completion of construction and compliance Procedure 4. Obtain Building Construction e. City planning statement (SKRK). with building permit from the Manado one– Permit (IMB) from Makassar one–stop stop shop (BP2T) shop (KPAP) Procedure 2. Obtain statement on land Time: 30 days dispute with Head of the Village Time: 21 days Cost: IDR 62,500 Time: 8 days Cost: IDR 31,761,209 (Size of building x Integrated Index x 1.00 x Base Tariff of Charges) Cost: IDR 27,500 Procedure 10. Obtain Nuisance permit (HO) for the warehouse from the Manado Comments: Based on Makassar Mayor Regulation No. Comments: BuildCo must obtain a statement from the 12/2008, the statutory time for this procedure is 12 local Head of the Village indicating that the ownership one–stop Licensing Service Office (BP2T) days. In reality, however, the process usually takes a of the land is not disputed. Time: 5 days longer amount of time. Cost: IDR 1,377,500 (IDR 1,350,000 + 27,500 for local fee) LIST OF PROCEDURES 75

Comments: In order to obtain the Nuisance permit, Procedure 2. Receive inspection from City c. Principal permit; BuildCo must submit the following documents: Planning Agency (Dinas Tata Kota) d. Drawings of the warehouse, prepared by BuildCo’s a. Copy of identification card; architect; Time: 1 day b. Copy of land certificate; e. Copy of BuildCo’s license to operate as a building Cost: No cost c. Building Construction Permit (IMB). planner; Comments: After receiving the file from the Mataram f. Copy of the applicant’s ID card and Company’s one–stop shop, the City Planning Agency inspects Procedure 11. Register with Local Tax Office Deed of Establishment; the future building site to confirm that application (Kantor Pajak Pratama, KPP) and planned construction comply with all planning g. Copy of Land and Building Tax receipt. Time: 8 days requirements. Usually the City Planning Agency noti- Once all documents have been submitted, the City Cost: No cost fies BuildCo about the inspection two days in advance Planning Agency reviews them and visits the future building site. BuildCo’s presence is not necessary Comments: The registration is done by completing because the company’s representatives must be pres- during such inspection. After the inspection, BuildCo the Tax Object Notification Letter (SPOP) available in ent during the inspection. can be summoned by the City Planning Office if there certain government offices. The SPOP must be signed are significant findings that need to be clarified. Other- by the taxpayer and submitted to Local Tax Office Procedure 3. Obtain Principal Permit (Izin wise, the City Planning Agency processes the docu- (Kantor Pajak Pratama, KPP) in the area where the Permit) City from City Planning Agency ment, makes the calculations for construction permit warehouse is to be built, no later than 30 days after (Dinas Tata Kota) charges and prepares the permit. Once the permit is receipt of the SPOP. The following documents should Time: 30 days ready, BuildCo receives a notification to pay the build- be included: Cost: No cost ing construction permit charges at the City Planning a. The latest Payable Tax Notification Letter; Comments: After the inspection, the file with the ap- Agency. After BuildCo has paid, the permit is issued. b. Copy of the land certificate; plication is forwarded to different agencies within the This procedure is based on: c. Copy of the identity card of the land title holder or City Office for approval. When all internal procedures a. Local Regulation No. 11/2000, regarding Building articles of association if the land is registered under are complete, BuildCo receives a notification to visit Construction Permit (IMB) charges, implemented a company name. the City Planning Agency and pick up the permit. since 2000; The Principal permit comprises the following items: Procedure 12. Register the warehouse with b. Local Regulation No. 4/1995, regarding environ- a. Land measurement; mental and building requirements in Mataram City, Manado one–stop shop (BP2T) b. Print out of the map (scale of 1:10,000); implemented since 1995. Time: 1 day c. Zoning statement; Procedure 7. Register the warehouse with Cost: IDR 601,275 d. Plotting; Local Tax Office (Kantor Pajak Pratama, Procedure 13*. Request and connect to e. Land marking. KPP) water and sewage with PDAM Procedure 4. Obtain legalized copy of land Time: 8 days Time: 12 days ownership certificate at the Notary Office Cost: No cost Cost: IDR 1,250,000 Time: 1 day Comments: The registration is done by completing the Tax Object Notification Letter (SPOP) available in Comments: The company notifies the Industrial Man- Cost: IDR 25,000 ager that the warehouse is ready for utility hook–ups. certain government offices. The SPOP must be signed Comments: BuildCo needs to authenticate a copy of by the taxpayer and submitted to Local Tax Office Procedure 14*. Request and connect the Land Ownership Certificate with a notary. The (Kantor Pajak Pratama, KPP) in the area where the to telephone with PT Telekomunikasi notary provides BuildCo a statement letter together warehouse is to be built, no later than 30 days after with the authenticated ownership certificate. This is a Indonesia Tbk (Telkom) receipt of the SPOP. The following documents should common practice in Mataram and it is undertaken in be included: Time: 4 days order to avoid frauds. a. The latest Payable Tax Notification Letter; Cost: IDR 500,000 b. Copy of the land certificate; Comments: The company notifies the Industrial Man- Procedure 5. Obtain Environmental ager that the warehouse is ready for utility hook–ups. Statement (SPPL) approval from local c. Copy of the identity card of the land title holder or Environmental Office (Kantor Lingkungan articles of association if the land is registered under * This procedure can be completed simultaneously Hidup, KLH) a company name. with previous procedures Time: 14 days Procedure 8. Register the warehouse DEALING WITH CONSTRUCTION PERMITS Cost: No cost with Local Industry and Trade Agency Mataram, West Nusa Tenggara Comments: In order to obtain the approval from the (Disperindag) Local Environmental Office (Kantor Lingkungan Hidup, Time: 7 days Warehouse value: IDR 4,552,100,000 = USD 437,498 KLH), BuildCo must submit the following documents: Cost: IDR 125,000 Data as of: July 2011 a. Application form, duly filled; Comments: In order to register the warehouse with Procedure 1. Request Principal Permit (Izin b. Environmental Statement, prepared by BuildCo’s the local Industry and Trade Agency, BuildCo must Prinsip) at Mataram one–stop shop architect. submit the following documents: Time: 1 day Procedure 6. Obtain Building Construction a. Copy of the trade business license (SIUP); Cost: No cost Permit (IMB) from City Planning Agency b. Copy of the company’s registration code (TDP); Comments: In order to obtain the Principal Permit, (Dinas Tata Kota) c. Copy of the owner’s or shareholders’ identity BuildCo must submit the following documents to the card(s); Time: 21 days Mataram one–stop shop: d. Copy of the taxpayer number (NPWP); Cost: IDR 13,873,667 (Construction value multiplied a. Copy of Land Certificate; by service level coefficient, where service level coef- e. Copy of the building construction permit (IMB); b. Copy of Land and Building Tax invoice and receipt; ficient is calculated considering road coefficient (0.8), f. Map of the warehouse. c. Copy of Identity Card; building utilization coefficient (1.25), building class Warehouses in a privately–owned port, warehouses d. Location Map, prepared by BuildCo’s architect. coefficient (0.75), size coefficient (0.11), and storey in the bonded zone, and warehouses adjacent to the After receiving the application, the Mataram one–stop coefficient (2 storeys = 0.185)) plant are exempted from registration. shop assembles all documents into a file and forwards Comments: In order to obtain the Building Construc- As per the assumptions of our case study, the ware- it to the City Planning Agency. tion Permit from the City Planning Agency, BuildCo house built by BuildCo needs to undergo registration must submit the following documents: procedures. a. Application form, duly filled; b. Legalized copy of the Land Certificate; 76 DOING BUSINESS IN INDONESIA 2012

Procedure 9*. Request and connect to Comments: In order to obtain the Building Con- Procedure 7*. Request and connect water and sewage with PDAM struction Permit, BuildCo must submit the following to telephone with PT Telekomunikasi documents: Time: 3 days Indonesia Tbk (Telkom) a. Application form, duly filled; Time: 3 days Cost: IDR 1,300,000 b. Copy of identity card(s) of BuildCo’s director(s); Comments: The company notifies the Industrial Man- c. Copy of company establishment deeds; Cost: IDR 526,000 ager that the warehouse is ready for utility hook–ups. d. Copy of Property tax payment receipt and Payable Comments: The company notifies the Industrial Man- Tax Notification Letter; ager that the warehouse is ready for utility hook–ups. Procedure 10*. Request and connect e. Copy of Land certificate, legalized by the National * This procedure can be completed simultaneously to telephone with PT Telekomunikasi Land Board; with previous procedures Indonesia Tbk (Telkom) f. Drawings (hard copy and soft copy), prepared by Time: 3 days BuildCo’s architect; DEALING WITH CONSTRUCTION PERMITS Cost: IDR 350,000 g. Environmental Preserve Compliance Statement Palangka Raya, Central Kalimantan Comments: The company notifies the Industrial Man- (SPPL), approved by the local Environmental Warehouse value: IDR 4,552,100,000 = USD 437,498 ager that the warehouse is ready for utility hook–ups. Agency. This procedure is based on: Data as of: July 2011 * This procedure can be completed simultaneously a. Local Regulation No. 9/2002, regarding Building with previous procedures Procedure 1. Request Principal Permit from Construction Permit; local Planning Office (Bappeda) b. Mayor Decree No. 34/2002, regarding operational DEALING WITH CONSTRUCTION PERMITS procedures for the implementation of Local regula- Time: 1 day Medan, North Sumatra tion No. 9/2002; Cost: No cost Warehouse value: IDR 4,552,100,000 = USD 437,498 c. Mayor Decree No. 62/2002, regarding technical Comments: The Principal Permit verifies that the pro- Data as of: July 2011 procedures for the implementation of Local regula- posed building and its proposed use comply with the tion No. 9/2002; city masterplan. In order to obtain the Principal Permit, Procedure 1. Obtain legalized copy of land d. Mayor Decree No. 3/2005, on fee schedules for BuildCo must submit the following documents: ownership certificate from National Land permit–related procedures. a. Application letter, duly filled; Board (BPN) Procedure 4. Register the warehouse b. Company establishment documents – Starting Time: 1 day Business Permit (SIUP), Company Registration (Tanda Daftar Gudang) with Local Industry (TDP), and Tax Registration (NPWP); Cost: IDR 25,000 and Trade Agency (Disperindag) c. Land utilization plans prepared by BuildCo’s archi- Comments: In order to be able to undertake some of Time: 5 days the necessary administrative procedures for the con- tect; struction of the warehouse, BuildCo must legalize a Cost: IDR 750,000 d. Location map, prepared by BuildCo’s architect. copy of the land ownership certificate at the National Comments: In order to register the warehouse, After the necessary documents have been submitted, Land Board (BPN). BuildCo must submit the following documents: the City Planning Office reviews the documents, in- a. Copy of Building Construction Permit (IMB); spects the area of the future building site and assesses Procedure 2. Obtain Environmental b. Copy of Permanent Business Trading License whether the plans abide by the city masterplan. Statement (SPPL) approval from local (SIUP); Environmental Agency (BLH) c. Copy Company Registration (TDP); Procedure 2. Receive inspection from local Time: 14 days d. Copy of ID card of company’s directors; Planning Office (BKPRD/Bappeda) Cost: No cost e. Location map; Time: 1 day Comments: BuildCo’s architect prepares an Environ- f. Two recent photographs (3x4cm) of the applicants. Cost: No cost mental Preserve Compliance Statement (SPPL) and After receiving the required documents, the local Comments: The Local Zoning Coordination Division submits it the Local Environmental Agency for approv- Industry and Trade Agency reviews such documents (BKPRD) of the local Planning Office (Bappeda) al, together with an application form. The Local Envi- and registers the warehouse in its database. The inspects the future building site. BuildCo’s presence ronmental Agency visits the future construction site cost of this procedure is based on article 22 of Local during the inspection is mandatory. prior to granting its approval. The presence of BuildCo Regulation No. 10/2002. representatives is not required during such visit. If no Procedure 3. Obtain Principal Permit from answer is provided by the Local Environmental Agency Procedure 5. Register the warehouse with local Planning Office (Bappeda) within 14 days from the moment in which the applica- Local Tax Office (Kantor Pajak Pratama, Time: 6 days tion has been submitted, BuildCo can automatically KPP) Cost: IDR 50,000 assume the approval has been granted. Time: 10 days This procedure is based on: Comments: Once the application has been reviewed Cost: No cost and approved in a joint meeting, the local Planning a. Regulation of Minister of Environmental Ministry Comments: The registration is done by completing Agency issues the Principal Permit. No. 11/2006, regarding types of activities that the Tax Object Notification Letter (SPOP) available in require Environmental Impact Analysis; Depending on the size of the building, the Principal certain government offices. The SPOP must be signed Permit is officially authorized and signed by different b. Law No. 32/2009, regarding environment–related by the taxpayer and submitted to the Local Tax Office public officials. Namely: issues; in the area where the warehouse is to be built, no later a. Area < 5000m2—signed by Head of Local Develop- c. Mayor Regulation No. 29/2010, dated 24 May than 30 days after receipt of the SPOP. The following ment and Planning Agency; 2010. (annex 6), on activities and buildings that documents should be included: 2 require environmental clearances. a. The latest Payable Tax Notification Letter; b. Area 5000–10000m —signed by Local Adminis- trative Secretary; b. Copy of the land certificate; Procedure 3. Obtain Building Construction c. Area > 10000m2—signed by Mayor. c. Copy of the identity card of the land title holder or Permit (IMB) from City Planning Agency articles of association if the land is registered under Based on Mayor regulation No. 45/2010, implement- (Dinas Tata Ruang dan Tata Bangunan Kota a company name. ed since January 2010, the cost for this procedure is Medan) IDR 50,000. The cost includes two registration forms (Leges) that cost IDR 25,000 each. Time: 40 days Procedure 6*. Request and connect to Cost: IDR 16,582,650 [Parameter Index (0.0245) x water and sewage with PDAM Procedure 4. Obtain Location Permit base tariff (IDR 450,000) x first floor area (650.3 Time: 10 days 2 from City Secretariat (APU, Administrasi m ) + Parameter Index (0.0245) x base tariff (IDR Cost: IDR 1,000,000 Pemerintahan Umum, Setda) 450,000) x second floor area (650.3 m2)] Comments: The company notifies the Industrial Man- Time: 14 days ager that the warehouse is ready for utility hook–ups. LIST OF PROCEDURES 77

Cost: IDR 5,000,139 Comments: In order to obtain the Nuisance Permit Cost: IDR 55,000 (IDR 50,000 for measurement Comments: In order to obtain the location permit, (Izin HO), BuildCo must submit the following docu- cost and IDR 5,000 for application fee) BuildCo must submit the following documents to the ments to the Palanka Raya one–stop shop: Comments: In order to obtain the Advis Planning, City Secretariat: a. Application letter, duly filed; BuildCo must submit the following documents: a. Application Letter, duly filled; b. Location map with information about the size of the a. Application form, duly filled; b. Company establishment deeds; building; b. Copies of applicant’s ID and company establish- c. Land utilization plans (in format set by National c. Environment Management Plan and Environment ment deed; Land office), prepared by BuildCo’s architect; Monitoring Plan (UKL/UPL); c. Photocopy of Land Ownership Certificate. d. Location map, prepared by BuildCo’s architect. d. Copy of Land ownership certificate; The Advis Planning is a necessary item for obtaining The location permit declares the certainty of land e. Copy of receipt of tax payment; the Building Construction Permit (IMB). Since Mayor ownership in the Spatial Plan and that the use of f. Copy of applicant’s ID; Regulation No. 30/2010 has come into effect, this procedure is carried out at the Palembang one–stop the land complies with the company’s purpose. g. Recent photographs of the applicant. Building companies may be required to submit ad- shop (KPTSP). ditional documents when they do not own the land Procedure 8. Obtain warehouse license Procedure 2. Obtain Building Construction (Statement of Land Acquisition) or if they are in the (Tanda Daftar Gudang) from Local Industry Permit (IMB) from Palembang one–stop plantation business (Statement that the location is not and Trade Agency (Disperindag) exceeding the limit of plantation within the province). shop (KPPT) Time: 3 days Such requirements do not apply to our case study. Time: 10 days Cost: IDR 100,000 Once the application is submitted, the City Secretariat Cost: IDR 11,000,000 (RIMB= LB x Iz x I kj x Ik x gathers the necessary recommendations for the vari- Comments: In order to receive the warehouse license, THDB per square meter – LB: the area size, Iz: Zone ous agencies (road, water control, civil work agency, BuildCo must submit the following documents to the index, Ikj: Roads classification index, Ik: building height etc) and processes the application. No inspection local Industry and Trade Agency: index, and THDB: rate of basic price) takes place during this procedure. a. Application form (duly filled and signed); Comments: In order to obtain the Building Construc- The procedures relating to Location Permit are b. Copy of construction building permit (IMB). tion Permit, BuildCo must submit the following docu- regulated by: ments to the Palembang one–stop shop: a. Regulation of Ministry of Land/Head of National Procedure 9. Register with Local Tax Office a. Application form, duly filled ; Land Office No. 2/1999; (Kantor Pajak Pratama, KPP) b. Photocopy of city planning statement (Advis Plan- b. Government Regulation No. 13/2010 about tariff of Time: 8 days ning) (3 copies); Non Tax Services at National Land Office. Cost: No cost c. Photocopy of land ownership certificate; Procedure 5. Obtain Environmental Comments: The registration is done by completing d. Architectural drawings of the building (7 copies); Management Plan and Environmental the Tax Object Notification Letter (SPOP) available in f. Pictures of the plot; certain government offices. The SPOP must be signed Monitoring Plan (UKL/UPL) approval from g. Structural design and calculations; by the taxpayer and submitted to the Local Tax Office local Environmental Agency (BLH, Kota in the area where the warehouse is to be built, no later i. Photocopy of proof of payment of Land and Build- Palangka Raya) than 30 days after receipt of the SPOP. The following ing tax (tax receipt); Time: 15 days documents should be included: h. Photocopy of identity card. Cost: IDR 450,000 a. The latest Payable Tax Notification Letter; After the application has been submitted and ac- b. Copy of the land certificate; cepted by the one–stop shop, BuildCo receives a Temporary Building Construction Permit (IPB). After Procedure 6. Obtain building construction c. Copy of the identity card of the land title holder or obtaining the temporary permit, BuildCo may start permit (IMB) from Palangka Raya one–stop articles of association if the land is registered under the construction process, if necessary. However, the shop (KPPT) a company name. temporary building permit does not guarantee that Time: 21 days Procedure 10*. Request and connect to the building construction permit will be issued. Once Cost: IDR 3,150,000 (IDR 25,000 x coefficient width the application has been submitted to the Palem- x coefficient Height (number of floors) x coefficient water and sewage with PDAM bang one–stop shop, the Palembang one–stop shop Building function x coefficient building/construction Time: 6 days forwards it to the City Planning Office. If there are no quality x coefficient building layout) Cost: IDR 350,000 issues related to the application, the City Planning Of- Comments: In order to obtain the Building Construc- Comments: The company notifies the Industrial Man- fice calculates the charges and notifies the Palembang tion Permit (IMB), BuildCo needs to submit the ager that the warehouse is ready for utility hook–ups. one–stop shop. The Palembang one–stop shop notifies following documents to the Palangka Raya one–stop BuildCo of the charges that have to be paid in order to shop: Procedure 11*. Request and connect obtain the permit. The statutory time for issuing the a. Principal permit; building construction permit (IMB) is 21 days, but the to telephone with PT Telekomunikasi process is usually faster. b. Location permit; Indonesia Tbk (Telkom) c. Shop drawing of first and second floor; Time: 3 days Procedure 3. Request official report on d. Proof of payment of “land and building” tax for the Cost: IDR 320,000 completion of construction and compliance past three years; Comments: The company notifies the Industrial Man- with building permit from Palembang one– e. Floor Plan; ager that the warehouse is ready for utility hook–ups. stop shop (KPPT) g. Photocopy of identity card of the applicant. * This procedure can be completed simultaneously Time: 1 day Based on Mayor Decree No. 12/2007, regarding the with previous procedures Cost: No cost procedures for obtaining permits and clearances, the statutory time for the Palangka Raya one–stop shop DEALING WITH CONSTRUCTION PERMITS Procedure 4. Receive inspection to verify to issue the permit is 8 days. In reality, the process Palembang, South Sumatra compliance with building permit from City takes longer. Planning Agency (Dinas Tata Kota) Warehouse value: IDR 4,552,100,000 = USD 437,498 Time: 1 day Procedure 7. Obtain Nuisance Permit (Izin Data as of: July 2011 HO) from Palangka Raya one–stop shop Cost: No cost (KPPT) Procedure 1. Obtain statement letter and Time: 13 days city planning map (Advis Planning) from Palembang one–stop shop (KPPT) Cost: IDR 650,000 Time: 10 days 78 DOING BUSINESS IN INDONESIA 2012

Procedure 5. Obtain official report on d. Site Activity Plan, prepared by BuildCo’s architect; Comments: A surveyor from the City Planning and completion of construction and compliance e. Building drawings, prepared by BuildCo’s architect; Construction Agency (DTRB) inspects the building and assesses its compliance with Advis Planning g. Location map, prepared by BuildCo’s architect. with building permit from Palembang one– Permit and building construction permit (IMB). After stop shop (KPPT) The Advis Planning Permit provides project planning the inspection has taken place, the DTRB Unit Head of Time: 10 days advice and information about on–site construction Supervision prepares a compliance report. requirements. In Pekanbaru, the process to obtain the Cost: No cost Advis Planning Permit is regulated by Local Regulation Procedure 6. Obtain official report on No. 14/2000, implemented since 18 December 2000. Procedure 6. Register with Local Tax Office construction completion and compliance (Kantor Pajak Pratama, KPP) Procedure 2. Receive inspection from City with building construction permit from City Time: 16 days Planning and Construction Agency (Dinas Planning and Construction Agency (Dinas Cost: No cost Tata Ruang dan Bangunan) tata Ruang dan Bangunan) Time: 30 days Comments: The registration is conducted by complet- Time: 1 day Cost: No cost ing the Tax Object Notification Letter (SPOP), avail- Cost: No cost able in certain government offices. The SPOP must be signed by the taxpayer and submitted to the Local Tax Procedure 3. Obtain Advis Planning Permit Procedure 7. Register the warehouse with Office in the area where the warehouse is to be built, from City Planning and Construction Local Tax Office (Kantor Pajak Pratama, no later than 30 days after receipt of the SPOP. The KPP) following documents should be included: Agency (Dinas tata Ruang dan Bangunan) Time: 8 days a. The latest Payable Tax Notification Letter; Time: 3 days Cost: No cost b. Copy of the land certificate; Cost: No cost Comments: The registration is done by completing c. Copy of the identity card of the land title holder or Procedure 4. Obtain Building Construction the Tax Object Notification Letter (SPOP) available in articles of association if the land is registered under certain government offices. The SPOP must be signed a company name. Permit (IMB) from City Planning and Construction Agency by the taxpayer and submitted to the Local Tax Office in the area where the warehouse is to be built, no later Procedure 7. Register the warehouse with Time: 30 days than 30 days after receipt of the SPOP. The following the local office of the Industry and Trade Cost: IDR 15,802,290 (retribution cost of IDR 12,150 documents should be included: Agency x area of the building) Time: 8 days Comments: In order to apply for the building con- Cost: No cost struction permit (IMB), BuildCo must submit the following documents to the Pekanbaru one–stop shop: Comments: To register the warehouse, BuildCo must submit the following documents to the Industry and a. Copies of Land Certificate Ownership; Size # of Storeys Luxurious Permanent Semi Permanent Non Permanent Trade Agency: b. Copies of ID card; (IDR/m2) (IDR/m2) (IDR/m2) (IDR/m2) c. Copies of Latest Payment Receipt of Land and a. Copy of the applicant’s identity card; <100m2 1 14,550 11,550 4,050 b. Application form, duly filled. Tax(es); d. Advis Planning (AP) Letter; >100m2 1 15,000 12,000 4,500 3,900 Procedure 8*. Request and connect to e. Shop drawing, signed by Licensed Designer. 2 15,150 12,150 5,250 4,050 water and sewage with PDAM After the application has been submitted, the Peka- 3 15,450 12,450 6,300 4,200 Time: 8 days nbaru one–stop shop forwards it to the City Planning 4 17,250 13,950 9,300 Cost: IDR 2,000,000 and Construction Agency. The City Planning and Construction Agency examines all the documents Comments: The company notifies the Industrial Man- 5 18,450 15,450 11,550 submitted by BuildCo and decides whether to grant ager that the warehouse is ready for utility hook–ups. the building construction permit or not. > 5 10,800 7,800 3,750 Procedure 9*. Request and connect The building construction permit can be denied for to telephone with PT Telekomunikasi different reasons: Indonesia Tbk (Telkom) a. The project design does not satisfy the technical a. The latest Payable Tax Notification Letter; requirements (as in AP); Time: 4 days b. Copy of the land certificate; b. The project design obstructs existing facilities; Cost: IDR 500,000 c. Copy of the identity card of the land title holder or c. The project design worsens the surroundings area articles of association if the land is registered under Comments: The company notifies the Industrial Man- – i.e. obstructs traffic, drainage, lighting or buildings a company name. ager that the warehouse is ready for utility hook–ups. nearby. * This procedure can be completed simultaneously While the building construction permit (IMB) applica- Procedure 8. Register the warehouse with with previous procedures tion is being processed, BuildCo can obtain an autho- the Pekanbaru one–stop shop (Badan rization, called Construction Approval (IP), to start the Pelayanan Terpadu, BPT) DEALING WITH CONSTRUCTION PERMITS construction works immediately. The Construction Time: 5 days Pekanbaru, Riau Approval, however, does not guarantee that the build- ing construction permit will be granted. Cost: No cost Warehouse value: IDR 4,552,100,000 = USD 437,498 If the planned construction satisfies all requirements, Comments: In order to register the warehouse with Data as of: July 2011 the City Planning and Construction Agency (Dinas the Pekanbaru one–stop shop, BuildCo must submit Tata Ruang dan Bangunan, DTRB) calculates the the following documents: Procedure 1. Request Advis Planning Construction Permit (IMB) fees according to Local a. Application form, duly filled; Permit from City Planning and Construction Regulation No. 1/2010. b. Photocopy of SIUP (trading license); Agency (Dinas Tata Ruang dan Bangunan) TARIFF TABLE : c. Photocopy of TDP (registration license); Time: 1 day d. Photocopy of the identification card of BuildCo’s Cost: No cost Procedure 5. Request and obtain final director; Comments: In order to obtain the Advis Planning inspection from City Planning and e. Recent photo of BuildCo’s director. Permit, BuildCo must submit the following documents: Construction Agency (Dinas tata Ruang a. Application form, duly filled; dan Bangunan) b. Photocopy of the applicant’s identity card; Time: 1 day c. Photocopy of Land Ownership Certificate; Cost: No cost LIST OF PROCEDURES 79

Mayor Decree No. 233/2009, implemented since 31 Cost: IDR 6,911,885 (Admininstrative Costs + Inspec- c. Copy of the identity card of the land title holder or December 2009, has transferred this procedure from tion Costs + Supervision Costs + Separation Costs + articles of association if the land is registered under the Local Office of Ministry of Industry and Trade to Project Nameplate Costs) a company name. Pekanbaru one–stop shop. Due to the implementation Comments: In order to obtain the building construc- of Law No. 28/2009 in Pekanbaru, this procedure tion permit (IMB), BuildCo must submit the following Procedure 9. Register the warehouse currently has no cost. documents: with the local office of the Industry, a. City Planning Statement (SKRK); Cooperation and Trade Agency (Dinas Procedure 9*. Request and connect to Perindustrian, Perdagangan dann Koperasi, water and sewage with PDAM b. Drawings and shop drawings (4 copies); c. Application form, duly filled. Disperindagkop) Time: 8 days After all documents have been submitted, the Time: 7 days Cost: IDR 1,000,000 Pontianak one–stop shop (BP2T) reviews them and Cost: No cost Comments: The company notifies the Industrial Man- prepares the building construction permit (IMB). The Comments: In order to register the warehouse with ager that the warehouse is ready for utility hook–ups. original letter that grants the permit is not handed the local office of the Industry, Cooperation and Trade over to BuildCo. Instead, BuildCo receives an “official Agency (Dinas Perindustrian, Perdagangan dann Procedure 10*. Request and connect copy” of the building permit. Such a copy allows Koperasi, Disperindagkop), BuildCo must submit the to telephone with PT Telekomunikasi BuildCo to start construction of the warehouse. No following documents: Indonesia Tbk (Telkom) inspection takes place before the official copy is issued a. Application form, duly filled; Time: 4 days since all the necessary on–site verifications have taken place during the procedures relating to the City Plan- b. Copy of identity card; Cost: IDR 500,000 ning Statement. c. Starting Business Permit (SIUP) and Company Comments: The company notifies the Industrial Man- Requirements for this procedure are based on City Registration (TDP); ager that the warehouse is ready for utility hook–ups. Regulation No. 6/1999, implemented since 1999. d. Corporate Tax Registration (NPWP). * This procedure can be completed simultaneously with previous procedures Procedure 5. Request final inspection from Procedure 10*. Request and connect to Pontianak one–stop shop (Badan Pelayanan water and sewage with PDAM DEALING WITH CONSTRUCTION PERMITS Perizinan Terpadu, BP2T) Time: 7 days Pontianak, West Kalimantan Time: 1 day Cost: IDR 1,500,000 Warehouse value: IDR 4,552,100,000 = USD 437,498 Cost: No cost Comments: The company notifies the Industrial Man- Data as of: July 2011 Comments: BuildCo notifies in writing that the ager that the warehouse is ready for utility hook–ups. warehouse has been completed and requests a final Procedure 1. Request City Planning inspection from the Pontianak one–stop shop. Procedure 11*. Request and connect Statement (SKRK) from Pontianak one– to telephone with PT Telekomunikasi stop shop (Badan Pelayanan Perizinan Procedure 6. Receive final inspection from Indonesia Tbk (Telkom) Terpadu, BP2T) Pontianak one–stop shop (Badan Pelayanan Time: 7 days Time: 1 day Perizinan Terpadu, BP2T) Cost: IDR 250,000 Cost: No cost Time: 1 day Comments: The company notifies the Industrial Man- Comments: In order to obtain City Planning Statement Cost: No cost ager that the warehouse is ready for utility hook–ups. (SKRK), BuildCo must submit the following docu- Comments: Representatives of the Pontianak one– * This procedure can be completed simultaneously ments to the Pontianak one–stop shop: stop shop carry out a joint inspection with the City with previous procedures a. Application form, duly filled; Planning Office to check whether the warehouse built by BuildCo is in line with the information contained in b. Copy of Payment Receipt of Land and Building Tax; DEALING WITH CONSTRUCTION PERMITS the application for the building construction permit. At c. Copy of applicant’s ID; the end of the inspection, BuildCo representatives sign Semarang, Central Java d. Location Map and Drawings, prepared by BuildCo’s the inspection report produced by the visiting team. Warehouse value: IDR 4,552,100,000 = USD 437,498 architect; Data as of: July 2011 e. Copy of Land Ownership certificate. Procedure 7. Obtain original letter of Building Construction Permit (IMB) from Procedure 1. Request location clearances Procedure 2. Receive inspection from Pontianak one–stop shop (Badan Pelayanan from Semarang one–stop shop (BPPT) Zoning Agency (Dinas Tata Ruang) Perizinan Terpadu, BP2T) Time: 1 day Time: 1 day Time: 2 days Cost: No cost Cost: No cost Cost: No cost Comments: In order to obtain the location clearances Comments: BuildCo’s representatives must be present Comments: After the final inspection has taken place, from the Semarang one–stop shop, BuildCo must during the inspection in order to show the borders of the Pontianak one–stop shop reviews the final inspec- submit the following documents: the future building site to the inspectors. Once the tion report and releases the original letter of building a. Application form, duly filled; inspection has taken place, the inspectors file a report construction permit (IMB). b. Project proposal; that is forwarded to the Pontianak one–stop shop. Procedure 8. Register with Local Tax Office c. Copy of land ownership certificate; Procedure 3. Obtain City Planning (Kantor Pajak Pratama, KPP) d. Copy of identity card of the applicant and company establishment deeds; Statement (SKRK) from Pontianak one– Time: 14 days stop shop (Badan Pelayanan Perizinan e. Copy of subject to tax registration. Cost: No cost Terpadu, BP2T) Comments: The registration is done by completing the Procedure 2. Receive inspection from Time: 16 days Tax Object Notification Letter (SPOP) available in cer- Semarang one–stop shop (BPPT) Cost: IDR 15,000 tain government offices. The SPOP must be signed by Time: 1 day the taxpayer and submitted to the Land and Building Procedure 4. Request Building Construction Tax Office in the area where the warehouse is to be Cost: No cost Permit (IMB) and obtain official copy of built, no later than 30 days after receipt of the SPOP. Comments: After receiving the application for the the permit from Pontianak one–stop shop The following documents should be included: location clearances, a technical team is sent by the (Badan Pelayanan Perizinan Terpadu, a. The latest Payable Tax Notification Letter; Semarang one–stop shop to verify the location of the plot and check if the neighbors have any objection to BP2T) b. Copy of the land certificate; the building project that will be carried out by BuildCo. Time: 14 days 80 DOING BUSINESS IN INDONESIA 2012

BuildCo representatives’ presence is mandatory during No inspection is carried out during this procedure DEALING WITH CONSTRUCTION PERMITS the inspection as they need to sign the inspection because all necessary verifications have been carried Surabaya, East Java minutes (Berita Acara Verifikasi Lapangan). out by the Semarang one–stop shop when processing the location clearances. If all documents submitted are Warehouse value: IDR 4,552,100,000 = USD 437,498 Procedure 3. Obtain location clearances complete and correct, BuildCo is notified to proceed Data as of: July 2011 from Semarang one–stop shop (BPPT) with the payment and collect the building permit: both actions are carried out at the Semarang one–stop shop Procedure 1. Notarize copy of Land Time: 12 days (BPPT). Certificate at Notary Office Cost: No cost According to Mayor Decree No. 13/2011, the statutory Time: 3 days Procedure 4. Obtain statement on land time for the Semarang one–stop shop to carry out this Cost: IDR 50,000 procedure is 15 days. The authorities usually respect dispute with Head of the Village Comments: In order to be able to undertake some of the statutory time limit. the necessary procedures for the construction of the Time: 8 days warehouse, BuildCo must legalize a copy of the land Cost: No cost Procedure 7. Register with Local Tax Office ownership certificate with a notary. The cost of this Comments: The statement of land dispute is neces- (Kantor Pajak Pratama, KPP) procedure is the product of the negotiation between sary when applying for the statement letter and the Time: 11 days the parties. building permit. Cost: No cost Procedure 2. Request City Planning Procedure 5. Obtain statement letter and Comments: The registration is conducted by complet- ing the Tax Object Notification Letter (SPOP) available Statement (SKRK) at Surabaya one–stop city planning map from Semarang one–stop in certain government offices. The SPOP must be shop (Unit Pelayanan Terpadu Satu Atap) shop (BPPT) signed by the taxpayer and submitted to the Local Tax Time: 1 day Time: 15 days Office in the area where the warehouse is to be built, Cost: No cost no later than 30 days after receipt of the SPOP. The Cost: IDR 1,579,300 (area of the plot, multiplied by Comments: In order to obtain the City Planning State- following documents should be included: IDR 1,700) ment, BuildCo must submit the following documents: a. The latest Payable Tax Notification Letter; Comments: In order to obtain the statement letter a. Application Form (available at the Surabaya one– and city planning map (Keterangan Rencana Kota, b. Copy of the land certificate; stop shop); KRK and Peta Rencana Tata Ruang dan Wilayah, Peta c. Copy of the identity card of the land title holder or b. Copy of identity card of the applicants; RTRW), BuildCo must submit the following docu- articles of association if the land is registered under c. Copy of Property Tax invoice and receipt; ments: a company name. a. Application form; d. Legalized copy of land ownership certificate. b. Copy of identity card of the applicant and com- Procedure 8. Register the warehouse with As it submits the documents, BuildCo is interviewed pany’s establishment deed; Semarang one–stop shop (BPPT) about the project details. After that, the Surabaya one–stop shop checks the masterplan and calculates Time: 3 days c. The latest Payable Tax Notification Letter; the retribution charges. BuildCo pays the fees at the d. Copy of land ownership certificate; Cost: No cost Surabaya one–stop shop and the file is transferred e. Statement on land dispute, obtained from local Comments: In order to register the warehouse, to the City Planning Agency (Dinas Cipta Karya dan Head of the Village. BuildCo must submit the following documents to the Tata Ruang). City Planning Office representatives From the end of 2009, the statement letter and city Semarang one–stop shop: inspect the future building site, measure the location, planning map are issued at the Semarang one–stop a. Business permit; prepare drawings, and position the future build- ing’s plot in technical masterplan. They also prepare shop (BPPT). This change is the product of Mayor b. Company Tax Registration Number; location drawings (with border, base coefficient, size Decree No. 875.1/57, year 2009, regarding Authority c. Building Construction Permit (IMB); Delegation for Approving Permit and Non Permit to coefficient, and technical requirements). When all Head of BPPT Semarang. According to Mayor Decree d. Location Map; is complete, the City Planning Agency evaluates, No. 13/2011, the statutory time for the Semarang e. Recent photograph of BuildCo’s director. registers, and approves the application. Once the ap- one–stop shop to issue the statement letter and city According to Mayor Decree No. 13/2011, the statutory plication has been approved, the City Planning Office planning map is 15 days. Such a statutory limit is time for the Semarang one–stop shop to carry out this transfers the file to the Surabaya one–stop shop which usually respected by the authorities. The costs for the procedure is 5 days. The registration, however, usually then notifies BuildCo that the statement is ready for statement letter and city planning map are based on takes a shorter amount of time. pick up. Local regulation No. 14/1998. Regulations establish a statutory time of 10 days for Procedure 9*. Request and connect to the City Planning Statement to be issued, but it usually Procedure 6. Obtain Building Construction water and sewage with PDAM takes longer. This procedure is governed by the following regula- Permit (IMB) from Semarang one–stop Time: 8 days shop (Badan Pelayanan Perijinan Terpadu, tions: Cost: IDR 1,500,000 BPPT) a. Local Regulation No. 7/2003, regarding charges on Comments: The company notifies the Industrial Man- City Planning Statement, implemented since 2004; Time: 15 days ager that the warehouse is ready for utility hook–ups. Cost: IDR 7,230,035 [0.6% x unit cost x building size b. Mayor Decree No. 31 / 2004, regarding implemen- x location index x building index] Procedure 10*. Request and connect tation of Local Regulation No 7/2003, implemented since 2004; Comments: In order to obtain the permit, BuildCo to telephone with PT Telekomunikasi needs to submit the following documents: Indonesia Tbk (Telkom) c. Mayor regulation No. 36/2005, regarding City Planning Map, implemented since 2005. a. Application form, duly filled; Time: 3 days b. Statement letter (KRK); Cost: IDR 63,000 Procedure 3. Receive inspection from City c. Photocopy certificate of land ownership; Comments: The company notifies the Industrial Man- Planning Agency (Dinas Cipta Karya dan d. Statement on land dispute, obtained from local ager that the warehouse is ready for utility hook–ups. Tata Ruang) Head of the Village; * This procedure can be completed simultaneously Time: 1 day e. Photocopy of personal ID of the applicant; with previous procedures Cost: No cost f. Photocopy of proof of property tax payments; Comments: A technical team of the City Planning g. Drawings; Agency inspects the future building site and measures h. Photocopy of the establishment deeds, business the location in the presence of BuildCo representa- trade license (SIUP), business construction services tives. license (SIUJK), tax registration. LIST OF PROCEDURES 81

Procedure 4. Obtain City Planning Procedure 8. Register warehouse with Comments: In order to obtain the Zoning Usage Statement (SKRK) from Surabaya one–stop Local Revenue Agency (Dispenda) Permit (IPR) and Print–out of City masterplan Map, BuildCo must submit the following documents to the shop (UPTSA) Time: 2 days Surakarta one–stop shop: Time: 28 days Cost: No cost a. Application form, duly filled; Cost: IDR 2,822,000 [(0.01 x Plot area x Taxation Comments: The registration is done by completing the b. Photocopy of applicant’s identification card; value x Location Index) + administrative costs of IDR Tax Object Notification Letter (SPOP) available in cer- c. Photocopy of Land ownership certificate; 35.000] tain government offices. The SPOP must be signed by Comments: Costs based on Mayor regulation No. the taxpayer and submitted to Local revenue agency d. Land and Building Tax payment proof. 31/2004 and Local regulation No. 7/2003. (Dispenda) in the area where the warehouse is to be Once the application has been submitted, the built, no later than 30 days after receipt of the SPOP. Surakarta one–stop shop assigns a team of officers to Procedure 5. Obtain Environmental The following documents should be included: carry out an inspection. After the inspection has taken Monitoring Plan and Environmental a. The latest Payable Tax Notification Letter; place, the City Planning Office prepares the necessary documents and calculates the fees to be paid. BuildCo Management Plan (UKL/UPL) approval b. Copy of the land certificate; receives a notification to pay the fees and collect the from local Environmental Control Agency c. New tax object registration number (nomor pener- permit and the print–out of the city masterplan map. (BLH) bitan obyek pajak baru). The procedures regarding Zoning Usage Permit (IPR) Time: 1 day and the print–out of the city masterplan have been Cost: No cost Procedure 9. Register the warehouse with introduced by Local regulation No. 8/2009, imple- Surabaya one–stop shop (Unit Pelayanan Comments: In order to obtain the approval of UKL and mented since 2010. UPL, BuildCo must submit the following documents to Terpadu Satu Atap) Other regulations concerning this procedure are the the Local Environmental Agency: Time: 1 day following: a. Environmental document. Prepared by BuildCo; Cost: No cost a. Local Regulation No. 8/1988, on building proce- b. City Planning Statement and City Planning Map; Comments: In order to register the warehouse with dures; c. Building Construction Permit Application Form. the Surabaya one–stop shop, BuildCo must submit the b. Local Regulation No. 9/1999, regarding retribution following documents: charges on city master–planning print out; Based on Regulation No. 7/2009, implemented since January 2011, this procedure is mandatory. a. Copy of ID card; c. Local Regulation No. 8/1993, regarding Surakarta b. Copy of Construction Permit (IMB); masterplan 1993–2013. Procedure 6. Obtain Building Construction c. Copy of Land Ownership Certificate; Procedure 2. Receive inspection from Permit (IMB) from Surabaya one–stop shop d. Copy of Business Trading License (SIUP) and Com- (Unit Pelayanan Terpadu Satu Atap) pany Registration (TDP); Surakarta one–stop shop (KPPT) Time: 30 days e. BuildCo’s director’s pictures (2 copies – size 4x6 Time: 1 day Cost: IDR 14,225,800 cm). Cost: No cost Comments: In order to obtain the building construc- The legal basis for this procedure are local regulation Comments: The inspection is conducted by a techni- tion permit, BuildCo must submit the following No. 1/2010, regarding warehouse registration charges, cal team from Surakarta one–stop shop (KPPT). A documents: and Mayor regulation No. 35/2010, regarding ware- representative of BuildCo must be present in order house registration procedures. Both regulations have show the border of the future building site and sign 1. Administrative Requirements: been implemented since 2010. the minutes of the inspection. a. Application form and statement letter of construc- tion requirement adherence; Procedure 10*. Request and connect to Procedure 3. Obtain Zoning Usage Permit b. Copy of ID card of BuildCo’s director; water and sewage with PDAM (Izin Pemanfaatan Ruang, IPR) and print– c. Copy of Property Tax Receipt; Time: 21 days out of city masterplan map from Surakarta d. Copy of Land Ownership Certificate; Cost: IDR 1,500,000 one–stop shop (KPPT) e. City Planning Statement (SKRK); Comments: The company notifies the Industrial Man- Time: 16 days f. Construction Accountability Statement, prepared ager that the warehouse is ready for utility hook–ups. Cost: IDR 1,741,875 (fees for the Print Out of the City by BuildCo’s architect; masterplan, the Zoning Usage Permit is free of cost) g. Picture of the site and building plans, prepared by Procedure 11*. Request and connect Comments: After the inspection has taken place, the BuildCo’s architect. to telephone with PT Telekomunikasi Surakarta one–stop shop issues the Zoning Usage 2. Technical requirements prepared by BuildCo: Indonesia Tbk (Telkom) Permit and the print–out of the city masterplan map. Time: 2 days a. Design drawings, 3 copies: Procedure 4. Obtain Environmental – Landscaping (scale 1:1000/1:5000), Cost: IDR 450,000 Statement (SPPL) approval from Local – Lay out (scale 1:100), Comments: The company notifies the Industrial Man- Environmental Agency (BLH) ager that the warehouse is ready for utility hook–ups. – Foundation base, roof, sanitation (1:100); Time: 2 days b. 2 sets of structure drawings. * This procedure can be completed simultaneously Cost: No cost with previous procedures Relevant regulations: Comments: BuildCo’s architect prepares the en- a. Local regulation No. 17/1999, implemented since vironmental document (SPPL) and submits to the DEALING WITH CONSTRUCTION PERMITS 1999; Local Environmental Agency (BLH) for approval. The b. Local regulation No. 7/2009, implemented since Surakarta, Central Java environmental document comprises two items, an January 2011. Warehouse value: IDR 4,552,100,000 = USD 437,498 application form and a statement letter, and can be prepared in–house by BuildCo. Data as of: July 2011 Procedure 7. Obtain official report on completion of construction and compliance Procedure 1. Request Zoning Usage Permit Procedure 5. Verify Land Ownership with with building permit from City Planning (Izin Pemanfaatan Ruang, IPR) and print– the Head of the Village (Lurah) Agency (Dinas Cipta Karya dan Tata out of city masterplan map from Surakarta Time: 1 day Ruang) one–stop shop (KPPT) Cost: No cost Time: 28 days Time: 1 day Comments: The Head of the Village has to verify that Cost: IDR 62,500 Cost: No cost the land belongs to BuildCo. Once the verification pro- cess has taken place, the Head of the Village signs the application for the building construction permit (IMB). 82 DOING BUSINESS IN INDONESIA 2012

Procedure 6. Verify Land Ownership with Procedure 9. Register the warehouse with Cost: IDR 20,484,450 (construction permit charges the Head of the Sub–district (Camat) Surakarta one–stop shop (KPPT) x size of building x coefficient of building class x coef- ficient of building location x coefficient building usage Time: 1 day Time: 6 days x coefficient of stories building) Cost: No cost Cost: No cost Comments: In order to obtain the building construc- Comments: The Head of the Sub–district has to verify Comments: In order to register the warehouse, tion permit, BuildCo must submit the following docu- that the land belongs to BuildCo. Once the verification BuildCo must submit the following documents : ments to the Yogyakarta one–stop shop: process has taken place, the Head of the Sub–district a. Copy of ID card of BuildCo’s representative; a. Application form, duly filled; signs the application for the building construction b. Copy of BuildCo’s Nuisance Permit (HO); b. Copy of certificate of ownership; permit (IMB). c. Copy of Permanent Business Trading Permit (SIUP); c. Shop drawings, signed by licensed architect and Procedure 7. Obtain Building Construction d. Copy of Company Establishment Deed. engineer; Permit (IMB) from Surakarta one–stop d. Structure and system calculations; shop (KPPT) Procedure 10*. Request and connect to e. Advis planning permit; water and sewage with PDAM Time: 21 days f. Environmental Management Plan and Environ- Cost: IDR 7,000,000 [(First floor: IDR 490,518 x IDR Time: 16 days mental Monitoring Plan, approved by the Local 2.1 x coefficient of the construction value for the first Cost: IDR 2,000,000 Environmental Agency. floor) + (Second floor: IDR 490,518 x IDR 2.1 x coef- Comments: The company notifies the Industrial Man- ficient of the construction value of second floor)] ager that the warehouse is ready for utility hook–ups. Procedure 4. Register with Local Tax Office (Kantor Pajak Pratama, KPP) Comments: In order to obtain the building construc- tion permit, BuildCo must submit the following docu- Procedure 11*. Request and connect Time: 3 days ments to Surakarta one–stop shop: to telephone with PT Telekomunikasi Cost: No cost a. Application form, duly filled by the applicant and Indonesia Tbk (Telkom) Comments: The registration is done by completing signed by head of village and head of Sub–district; Time: 8 days the Tax Object Notification Letter (SPOP) available in b. Photocopy of ID card (KTP); Cost: IDR 500,000 certain government offices. The SPOP must be signed c. Photocopy of Land Ownership Certificate; by the taxpayer and submitted to the Local Tax Office Comments: The company notifies the Industrial Man- in the area where the warehouse is to be built, no later d. Photocopy of Land and Building Tax payment ager that the warehouse is ready for utility hook–ups. than 30 days after receipt of the SPOP. The following receipt; * This procedure can be completed simultaneously documents should be included: e. Zoning Usage Permit (IPR); with previous procedures a. The latest Payable Tax Notification Letter; f. Print–out of city masterplan map; b. Copy of the land certificate; DEALING WITH CONSTRUCTION PERMITS g. Architectural Plans, prepared by BuildCo architect. c. Copy of the identity card of the land title holder or After submitting all the required documents, BuildCo Yogyakarta, DI Yogyakarta articles of association if the land is registered under receives a receipt. The Surakarta one–stop shop Warehouse value: IDR 4,552,100,000 = USD 437,498 a company name. forwards the documents to the City Planning Agency Data as of: July 2011 that reviews them. After that, provided that there is no Procedure 5. Register the warehouse issue to be addressed, the City Planning Agency as- Procedure 1. Obtain Advis Planning Permit with Yogyakarta one–stop shop (Dinas sembles a team to conduct a site inspection. BuildCo from Yogyakarta one–stop shop (Dinas Perijinan) presence is required only if notified by the City Plan- ning Agency. Given the assumptions of the case study, Perijinan) Time: 5 days the presence of BuildCo during the inspection is very Time: 1 day Cost: No cost unlikely. Cost: No cost Comments: In order to register the warehouse, After the inspection, the inspectors prepare a report Comments: The Permit Registration Office at the BuildCo must submit the following documents to the for the City Planning Office. The City Planning Office Yogyakarta one–stop shop has all data regarding the Yogyakarta one–stop shop: prepares the building construction permit and calcu- city masterplan (borders, voids, building height, no. of a. Application form, duly filled; lates the fees. When all is ready, the one–stop shop storeys). Because of this, the procedure can be carried b. Copy of identity card of the applicants; office informs BuildCo by letter/phone call and invites out very rapidly. BuildCo to pay the fees and collect the permit. Collec- c. Copy of Starting Business Permit, Company Regis- tion of the document and payment of the fees takes tration, Nuisance Permit (already in possession of Procedure 2. Obtain Environmental BuildCo, as per assumptions); place simultaneously at the Surakarta one–stop shop. Management Plan and Environmental d. Copy of Tax Registration Number; This procedure is regulated by Mayor Decree No. Monitoring Plan (UKL/UPL) approval 974/049/I/2000, implemented since 2000, regard- from Local Environment Agency (BLH) e. Location Map. ing Retribution Charges for Building Construction through Yogyakarta one–stop shop (Dinas f. Notification letter to confirm the status of the own- Permit. Perijinan) ership of the warehouse (if not owned or rented by the company) Time: 12 days Procedure 8. Register the warehouse with The requirements for this procedure are regulated by Local Tax Office (Kantor Pajak Pratama, Cost: No cost Mayor regulation No. 37/2011. Such regulation estab- KPP) Comments: BuildCo prepares the Environmental lishes a statutory limit of 5 days for this procedure to Time: 11 days Management Plan and the Environmental Monitor- be carried out. Such a timeline is usually respected by ing Plan (UKL/UPL) by filling up a template that the Yogyakarta one–stop shop. Cost: No cost is provided by the Yogyakarta one–stop shop. The Comments: The registration is done by completing document is submitted to the Yogyakarta one–stop Procedure 6*. Request and connect to the Tax Object Notification Letter (SPOP) available in shop which then forwards it the Local Environmental water and sewage with PDAM certain government offices. The SPOP must be signed Agency. After being reviewed and examined by a Time: 8 days by the taxpayer and submitted to the Local Tax Office technical team, the document is cleared by the Head in the area where the warehouse is to be built, no later of the Local Environmental Agency and sent back to Cost: IDR 2,000,000 than 30 days after receipt of the SPOP. The following the Yogyakarta one–stop shop where it can be picked Comments: The company notifies the Industrial Man- documents should be included: up by BuildCo. ager that the warehouse is ready for utility hook–ups. a. The latest Payable Tax Notification Letter (Tax Receipt); Procedure 3. Obtain Building Construction Procedure 7*. Request and connect b. Copy of the land certificate; Permit (IMB) from Yogyakarta one–stop to telephone with PT Telekomunikasi c. Copy of the identity card of the land title holder or shop (Dinas Perijinan) Indonesia Tbk (Telkom) articles of association if the land is registered under Time: 25 days Time: 8 days a company name. LIST OF PROCEDURES 83

Cost: IDR 480,000 Comments: The buyer pays the Tax on Acquisition Comments: After the buyer submits the registration Comments: The company notifies the Industrial Man- of Land and Building (BPHTB) in the amount of 5% x of the Land Deed, she/he leaves it there and has ager that the warehouse is ready for utility hook–ups. [(transfer value or sale value or Nilai Perolehan Obyek to return some days later to pick up the Land Deed Pajak (NPOP)) – (non–taxable sale value or Nilai that has been registered under the buyer’s name. In * This procedure can be completed simultaneously Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- between submission of the deed and pick–up, the with previous procedures KP))]. According to the law on Local Tax (Law No. buyer has to phone the Officer at the Land Office to 28/2009), the BPHTB belongs to the local govern- ask about the progress. The Land Office crosses out ment. Article 87 point 4 of the Law sets a minimum the name of the previous owner and inserts the name LIST OF PROCEDURES value for the NPOPTKP at IDR 60,000,000. of the buyer, stamps and signs it. For Balikpapan, the local regulation (Perda No. REGISTERING PROPERTY 18/2010) stipulates a NPOPTKP of IDR 60,000,000. Procedure 6. Registration of the Land Deed at the Tax on Land and Building Office Procedure 4. Execution of sale and (PBB) under the name of the buyer Balikpapan, East Kalimantan purchase of Land Deed by a Land Deed Time: 1 day Property value: IDR 1,342,223,913 = USD 129,000 Official (PPAT) appointed by the Head of Cost: No cost Data as of: July 2011 the National Land Office or a local Head of Comments: In connection to the registration of the a Sub–District Land Deed, the change of ownership must be regis- Procedure 1. Land certificate examination Time: 3 days tered with the Land and Building Tax Office (PBB). The at the local Land Office (BPN) Cost: IDR 13,422,239 (1% of the property value) taxpayer reports the transfer of land title. Time: 3 days Comments: The execution of the sale and purchase of * This procedure can be completed simultaneously Cost: IDR 50,000 the Land Deed is made before Land Officials, namely with previous procedures. Comments: A land certificate examination is carried a Land Deed Official (PPAT) appointed by the Head of out by a Land Deed Official. If the land book con- the National Land Office after the taxes in procedures REGISTERING PROPERTY cerned is available at the Land Office, it usually takes 1 3 and 4 have been paid. For convenience, those pay- Banda Aceh, Aceh Province day. However, sometimes the land book is unavail- ments are usually made three days before the execu- able, misplaced or being used by another division of tion of the sale–purchase deed. Property value: IDR 1,342,223,913 = USD 129,000 the Land Office, so then the examination process will The documentation shall include: Data as of: July 2011 be pending and it usually takes a few days to obtain a. Original land certificate; the information from the Land Office. The Regula- Procedure 1. Land certificate examination tion of the National Land Agency Number 1 of 2010 b. Evidence of the latest payment of Tax on Land and at the local Land Office (BPN) Building (PBB). Every year, the local PBB Tax Office stipulates that the requirements to examine the land Time: 3 days certificate include the following: issues a tax assessment to land owners. By custom, the buyer usually wants to obtain the original of the Cost: IDR 50,000 a. Land Ownership Certificate; payment of PBB for the past three years and utility Comments: A land certificate examination is carried b. Copy of the applicant’s identification or its proxy; bills for the last three months––though in practice out by a Land Deed Official. If the land book con- c. Letter of request from the Land Deed Official the office will check the last 10 years. The Land cerned is available at the Land Office, it usually takes 1 (PPAT) for the transfer of rights by virtue of the Deed Officer drawing up the sale and purchase day. However, sometimes the land book is unavail- Deed of the Land Deed Officer. deed will only need to see the most recent PBB able, misplaced or being used by another division of The land title search would also involve a check at the while the Land Office will need a copy of the most the Land Office, so then the examination process will local City Planning Office, located at the localgovern- recent PBB for registering the land into the name of be pending and it usually takes a few days to obtain ment office, to determine the intended use of the said the new owner; the information from the Land Office. The Regula- plot of land, whether for residences, industry or green c. Evidence of payment of the Tax on Transfer of Land tion of the National Land Agency Number 1 of 2010 belt. No written statement is given, but a note is made and Building (Transfer Tax) (obtained in Procedure stipulates that the requirements to examine the land on the certificate saying ‘Has been examined and 2); certificate include the following: according to the Land Registry/ Land Book at the Land d. Evidence of payment of the Tax on Acquisition of a. Land Ownership Certificate; Office, dated______, time ______’ and is initialed Land and Building (BPHTB) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; by the officer at the Land Office. 3); c. Letter of request from the Land Deed Official e. Evidence of deed of Company Establishment which (PPAT) for the transfer of rights by virtue of the Procedure 2. Seller pays Transfer Tax at a was already authorized by the Ministry of Law and Deed of the Land Deed Officer. bank Human Rights; The land title search would also involve a check at the Time: 1 day f. Company Tax–Registration Numbers (NPWP) of local City Planning Office, located at the localgovern- Cost: IDR 67,111,196 (5% of the property value) the seller and the purchaser (obtained in Procedure ment office, to determine the intended use of the said Comments: The seller pays the Tax on Transfer of 4); plot of land, whether for residences, industry or green Land and Building (Transfer Tax) in the amount of 5% g. Deed of Establishment and its amendments of both belt. No written statement is given, but a note is made which is calculated on the transfer value. Taxes to the the seller and purchaser; on the certificate saying ‘Has been examined and central government are paid at a bank appointed by h. Corporate approvals of the seller to dispose of according to the Land Registry/ Land Book at the Land the State Treasury by the state–owned bank (Bank the land and the purchaser to acquire the land as Office, dated______, time ______’ and is initialed BUMN); those to the local government are paid at the required in the Articles of Association of both the by the officer at the Land Office. Local Government Bank and/or other private com- seller and purchaser; Procedure 2. Seller pays Transfer Tax at a mercial bank (as per Article 4.2 of Law No. 7/1983, i. Advise Planning from the City Administration amended by Law No. 10/1994 and Law 17/2000 Institution; bank concerning Income Tax and Parts 2.1 and 5.1 of the Time: 1 day Director General of Taxation Circular No. SE–04- j. Permit for Building Establishment. Cost: IDR 67,111,196 (5% of the property value ) /P.J.33/1996 dated August 26, 1996). Procedure 5. Registration of the Land Deed Comments: The seller pays the Tax on Transfer of Procedure 3*. Buyer pays Tax on at the local Land Office (BPN) under the Land and Building (Transfer Tax) in the amount of Acquisition on Land and Building at a bank name of the buyer 5% which is calculated on the transfer value. Taxes to the central government are paid at a bank ap- Time: 30 days Time: 1 day pointed by the State Treasury by the state–owned Cost: IDR 64,111,196 (5% of property value minus IDR Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- bank (Bank BUMN); those to the local government 60 million which is tax–free) erty value) + IDR 6,000 stamp duty per document (2 are paid at the Local Government Bank and/or other required)) private commercial bank (as per Article 4.2 of Law No. 7/1983, amended by Law No. 10/1994 and Law 84 DOING BUSINESS IN INDONESIA 2012

17/2000 concerning Income Tax and Parts 2.1 and 5.1 Procedure 5. Registration of the Land Deed mercial bank (as per Article 4.2 of Law No. 7/1983, of the Director General of Taxation Circular No. SE– at the local Land Office (BPN) under the amended by Law No. 10/1994 and Law 17/2000 04/P.J.33/1996 dated August 26, 1996). concerning Income Tax and Parts 2.1 and 5.1 of the name of the buyer Director General of Taxation Circular No. SE–04- Procedure 3*. Buyer pays Tax on Time: 30 days /P.J.33/1996 dated August 26, 1996). Acquisition on Land and Building at a bank Cost: IDR 1,404,224 (IDR 50000 + (0.1% of prop- Time: 1 day erty value) + IDR 6,000 stamp duty per document (2 Procedure 3*. Buyer pays Tax on required)) Acquisition on Land and Building at a bank Cost: IDR 64,111,196 (5% of property value minus IDR 60 million which is tax–free) Comments: After the buyer submits the registration Time: 1 day of the Land Deed, she/he leaves it there and has Comments: The buyer pays the Tax on Acquisition Cost: IDR 64,111,196 (5% of property value minus IDR to return some days later to pick up the Land Deed 60 million which is tax–free) of Land and Building (BPHTB) in the amount of 5% x that has been registered under the buyer’s name. In [(transfer value or sale value or Nilai Perolehan Obyek between submission of the deed and pick–up, the Comments: The buyer pays the Tax on Acquisition Pajak (NPOP)) – (non–taxable sale value or Nilai buyer has to phone the Officer at the Land Office to of Land and Building (BPHTB) in the amount of 5% x Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- ask about the progress. The Land Office crosses out [(transfer value or sale value or Nilai Perolehan Obyek KP))]. According to the law on Local Tax (Law No. the name of the previous owner and inserts the name Pajak (NPOP)) – (non–taxable sale value or Nilai 28/2009), the BPHTB belongs to the local govern- of the buyer, stamps and signs it. Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- ment. Article 87 point 4 of the Law sets a minimum KP))]. According to the law on Local Tax (Law No. value for the NPOPTKP at IDR 60,000,000. Procedure 6. Registration of the Land Deed 28/2009), the BPHTB belongs to the local govern- For Banda Aceh, the local regulation (Perda No. ment. Article 87 point 4 of the Law sets a minimum at the Tax on Land and Building Office value for the NPOPTKP at IDR 60,000,000. 7/2010) stipulates a NPOPTKP of IDR 60,000,000. (PBB) under the name of the buyer For Bandung, the local regulation (Perda No. 2/2011) Procedure 4. Execution of sale and Time: 1 day stipulates a NPOPTKP of IDR 60,000,000. purchase of Land Deed by a Land Deed Cost: No cost Official (PPAT) appointed by the Head of Comments: In connection to the registration of the Procedure 4. Execution of sale and the National Land Office or a local Head of Land Deed, the change of ownership must be regis- purchase of Land Deed by a Land Deed a Sub–District tered with the Land and Building Tax Office (PBB). The Official (PPAT) appointed by the Head of taxpayer reports the transfer of land title. Time: 3 days the National Land Office or a local Head of a Sub–District Cost: IDR 13,422,239 (1% of the property value ) * This procedure can be completed simultaneously with previous procedures. Time: 1 day Comments: The execution of the sale and purchase of the Land Deed is made before Land Officials, namely Cost: IDR 13,422,239 (1% of the property value) a Land Deed Official (PPAT) appointed by the Head of REGISTERING PROPERTY Comments: The execution of the sale and purchase the National Land Office after the taxes in procedures Bandung, West Java of the Land Deed is made before Land Officials, 3 and 4 have been paid. For convenience, those pay- Property value: IDR 1,342,223,913 = USD 129,000 namely a Land Deed Official (PPAT) appointed by ments are usually made three days before the execu- the Head of the National Land Office after the taxes Data as of: July 2011 tion of the sale–purchase deed. in procedures 3 and 4 have been paid. For conve- The documentation shall include: Procedure 1. Land certificate examination nience, those payments are usually made three days before the execution of the sale–purchase a. Original land certificate; at the local Land Office (BPN) deed. b. Evidence of the latest payment of Tax on Land and Time: 1 day The documentation shall include: Building (PBB). Every year, the local PBB Tax Office Cost: IDR 50,000 issues a tax assessment to land owners. By custom, a. Original land certificate; Comments: A land certificate examination is carried the buyer usually wants to obtain the original of the b. Evidence of the latest payment of Tax on Land and out by a Land Deed Official. If the land book con- payment of PBB for the past three years and utility Building (PBB). Every year, the local PBB Tax Office cerned is available at the Land Office, it usually takes 1 bills for the last three months––though in practice issues a tax assessment to land owners. By custom, day. However, sometimes the land book is unavail- the office will check the last 10 years. The Land the buyer usually wants to obtain the original of the able, misplaced or being used by another division of Deed Officer drawing up the sale and purchase payment of PBB for the past three years and utility the Land Office, so then the examination process will deed will only need to see the most recent PBB bills for the last three months––though in practice be pending and it usually takes a few days to obtain while the Land Office will need a copy of the most the office will check the last 10 years. The Land the information from the Land Office. The Regula- recent PBB for registering the land into the name of Deed Officer drawing up the sale and purchase tion of the National Land Agency Number 1 of 2010 the new owner; deed will only need to see the most recent PBB stipulates that the requirements to examine the land while the Land Office will need a copy of the most c. Evidence of payment of the Tax on Transfer of Land certificate include the following: and Building (Transfer Tax) (obtained in Procedure recent PBB for registering the land into the name of a. Land Ownership Certificate; 2); the new owner; b. Copy of the applicant’s identification or its proxy; c. Evidence of payment of the Tax on Transfer of Land d. Evidence of payment of the Tax on Acquisition of and Building (Transfer Tax) (obtained in Procedure Land and Building (BPHTB) (obtained in Procedure c. Letter of request from the Land Deed Official 2); 3); (PPAT) for the transfer of rights by virtue of the Deed of the Land Deed Officer. d. Evidence of payment of the Tax on Acquisition of e. Evidence of deed of Company Establishment which No written statement is given, but a note is made on Land and Building (BPHTB) (obtained in Procedure was already authorized by the Ministry of Law and 3); Human Rights; the certificate saying ‘Has been examined and accord- ing to the Land Registry/ Land Book at the Land Office, e. Evidence of deed of Company Establishment which f. Company Tax–Registration Numbers (NPWP) of dated______, time ______’ and is initialed by the was already authorized by the Ministry of Law and the seller and the purchaser (obtained in Procedure officer at the Land Office. Human Rights; 4); f. Company Tax–Registration Numbers (NPWP) of g. Deed of Establishment and its amendments of both Procedure 2. Seller pays Transfer Tax at a the seller and the purchaser (obtained in Procedure the seller and purchaser; bank 4); h. Corporate approvals of the seller to dispose of g. Deed of Establishment and its amendments of both Time: 1 day the land and the purchaser to acquire the land as the seller and purchaser; required in the Articles of Association of both the Cost: IDR 67,111,196 (5% of the property value) h. Corporate approvals of the seller to dispose of seller and purchaser; Comments: The seller pays the Tax on Transfer of the land and the purchaser to acquire the land as i. Advise Planning from the City Administration Land and Building (Transfer Tax) in the amount of 5% required in the Articles of Association of both the Institution; which is calculated on the transfer value. Taxes to the seller and purchaser; central government are paid at a bank appointed by j. Permit for Building Establishment. i. Advise Planning from the City Administration the State Treasury by the state–owned bank (Bank Institution; BUMN); those to the local government are paid at the j. Permit for Building Establishment. Local Government Bank and/or other private com- LIST OF PROCEDURES 85

Procedure 5. Registration of the Land Deed the location, use and property value (the parties do while the Land Office will need a copy of the most at the local Land Office (BPN) under the not need to be present). Once the inspection has recent PBB for registering the land into the name of been completed, the buyer or its representative is the new owner; name of the buyer informed and can proceed to make the payment of c. Evidence of payment of the Tax on Transfer of Land Time: 14 days the relevant fees at the BIDA offices. According to the and Building (Transfer Tax) (obtained in Procedure Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- 2005 Decision by the BIDA (SK Nomor 09/KPTS/ 3); KA/L/2005) on the ‘Tariff of Land Transfer’ – Uang erty value) + IDR 6,000 stamp duty per document (2 d. Evidence of payment of the Tax on Acquisition of Wajib Tahunan Otorita, or UWTO – the cost of the required)) Land and Building (BPHTB) (obtained in Procedure license is equivalent to 2.5% of the property value. Comments: After the buyer submits the registration 4); The license is valid for 25 years or until new transfer of of the Land Deed, she/he leaves it there and has e. Evidence of deed of Company Establishment which to return some days later to pick up the Land Deed the property (whichever comes first), after which the fee would have to be paid again. was already authorized by the Ministry of Law and that has been registered under the buyer’s name. In Human Rights; between submission of the deed and pick–up, the buyer has to phone the Officer at the Land Office to Procedure 3. Seller pays Transfer Tax at a f. Company Tax–Registration Numbers (NPWP) of ask about the progress. The Land Office crosses out bank the seller and the purchaser (obtained in Procedure 5); the name of the previous owner and inserts the name Time: 1 day g. Deed of Establishment and its amendments of both of the buyer, stamps and signs it. Cost: IDR 67,111,196 (5% of the property value) the seller and purchaser; Comments: The seller pays the Tax on Transfer of Procedure 6. Registration of the Land Deed h. Corporate approvals of the seller to dispose of Land and Building (Transfer Tax) in the amount of 5% the land and the purchaser to acquire the land as at the Tax on Land and Building Office which is calculated on the transfer value. Taxes to the required in the Articles of Association of both the (PBB) under the name of the buyer central government are paid at a bank appointed by seller and purchaser; Time: 1 day the State Treasury by the state–owned bank (Bank i. Advise Planning from the City Administration Cost: No cost BUMN); those to the local government are paid at the Local Government Bank and/or other private com- Institution; Comments: In connection to the registration of the mercial bank (as per Article 4.2 of Law No. 7/1983, j. Permit for Building Establishment. Land Deed, the change of ownership must be regis- amended by Law No. 10/1994 and Law 17/2000 tered with the Land and Building Tax Office (PBB). The concerning Income Tax and Parts 2.1 and 5.1 of the Procedure 6. Registration of the Land Deed taxpayer reports the transfer of land title. Director General of Taxation Circular No. SE–04- at the local Land Office (BPN) under the * This procedure can be completed simultaneously /P.J.33/1996 dated August 26, 1996). name of the buyer with previous procedures. Procedure 4*. Buyer pays Tax on Time: 7 days REGISTERING PROPERTY Acquisition on Land and Building at a bank Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- erty value) + IDR 6,000 stamp duty per document (2 Batam, Riau Islands Time: 1 day required)) Property value: IDR 1,342,223,913 = USD 129,000 Cost: IDR 63,611,196 (5% of property value minus Comments: After the buyer submits the registration Data as of: July 2011 IDR 70 million which is tax–free) of the Land Deed, she/he leaves it there and has Comments: The buyer pays the Tax on Acquisition to return some days later to pick up the Land Deed Procedure 1. Land certificate examination of Land and Building (BPHTB) in the amount of 5% x that has been registered under the buyer’s name. In at the local Land Office (BPN) [(transfer value or sale value or Nilai Perolehan Obyek between submission of the deed and pick–up, the Time: 7 days Pajak (NPOP)) – (non–taxable sale value or Nilai buyer has to phone the Officer at the Land Office to Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- ask about the progress. The Land Office crosses out Cost: IDR 50,000 KP))]. According to the law on Local Tax (Law No. the name of the previous owner and inserts the name Comments: A land certificate examination is carried 28/2009), the BPHTB belongs to the local govern- of the buyer, stamps and signs it. out by a Land Deed Official. If the land book con- ment. Article 87 point 4 of the Law sets a minimum cerned is available at the Land Office, it usually takes 1 value for the NPOPTKP at IDR 60,000,000. Procedure 7. Registration of the Land Deed day. However, sometimes the land book is unavail- For Batam, the local regulation (Perda No. 2/2011) at the Tax on Land and Building Office able, misplaced or being used by another division of stipulates a NPOPTKP of IDR 70,000,000. (PBB) under the name of the buyer the Land Office, so then the examination process will Time: 1 day be pending and it usually takes a few days to obtain Procedure 5. Execution of sale and the information from the Land Office. The Regula- purchase of Land Deed by a Land Deed Cost: No cost tion of the National Land Agency Number 1 of 2010 Comments: In connection to the registration of the stipulates that the requirements to examine the land Official (PPAT) appointed by the Head of the National Land Office or a local Head of Land Deed, the change of ownership must be regis- certificate include the following: tered with the Land and Building Tax Office (PBB). The a. Land Ownership Certificate; a Sub–District taxpayer reports the transfer of land title. Time: 7 days b. Copy of the applicant’s identification or its proxy; * This procedure can be completed simultaneously c. Letter of request from the Land Deed Official Cost: IDR 13,422,239 (1% of the property value) with previous procedures. (PPAT) for the transfer of rights by virtue of the Comments: The execution of the sale and purchase of Deed of the Land Deed Officer. the Land Deed is made before Land Officials, namely REGISTERING PROPERTY a Land Deed Official (PPAT) appointed by the Head of No written statement is given, but a note is made on Denpasar, Bali the certificate saying ‘Has been examined and accord- the National Land Office after the taxes in procedures ing to the Land Registry/ Land Book at the Land Office, 3 and 4 have been paid. For convenience, those pay- Property value: IDR 1,342,223,913 = USD 129,000 dated______, time ______’ and is initialed by the ments are usually made three days before the execu- Data as of: July 2011 officer at the Land Office. tion of the sale–purchase deed. The documentation shall include: Procedure 1. Land certificate examination Procedure 2. Obtain a property transfer a. Original land certificate; at the local Land Office (BPN) license from the Batam Industrial b. Evidence of the latest payment of Tax on Land and Time: 3 days Development Authority (BIDA) Building (PBB). Every year, the local PBB Tax Office Cost: IDR 50,000 Time: 30 days issues a tax assessment to land owners. By custom, Comments: A land certificate examination is carried Cost: IDR 33,555,598 (2.5% of the property value) the buyer usually wants to obtain the original of the out by a Land Deed Official. If the land book con- payment of PBB for the past three years and utility Comments: The buyer or its representative (Land cerned is available at the Land Office, it usually takes 1 bills for the last three months––though in practice day. However, sometimes the land book is unavail- Deed Official) must obtain a property transfer license the office will check the last 10 years. The Land at the Batam Industrial Development Authority able, misplaced or being used by another division of Deed Officer drawing up the sale and purchase the Land Office, so then the examination process will (BIDA) offices before the property transfer. An inspec- deed will only need to see the most recent PBB tion of the site is conducted by the Authority to assess be pending and it usually takes a few days to obtain the information from the Land Office. The Regula- 86 DOING BUSINESS IN INDONESIA 2012

tion of the National Land Agency Number 1 of 2010 b. Evidence of the latest payment of Tax on Land and Cost: IDR 50,000 stipulates that the requirements to examine the land Building (PBB). Every year, the local PBB Tax Office Comments: A land certificate examination is carried certificate include the following: issues a tax assessment to land owners. By custom, out by a Land Deed Official. If the land book con- a. Land Ownership Certificate; the buyer usually wants to obtain the original of the cerned is available at the Land Office, it usually takes 1 payment of PBB for the past three years and utility b. Copy of the applicant’s identification or its proxy; day. However, sometimes the land book is unavail- bills for the last three months––though in practice able, misplaced or being used by another division of c. Letter of request from the Land Deed Official the office will check the last 10 years. The Land the Land Office, so then the examination process will (PPAT) for the transfer of rights by virtue of the Deed Officer drawing up the sale and purchase be pending and it usually takes a few days to obtain Deed of the Land Deed Officer. deed will only need to see the most recent PBB the information from the Land Office. The Regula- The land title search would also involve a check at the while the Land Office will need a copy of the most tion of the National Land Agency Number 1 of 2010 local City Planning Office, located at the localgovern- recent PBB for registering the land into the name of stipulates that the requirements to examine the land ment office, to determine the intended use of the said the new owner; certificate include the following: plot of land, whether for residences, industry or green c. Evidence of payment of the Tax on Transfer of Land a. Land Ownership Certificate; belt. No written statement is given, but a note is made and Building (Transfer Tax) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; on the certificate saying ‘Has been examined and 2); according to the Land Registry/ Land Book at the Land c. Letter of request from the Land Deed Official d. Evidence of payment of the Tax on Acquisition of Office, dated______, time ______’ and is initialed (PPAT) for the transfer of rights by virtue of the Land and Building (BPHTB) (obtained in Procedure by the officer at the Land Office. Deed of the Land Deed Officer. 3); The land title search would also involve a check at the e. Evidence of deed of Company Establishment which Procedure 2. Seller pays Transfer Tax at a local City Planning Office, located at the localgovern- was already authorized by the Ministry of Law and bank ment office, to determine the intended use of the said Human Rights; Time: 1 day plot of land, whether for residences, industry or green f. Company Tax–Registration Numbers (NPWP) of belt. No written statement is given, but a note is made Cost: IDR 67,111,196 (5% of the property value ) the seller and the purchaser (obtained in Procedure on the certificate saying ‘Has been examined and Comments: The seller pays the Tax on Transfer of 4); according to the Land Registry/ Land Book at the Land Land and Building (Transfer Tax) in the amount of 5% g. Deed of Establishment and its amendments of both Office, dated______, time ______’ and is initialed which is calculated on the transfer value. Taxes to the the seller and purchaser; by the officer at the Land Office. central government are paid at a bank appointed by h. Corporate approvals of the seller to dispose of the State Treasury by the state–owned bank (Bank the land and the purchaser to acquire the land as Procedure 2. Seller pays Transfer Tax at a BUMN); those to the local government are paid at the required in the Articles of Association of both the bank Local Government Bank and/or other private com- seller and purchaser; mercial bank (as per Article 4.2 of Law No. 7/1983, Time: 2 days amended by Law No. 10/1994 and Law 17/2000 i. Advise Planning from the City Administration Cost: IDR 67,111,196 (5% of the property value) Institution; concerning Income Tax and Parts 2.1 and 5.1 of the Comments: The seller pays the Tax on Transfer of Director General of Taxation Circular No. SE–04- j. Permit for Building Establishment. Land and Building (Transfer Tax) in the amount of 5% /P.J.33/1996 dated August 26, 1996). which is calculated on the transfer value. Taxes to the Procedure 5. Registration of the Land Deed central government are paid at a bank appointed by Procedure 3*. Buyer pays Tax on at the local Land Office (BPN) under the the State Treasury by the state–owned bank (Bank Acquisition on Land and Building at local name of the buyer BUMN); those to the local government are paid at the government Revenue Office (Dispenda) Time: 30 days Local Government Bank and/or other private com- Time: 1 day mercial bank (as per Article 4.2 of Law No. 7/1983, Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- amended by Law No. 10/1994 and Law 17/2000 Cost: IDR 64,111,196 (5% of property value minus IDR erty value) + IDR 6,000 stamp duty per document (2 concerning Income Tax and Parts 2.1 and 5.1 of the 60 million which is tax–free) required)) Director General of Taxation Circular No. SE–04- Comments: The buyer pays the Tax on Acquisition Comments: After the buyer submits the registration /P.J.33/1996 dated August 26, 1996). of Land and Building (BPHTB) in the amount of 5% x of the Land Deed, she/he leaves it there and has [(transfer value or sale value or Nilai Perolehan Obyek to return some days later to pick up the Land Deed Procedure 3*. Buyer pays Tax on Pajak (NPOP)) – (non–taxable sale value or Nilai that has been registered under the buyer’s name. In Acquisition on Land and Building at a bank Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- between submission of the deed and pick–up, the KP))]. According to the law on Local Tax (Law No. buyer has to phone the Officer at the Land Office to Time: 2 days 28/2009), the BPHTB belongs to the local govern- ask about the progress. The Land Office crosses out Cost: IDR 64,111,196 (5% of property value minus IDR ment. Article 87 point 4 of the Law sets a minimum the name of the previous owner and inserts the name 60 million which is tax–free) value for the NPOPTKP at IDR 60,000,000. of the buyer, stamps and signs it. Comments: The buyer pays the Tax on Acquisition For Denpasar, the local regulation (Perda No. 7/2010) of Land and Building (BPHTB) in the amount of 5% x stipulates a NPOPTKP of IDR 60,000,000. Procedure 6. Registration of the Land Deed [(transfer value or sale value or Nilai Perolehan Obyek at the Tax on Land and Building Office Pajak (NPOP)) – (non–taxable sale value or Nilai Procedure 4. Execution of sale and (PBB) under the name of the buyer Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- KP))]. According to the law on Local Tax (Law No. purchase of Land Deed by a Land Deed Time: 1 day 28/2009), the BPHTB belongs to the local govern- Official (PPAT) appointed by the Head of Cost: No cost the National Land Office or a local Head of ment. Article 87 point 4 of the Law sets a minimum Comments: In connection to the registration of the value for the NPOPTKP at IDR 60,000,000. a Sub–District Land Deed, the change of ownership must be regis- While waiting for Gorontalo to enact local regulations Time: 3 days tered with the Land and Building Tax Office (PBB). The to implement the law on Local Tax, it is still under Cost: IDR 13,422,239 (1% of the property value ) taxpayer reports the transfer of land title. the old system (based on Article 7 of Law 20/2000, Comments: The execution of the sale and purchase of * This procedure can be completed simultaneously amending Law 21/1997) in which the maximum value the Land Deed is made before Land Officials, namely with previous procedures. for NPOPTKP is 60,000,000. In Gorontalo, based on a Land Deed Official (PPAT) appointed by the Head of Local Regulation No. 10/2011, the NPOPTKP is IDR the National Land Office after the taxes in procedures REGISTERING PROPERTY 60,000,000. 3 and 4 have been paid. For convenience, those pay- ments are usually made three days before the execu- Gorontalo, Gorontalo Procedure 4. Execution of sale and tion of the sale–purchase deed. Property value: IDR 1,342,223,913 = USD 129,000 purchase of Land Deed by a Land Deed The documentation shall include: Data as of: July 2011 Official (PPAT) appointed by the Head of a. Original land certificate; the National Land Office or a local Head of Procedure 1. Land certificate examination a Sub–District at the local Land Office (BPN) Time: 3 days Time: 3 days Cost: IDR 13,422,239 (1% of the property value) LIST OF PROCEDURES 87

Comments: The execution of the sale and purchase of REGISTERING PROPERTY Cost: IDR 13,422,239 (1% of the property value) the Land Deed is made before Land Officials, namely Jakarta, DKI Jakarta Comments: The execution of the sale and purchase of a Land Deed Official (PPAT) appointed by the Head of the Land Deed is made before Land Officials, namely Property value: IDR 1,342,223,913 = USD 129,000 the National Land Office after the taxes in procedures a Land Deed Official (PPAT) appointed by the Head of 3 and 4 have been paid. For convenience, those pay- Data as of: July 2011 the National Land Office after the taxes in procedures ments are usually made three days before the execu- Procedure 1. Land certificate examination 3 and 4 have been paid. For convenience, those pay- tion of the sale–purchase deed. ments are usually made three days before the execu- The documentation shall include: at the local Land Office (BPN) tion of the sale–purchase deed. a. Original land certificate; Time: 1 day The documentation shall include: b. Evidence of the latest payment of Tax on Land and Cost: IDR 50,000 a. Original land certificate; Building (PBB). Every year, the local PBB Tax Office Comments: A land certificate examination is carried b. Evidence of the latest payment of Tax on Land and issues a tax assessment to land owners. By custom, out by a Land Deed Official. If the land book con- Building (PBB). Every year, the local PBB Tax Office the buyer usually wants to obtain the original of the cerned is available at the Land Office, it usually takes 1 issues a tax assessment to land owners. By custom, payment of PBB for the past three years and utility day. However, sometimes the land book is unavail- the buyer usually wants to obtain the original of the bills for the last three months––though in practice able, misplaced or being used by another division of payment of PBB for the past three years and utility the office will check the last 10 years. The Land the Land Office, so then the examination process will bills for the last three months––though in practice Deed Officer drawing up the sale and purchase be pending and it usually takes a few days to obtain the office will check the last 10 years. The Land deed will only need to see the most recent PBB the information from the Land Office. The Regula- Deed Officer drawing up the sale and purchase while the Land Office will need a copy of the most tion of the National Land Agency Number 1 of 2010 deed will only need to see the most recent PBB recent PBB for registering the land into the name of stipulates that the requirements to examine the land while the Land Office will need a copy of the most the new owner; certificate include the following: recent PBB for registering the land into the name of c. Evidence of payment of the Tax on Transfer of Land a. Land Ownership Certificate; the new owner; and Building (Transfer Tax) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; c. Evidence of payment of the Tax on Transfer of Land 2); c. Letter of request from the Land Deed Official and Building (Transfer Tax) (obtained in Procedure d. Evidence of payment of the Tax on Acquisition of (PPAT) for the transfer of rights by virtue of the 2); Land and Building (BPHTB) (obtained in Procedure Deed of the Land Deed Officer. d. Evidence of payment of the Tax on Acquisition of 3); The land title search would also involve a check at the Land and Building (BPHTB) (obtained in Procedure e. Evidence of deed of Company Establishment which local City Planning Office, located at the localgovern- 3); was already authorized by the Ministry of Law and ment office, to determine the intended use of the said e. Evidence of deed of Company Establishment which Human Rights; plot of land, whether for residences, industry or green was already authorized by the Ministry of Law and f. Company Tax–Registration Numbers (NPWP) of belt. No written statement is given, but a note is made Human Rights; the seller and the purchaser (obtained in Procedure on the certificate saying ‘Has been examined and f. Company Tax–Registration Numbers (NPWP) of 4); according to the Land Registry/ Land Book at the Land the seller and the purchaser (obtained in Procedure g. Deed of Establishment and its amendments of both Office, dated______, time ______’ and is initialed 4); by the officer at the Land Office. the seller and purchaser; g. Deed of Establishment and its amendments of both h. Corporate approvals of the seller to dispose of Procedure 2. Seller pays Transfer Tax at a the seller and purchaser; the land and the purchaser to acquire the land as bank h. Corporate approvals of the seller to dispose of required in the Articles of Association of both the the land and the purchaser to acquire the land as seller and purchaser; Time: 1 day required in the Articles of Association of both the i. Advise Planning from the City Administration Cost: IDR 67,111,196 (5% of the property value) seller and purchaser; Institution; Comments: The seller pays the Tax on Transfer of i. Advise Planning from the City Administration j. Permit for Building Establishment. Land and Building (Transfer Tax) in the amount of Institution; 5% which is calculated on the transfer value. Taxes j. Permit for Building Establishment. Procedure 5. Registration of the Land Deed to the central government are paid at a bank ap- at the local Land Office (BPN) under the pointed by the State Treasury by the state–owned Procedure 5. Registration of the Land Deed name of the buyer bank (Bank BUMN); those to the local government are paid at the Local Government Bank and/or other at the local Land Office (BPN) under the Time: 21 days private commercial bank (as per Article 4.2 of Law name of the buyer Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- No. 7/1983, amended by Law No. 10/1994 and Law Time: 15 days erty value) + IDR 6,000 stamp duty per document (2 17/2000 concerning Income Tax and Parts 2.1 and 5.1 Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- required)) of the Director General of Taxation Circular No. SE– erty value) + IDR 6,000 stamp duty per document (2 Comments: After the buyer submits the registration 04/P.J.33/1996 dated August 26, 1996). required)) of the Land Deed, she/he leaves it there and has to Comments: Registration of the Land Deed at the local return some days later to pick up the Land Deed that Procedure 3*. Buyer pays Tax on Land Office (BPN) to have the purchaser’s name regis- has been registered under the buyer’s name. Acquisition on Land and Building at a bank tered and recorded in the land certificate. At the latest In between submission of the deed and pick–up, the Time: 1 day of 7 (seven) days as of the signing date of the sale and buyer has to phone the Officer at the Land Office to Cost: IDR 63,111,196 (5% of property value minus IDR purchase of Land Deed, the notary submits such deed ask about the progress. The Land Office crosses out 80 million which is tax–free) including its supporting documents to the Land Office, the name of the previous owner and inserts the name but in practice the wait is much longer because of the Comments: The buyer pays the Tax on Acquisition of the buyer, stamps and signs it. backlog. (Article 40 sub 1 of Government Regulation of Land and Building (BPHTB) in the amount of 5% x No. 24/1997 concerning the Land Registration). In [(transfer value or sale value or Nilai Perolehan Obyek Procedure 6. Registration of the Land Deed theory, the registration process should be completed Pajak (NPOP)) – (non–taxable sale value or Nilai at the Tax on Land and Building Office within the 5 days statutory time limit. The Land Of- Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- fice crosses out the name of the previous owner and (PBB) under the name of the buyer KP))]. According to the law on Local Tax (Law No. inserts the name of the buyer, stamps and signs it. Time: 1 day 28/2009), the BPHTB belongs to the local govern- Cost: No cost ment. Article 87 point 4 of the Law sets a minimum value for the NPOPTKP at IDR 60,000,000. Procedure 6. Registration of the Land Deed Comments: In connection to the registration of the at the Tax on Land and Building Office For Jakarta, the local regulation (Perda No. 18/2010) Land Deed, the change of ownership must be regis- (PBB) under the name of the buyer tered with the Land and Building Tax Office (PBB). The stipulates a NPOPTKP of IDR 80,000,000. taxpayer reports the transfer of land title. Time: 1 day Procedure 4. Execution of sale and Cost: No cost * This procedure can be completed simultaneously with previous procedures. purchase of Land Deed by a PPAT official Time: 3 days 88 DOING BUSINESS IN INDONESIA 2012

Comments: In connection to the registration of the 28/2009), the BPHTB belongs to the local govern- Procedure 6. Registration of the Land Deed Land Deed, the change of ownership must be regis- ment. Article 87 point 4 of the Law sets a minimum at the Tax on Land and Building Office tered with the Land and Building Tax Office (PBB). The value for the NPOPTKP at IDR 60,000,000. (PBB) under the name of the buyer taxpayer reports the transfer of land title. For Jambi, the local regulation (Perda No. 10/2010) Time: 1 day * This procedure can be completed simultaneously stipulates a NPOPTKP of IDR 60,000,000. with previous procedures. Cost: No cost Procedure 4. Execution of sale and Comments: In connection to the registration of the REGISTERING PROPERTY purchase of Land Deed by a Land Deed Land Deed, the change of ownership must be regis- tered with the Land and Building Tax Office (PBB). The Jambi, Jambi Official (PPAT) appointed by the Head of the National Land Office or a local Head of taxpayer reports the transfer of land title. Property value: IDR 1,342,223,913 = USD 129,000 a Sub–District * This procedure can be completed simultaneously Data as of: July 2011 Time: 3 days with previous procedures. Procedure 1. Land certificate examination Cost: IDR 13,422,239 (1% of the property value) REGISTERING PROPERTY at the local Land Office (BPN) Comments: The execution of the sale and purchase of Time: 1 day the Land Deed is made before Land Officials, namely Makassar, South Sulawesi a Land Deed Official (PPAT) appointed by the Head of Cost: IDR 50,000 Property value: IDR 1,342,223,913 = USD 129,000 the National Land Office after the taxes in procedures Data as of: July 2011 Comments: A land certificate examination is carried 3 and 4 have been paid. For convenience, those pay- out by a Land Deed Official. If the land book con- ments are usually made three days before the execu- Procedure 1. Land certificate examination cerned is available at the Land Office, it usually takes 1 tion of the sale–purchase deed. day. However, sometimes the land book is unavail- at the local Land Office (BPN) The documentation shall include: able, misplaced or being used by another division of Time: 2 days the Land Office, so then the examination process will a. Original land certificate; Cost: IDR 50,000 be pending and it usually takes a few days to obtain b. Evidence of the latest payment of Tax on Land and Comments: A land certificate examination is carried the information from the Land Office. The Regula- Building (PBB). Every year, the local PBB Tax Office out by a Land Deed Official. If the land book con- tion of the National Land Agency Number 1 of 2010 issues a tax assessment to land owners. By custom, cerned is available at the Land Office, it usually takes 1 stipulates that the requirements to examine the land the buyer usually wants to obtain the original of the day. However, sometimes the land book is unavail- certificate include the following: payment of PBB for the past three years and utility able, misplaced or being used by another division of a. Land Ownership Certificate; bills for the last three months––though in practice the Land Office, so then the examination process will the office will check the last 10 years. The Land b. Copy of the applicant’s identification or its proxy; be pending and it usually takes a few days to obtain Deed Officer drawing up the sale and purchase c. Letter of request from the Land Deed Official the information from the Land Office. The Regula- deed will only need to see the most recent PBB tion of the National Land Agency Number 1 of 2010 (PPAT) for the transfer of rights by virtue of the while the Land Office will need a copy of the most Deed of the Land Deed Officer. stipulates that the requirements to examine the land recent PBB for registering the land into the name of certificate include the following: The land title search would also involve a check at the the new owner; a. Land Ownership Certificate; local City Planning Office, located at the localgovern- c. Evidence of payment of the Tax on Transfer of Land ment office, to determine the intended use of the said and Building (Transfer Tax) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; plot of land, whether for residences, industry or green 2); c. Letter of request from the Land Deed Official belt. No written statement is given, but a note is made d. Evidence of payment of the Tax on Acquisition of (PPAT) for the transfer of rights by virtue of the on the certificate saying ‘Has been examined and Land and Building (BPHTB) (obtained in Procedure Deed of the Land Deed Officer. according to the Land Registry/ Land Book at the Land 3); The land title search would also involve a check at the Office, dated______, time ______’ and is initialed local City Planning Office, located at the localgovern- by the officer at the Land Office. e. Evidence of deed of Company Establishment which was already authorized by the Ministry of Law and ment office, to determine the intended use of the said Human Rights; plot of land, whether for residences, industry or green Procedure 2. Seller pays Transfer Tax at a belt. No written statement is given, but a note is made bank f. Company Tax–Registration Numbers (NPWP) of on the certificate saying ‘Has been examined and the seller and the purchaser (obtained in Procedure Time: 1 day according to the Land Registry/ Land Book at the Land 4); Cost: IDR 67,111,196 (5% of the property value) Office, dated______, time ______’ and is initialed g. Deed of Establishment and its amendments of both by the officer at the Land Office. Comments: The seller pays the Tax on Transfer of the seller and purchaser; Land and Building (Transfer Tax) in the amount of 5% h. Corporate approvals of the seller to dispose of Procedure 2. Seller pays Transfer Tax at a which is calculated on the transfer value. Taxes to the the land and the purchaser to acquire the land as central government are paid at a bank appointed by bank required in the Articles of Association of both the the State Treasury by the state–owned bank (Bank Time: 1 day seller and purchaser; BUMN); those to the local government are paid at the Cost: IDR 67,111,196 (5% of the property value) i. Permit for Building Establishment. Local Government Bank and/or other private com- Comments: The seller pays the Tax on Transfer of mercial bank (as per Article 4.2 of Law No. 7/1983, Land and Building (Transfer Tax) in the amount of amended by Law No. 10/1994 and Law 17/2000 Procedure 5. Registration of the Land Deed at the local Land Office (BPN) under the 5% which is calculated on the transfer value. Taxes concerning Income Tax and Parts 2.1 and 5.1 of the to the central government are paid at a bank ap- Director General of Taxation Circular No. SE–04- name of the buyer pointed by the State Treasury by the state–owned /P.J.33/1996 dated August 26, 1996). Time: 30 days bank (Bank BUMN); those to the local government are paid at the Local Government Bank and/or other Procedure 3*. Buyer pays Tax on Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- erty value) + IDR 6,000 stamp duty per document (2 private commercial bank (as per Article 4.2 of Law Acquisition on Land and Building at a bank required)) No. 7/1983, amended by Law No. 10/1994 and Law Time: 1 day Comments: After the buyer submits the registration 17/2000 concerning Income Tax and Parts 2.1 and 5.1 Cost: IDR 64,111,196 (5% of property value minus IDR of the Land Deed, she/he leaves it there and has of the Director General of Taxation Circular No. SE– 60 million which is tax–free) to return some days later to pick up the Land Deed 04/P.J.33/1996 dated August 26, 1996). that has been registered under the buyer’s name. In Comments: The buyer pays the Tax on Acquisition Procedure 3*. Buyer pays Tax on of Land and Building (BPHTB) in the amount of 5% x between submission of the deed and pick–up, the [(transfer value or sale value or Nilai Perolehan Obyek buyer has to phone the Officer at the Land Office to Acquisition on Land and Building at a bank Pajak (NPOP)) – (non–taxable sale value or Nilai ask about the progress. The Land Office crosses out Time: 1 day Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- the name of the previous owner and inserts the name Cost: IDR 64,111,196 (5% of property value minus IDR KP))]. According to the law on Local Tax (Law No. of the buyer, stamps and signs it. 60 million which is tax–free) LIST OF PROCEDURES 89

Comments: The buyer pays the Tax on Acquisition Comments: After the buyer submits the registration 17/2000 concerning Income Tax and Parts 2.1 and 5.1 of Land and Building (BPHTB) in the amount of 5% x of the Land Deed, she/he leaves it there and has of the Director General of Taxation Circular No. SE– [(transfer value or sale value or Nilai Perolehan Obyek to return some days later to pick up the Land Deed 04/P.J.33/1996 dated August 26, 1996). Pajak (NPOP)) – (non–taxable sale value or Nilai that has been registered under the buyer’s name. In Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- between submission of the deed and pick–up, the Procedure 3*. Buyer pays Tax on KP))]. According to the law on Local Tax (Law No. buyer has to phone the Officer at the Land Office to Acquisition on Land and Building at a bank 28/2009), the BPHTB belongs to the local govern- ask about the progress. The Land Office crosses out Time: 1 day ment. Article 87 point 4 of the Law sets a minimum the name of the previous owner and inserts the name value for the NPOPTKP at IDR 60,000,000. of the buyer, stamps and signs it. Cost: IDR 65,861,196 (5% of property value minus IDR 25 million which is tax–free) For Makassar, the local regulation (Perda No. 3/2010) stipulates a NPOPTKP of IDR 60,000,000. Procedure 6. Registration of the Land Deed Comments: The buyer pays the Tax on Acquisition at the Tax on Land and Building Office of Land and Building (BPHTB) in the amount of 5% x Procedure 4. Execution of sale and (PBB) under the name of the buyer [(transfer value or sale value or Nilai Perolehan Obyek purchase of Land Deed by a Land Deed Pajak (NPOP)) – (non–taxable sale value or Nilai Time: 1 day Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- Official (PPAT) appointed by the Head of Cost: No cost KP))]. According to the law on Local Tax (Law No. the National Land Office or a local Head of Comments: In connection to the registration of the 28/2009), the BPHTB belongs to the local govern- a Sub–District Land Deed, the change of ownership must be regis- ment. Article 87 point 4 of the Law sets a minimum Time: 3 days tered with the Land and Building Tax Office (PBB). The value for the NPOPTKP at IDR 60,000,000. Cost: IDR 13,422,239 (1% of the property value) taxpayer reports the transfer of land title. While waiting for Manado to enact local regulations to implement the law on Local Tax, it is still under the old Comments: The execution of the sale and purchase of * This procedure can be completed simultaneously the Land Deed is made before Land Officials, namely with previous procedures. system (based on Article 7 of Law 20/2000, amend- a Land Deed Official (PPAT) appointed by the Head of ing Law 21/1997) in which the maximum value for NPOPTKP is 60,000,000. In Manado, the NPOPTKP the National Land Office after the taxes in procedures REGISTERING PROPERTY 3 and 4 have been paid. For convenience, those pay- is IDR 25,000,000. ments are usually made three days before the execu- Manado, North Sulawesi tion of the sale–purchase deed. Property value: IDR 1,342,223,913 = USD 129,000 Procedure 4. Execution of sale and The documentation shall include: Data as of: July 2011 purchase of Land Deed by a Land Deed Official (PPAT) appointed by the Head of a. Original land certificate; Procedure 1. Land certificate examination the National Land Office or a local Head of b. Evidence of the latest payment of Tax on Land and at the local Land Office (BPN) a Sub–District Building (PBB). Every year, the local PBB Tax Office issues a tax assessment to land owners. By custom, Time: 1 day Time: 3 days the buyer usually wants to obtain the original of the Cost: IDR 50,000 Cost: IDR 13,422,239 (1% of the property value) payment of PBB for the past three years and utility Comments: A land certificate examination is carried Comments: The execution of the sale and purchase of bills for the last three months––though in practice out by a Land Deed Official. If the land book con- the Land Deed is made before Land Officials, namely the office will check the last 10 years. The Land cerned is available at the Land Office, it usually takes 1 a Land Deed Official (PPAT) appointed by the Head of Deed Officer drawing up the sale and purchase day. However, sometimes the land book is unavail- the National Land Office after the taxes in procedures deed will only need to see the most recent PBB able, misplaced or being used by another division of 3 and 4 have been paid. For convenience, those pay- while the Land Office will need a copy of the most the Land Office, so then the examination process will ments are usually made three days before the execu- recent PBB for registering the land into the name of be pending and it usually takes a few days to obtain tion of the sale–purchase deed. the new owner; the information from the Land Office. The Regula- The documentation shall include: c. Evidence of payment of the Tax on Transfer of Land tion of the National Land Agency Number 1 of 2010 a. Original land certificate; and Building (Transfer Tax) (obtained in Procedure stipulates that the requirements to examine the land 2); certificate include the following: b. Evidence of the latest payment of Tax on Land and Building (PBB). Every year, the local PBB Tax Office d. Evidence of payment of the Tax on Acquisition of a. Land Ownership Certificate; issues a tax assessment to land owners. By custom, Land and Building (BPHTB) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; the buyer usually wants to obtain the original of the 3); c. Letter of request from the Land Deed Official payment of PBB for the past three years and utility e. Evidence of deed of Company Establishment which (PPAT) for the transfer of rights by virtue of the bills for the last three months––though in practice was already authorized by the Ministry of Law and Deed of the Land Deed Officer. the office will check the last 10 years. The Land Human Rights; The land title search would also involve a check at the Deed Officer drawing up the sale and purchase f. Company Tax–Registration Numbers (NPWP) of local City Planning Office, located at the localgovern- deed will only need to see the most recent PBB the seller and the purchaser (obtained in Procedure ment office, to determine the intended use of the said while the Land Office will need a copy of the most 4); plot of land, whether for residences, industry or green recent PBB for registering the land into the name of g. Deed of Establishment and its amendments of both belt. No written statement is given, but a note is made the new owner; the seller and purchaser; on the certificate saying ‘Has been examined and c. Evidence of payment of the Tax on Transfer of Land h. Corporate approvals of the seller to dispose of according to the Land Registry/ Land Book at the Land and Building (Transfer Tax) (obtained in Procedure the land and the purchaser to acquire the land as Office, dated______, time ______’ and is initialed 2); required in the Articles of Association of both the by the officer at the Land Office. d. Evidence of payment of the Tax on Acquisition of seller and purchaser; Land and Building (BPHTB) (obtained in Procedure Procedure 2. Seller pays Transfer Tax at a i. Advise Planning from the City Administration 3); Institution; bank e. Evidence of deed of Company Establishment which j. Permit for Building Establishment. Time: 1 day was already authorized by the Ministry of Law and Cost: IDR 67,111,196 (5% of the property value) Human Rights; Procedure 5. Registration of the Land Deed Comments: The seller pays the Tax on Transfer of f. Company Tax–Registration Numbers (NPWP) of at the local Land Office (BPN) under the Land and Building (Transfer Tax) in the amount of the seller and the purchaser (obtained in Procedure name of the buyer 5% which is calculated on the transfer value. Taxes 4); to the central government are paid at a bank ap- Time: 30 days g. Deed of Establishment and its amendments of both pointed by the State Treasury by the state–owned the seller and purchaser; Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- bank (Bank BUMN); those to the local government h. Corporate approvals of the seller to dispose of erty value) + IDR 6,000 stamp duty per document (2 are paid at the Local Government Bank and/or other required)) the land and the purchaser to acquire the land as private commercial bank (as per Article 4.2 of Law required in the Articles of Association of both the No. 7/1983, amended by Law No. 10/1994 and Law seller and purchaser; 90 DOING BUSINESS IN INDONESIA 2012

i. Advise Planning from the City Administration Cost: IDR 67,111,196 (5% of the property value) g. Deed of Establishment and its amendments of both Institution; Comments: The seller pays the Tax on Transfer of Land the seller and purchaser; j. Permit for Building Establishment. and Building (Transfer Tax) in the amount of 5% which h. Corporate approvals of the seller to dispose of is calculated on the transfer value. Taxes to the central the land and the purchaser to acquire the land as Procedure 5. Registration of the Land Deed government are paid at a bank appointed by the State required in the Articles of Association of both the at the local Land Office (BPN) under the Treasury by the state–owned bank (Bank BUMN); seller and purchaser; name of the buyer those to the local government are paid at the Local i. Advise Planning from the City Administration Government Bank and/or other private commercial Institution; Time: 5 days bank (as per Article 4.2 of Law No. 7/1983, amended j. Permit for Building Establishment. Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- by Law No. 10/1994 and Law 17/2000 concerning erty value) + IDR 6,000 stamp duty per document (2 Income Tax and Parts 2.1 and 5.1 of the Director Gen- Procedure 5. Registration of the Land Deed required)) eral of Taxation Circular No. SE–04/P.J.33/1996 dated Comments: After the buyer submits the registration August 26, 1996). at the local Land Office (BPN) under the of the Land Deed, she/he leaves it there and has to re- name of the buyer turn some days later to pick up the Land Deed that has Procedure 3*. Buyer pays Tax on Time: 15 days been registered under the buyer’s name. In between Acquisition on Land and Building at local Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- submission of the deed and pick–up, the buyer has to government Revenue Office (Dispenda) erty value) + IDR 6,000 stamp duty per document (2 phone the Officer at the Land Office to ask about the Time: 1 day required)) progress. The Land Office crosses out the name of Comments: After the buyer submits the registration the previous owner and inserts the name of the buyer, Cost: IDR 64,111,196 (5% of property value minus IDR of the Land Deed, she/he leaves it there and has to re- stamps and signs it. 60 million which is tax–free) turn some days later to pick up the Land Deed that has Comments: The buyer pays the Tax on Acquisition been registered under the buyer’s name. In between of Land and Building (BPHTB) in the amount of 5% x Procedure 6. Registration of the Land Deed submission of the deed and pick–up, the buyer has to [(transfer value or sale value or Nilai Perolehan Obyek at the Tax on Land and Building Office phone the Officer at the Land Office to ask about the Pajak (NPOP)) – (non–taxable sale value or Nilai (PBB) under the name of the buyer progress. The Land Office crosses out the name of Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- the previous owner and inserts the name of the buyer, Time: 1 day KP))]. According to the law on Local Tax (Law No. stamps and signs it. Cost: No cost 28/2009), the BPHTB belongs to the local govern- Comments: In connection to the registration of the ment. Article 87 point 4 of the Law sets a minimum Procedure 6. Registration of the Land Deed Land Deed, the change of ownership must be regis- value for the NPOPTKP at IDR 60,000,000. tered with the Land and Building Tax Office (PBB). The at the Tax on Land and Building Office For Mataram, the local regulation (Perda No. (PBB) under the name of the buyer taxpayer reports the transfer of land title. 30/2010) stipulates a NPOPTKP of IDR 60,000,000. Time: 1 day * This procedure can be completed simultaneously with previous procedures. Procedure 4. Execution of sale and Cost: No cost purchase of Land Deed by a Land Deed Comments: In connection to the registration of the REGISTERING PROPERTY Official (PPAT) appointed by the Head of Land Deed, the change of ownership must be regis- Mataram, West Nusa Tenggara the National Land Office or a local Head of tered with the Land and Building Tax Office (PBB). The a Sub–District taxpayer reports the transfer of land title. Property value: IDR 1,342,223,913 = USD 129,000 Time: 3 days * This procedure can be completed simultaneously Data as of: July 2011 Cost: IDR 13,422,239 (1% of the property value) with previous procedures. Procedure 1. Land certificate examination Comments: The execution of the sale and purchase of at the local Land Office (BPN) the Land Deed is made before Land Officials, namely REGISTERING PROPERTY Time: 4 days a Land Deed Official (PPAT) appointed by the Head of Medan, North Sumatra the National Land Office after the taxes in procedures Property value: IDR 1,342,223,913 = USD 129,000 Cost: IDR 50,000 3 and 4 have been paid. For convenience, those pay- Comments: A land certificate examination is carried ments are usually made three days before the execu- Data as of: July 2011 out by a Land Deed Official. If the land book concerned tion of the sale–purchase deed. Procedure 1. Land certificate examination is available at the Land Office, it usually takes 1 day. The documentation shall include: However, sometimes the land book is unavailable, at the local Land Office (BPN) misplaced or being used by another division of the a. Original land certificate; Time: 1 day Land Office, so then the examination process will be b. Evidence of the latest payment of Tax on Land and Cost: IDR 50,000 pending and it usually takes a few days to obtain the Building (PBB). Every year, the local PBB Tax Office Comments: A land certificate examination is carried information from the Land Office. The Regulation of issues a tax assessment to land owners. By custom, out by a Land Deed Official. If the land book concerned the National Land Agency Number 1 of 2010 stipulates the buyer usually wants to obtain the original of the is available at the Land Office, it usually takes 1 day. that the requirements to examine the land certificate payment of PBB for the past three years and utility However, sometimes the land book is unavailable, include the following: bills for the last three months––though in practice misplaced or being used by another division of the a. Land Ownership Certificate; the office will check the last 10 years. The Land Deed Officer drawing up the sale and purchase Land Office, so then the examination process will be b. Copy of the applicant’s identification or its proxy; deed will only need to see the most recent PBB pending and it usually takes a few days to obtain the c. Letter of request from the Land Deed Official while the Land Office will need a copy of the most information from the Land Office. The Regulation of (PPAT) for the transfer of rights by virtue of the recent PBB for registering the land into the name of the National Land Agency Number 1 of 2010 stipulates Deed of the Land Deed Officer. the new owner; that the requirements to examine the land certificate include the following: The land title search would also involve a check at the c. Evidence of payment of the Tax on Transfer of Land local City Planning Office, located at the localgovern- and Building (Transfer Tax) (obtained in Procedure a. Land Ownership Certificate; ment office, to determine the intended use of the said 2); b. Copy of the applicant’s identification or its proxy; plot of land, whether for residences, industry or green d. Evidence of payment of the Tax on Acquisition of c. Letter of request from the Land Deed Official belt. No written statement is given, but a note is made Land and Building (BPHTB) (obtained in Procedure (PPAT) for the transfer of rights by virtue of the on the certificate saying ‘Has been examined and 3); Deed of the Land Deed Officer. according to the Land Registry/ Land Book at the Land The land title search would also involve a check at the Office, dated______, time ______’ and is initialed e. Evidence of deed of Company Establishment which local City Planning Office, located at the localgovern- by the officer at the Land Office. was already authorized by the Ministry of Law and Human Rights; ment office, to determine the intended use of the said f. Company Tax–Registration Numbers (NPWP) of plot of land, whether for residences, industry or green Procedure 2. Seller pays Transfer Tax at a belt. No written statement is given, but a note is made bank the seller and the purchaser (obtained in Procedure 4); on the certificate saying ‘Has been examined and Time: 1 day LIST OF PROCEDURES 91

according to the Land Registry/ Land Book at the Land d. Evidence of payment of the Tax on Acquisition of c. Letter of request from the Land Deed Official Office, dated______, time ______’ and is initialed Land and Building (BPHTB) (obtained in Procedure (PPAT) for the transfer of rights by virtue of the by the officer at the Land Office. 3); Deed of the Land Deed Officer. e. Evidence of deed of Company Establishment which The land title search would also involve a check at the Procedure 2. Seller pays Transfer Tax at a was already authorized by the Ministry of Law and local City Planning Office, located at the localgovern- bank Human Rights; ment office, to determine the intended use of the said Time: 2 days f. Company Tax–Registration Numbers (NPWP) of plot of land, whether for residences, industry or green belt. No written statement is given, but a note is made Cost: IDR 67,111,196 (5% of the property value) the seller and the purchaser (obtained in Procedure 4); on the certificate saying ‘Has been examined and Comments: The seller pays the Tax on Transfer of according to the Land Registry/ Land Book at the Land g. Deed of Establishment and its amendments of both Land and Building (Transfer Tax) in the amount of 5% Office, dated______, time ______’ and is initialed the seller and purchaser; which is calculated on the transfer value. Taxes to the by the officer at the Land Office. central government are paid at a bank appointed by h. Corporate approvals of the seller to dispose of the State Treasury by the state–owned bank (Bank the land and the purchaser to acquire the land as Procedure 2. Seller pays Transfer Tax at a BUMN); those to the local government are paid at the required in the Articles of Association of both the bank Local Government Bank and/or other private com- seller and purchaser; Time: 1 day mercial bank (as per Article 4.2 of Law No. 7/1983, i. Advise Planning from the City Administration amended by Law No. 10/1994 and Law 17/2000 Institution; Cost: IDR 67,111,196 (5% of the property value ) concerning Income Tax and Parts 2.1 and 5.1 of the j. Permit for Building Establishment. Comments: The seller pays the Tax on Transfer of Director General of Taxation Circular No. SE–04- Land and Building (Transfer Tax) in the amount of 5% /P.J.33/1996 dated August 26, 1996). Procedure 5. Registration of the Land Deed which is calculated on the transfer value. Taxes to the central government are paid at a bank appointed by Procedure 3*. Buyer pays Tax on at the local Land Office (BPN) under the name of the buyer the State Treasury by the state–owned bank (Bank Acquisition on Land and Building at a bank BUMN); those to the local government are paid at the Time: 1 day Time: 30 days Local Government Bank and/or other private com- mercial bank (as per Article 4.2 of Law No. 7/1983, Cost: IDR 64,111,196 (5% of (property value minus Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- amended by Law No. 10/1994 and Law 17/2000 IDR 60 million which is tax–free)) erty value) + IDR 6,000 stamp duty per document (2 required)) concerning Income Tax and Parts 2.1 and 5.1 of the Comments: The buyer pays the Tax on Acquisition Comments: After the buyer submits the registration Director General of Taxation Circular No. SE–04- of Land and Building (BPHTB) in the amount of 5% x /P.J.33/1996 dated August 26, 1996). [(transfer value or sale value or Nilai Perolehan Obyek of the Land Deed, she/he leaves it there and has Pajak (NPOP)) – (non–taxable sale value or Nilai to return some days later to pick up the Land Deed that has been registered under the buyer’s name. In Procedure 3*. Buyer pays Tax on Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- Acquisition on Land and Building at a bank KP))]. According to the law on Local Tax (Law No. between submission of the deed and pick–up, the 28/2009), the BPHTB belongs to the local govern- buyer has to phone the Officer at the Land Office to Time: 1 day ment. Article 87 point 4 of the Law sets a minimum ask about the progress. The Land Office crosses out Cost: IDR 66,111,196 (5% of property value minus IDR value for the NPOPTKP at IDR 60,000,000. the name of the previous owner and inserts the name 20 million which is tax–free) of the buyer, stamps and signs it. While waiting for Medan to enact local regulations to Comments: The buyer pays the Tax on Acquisition implement the law on Local Tax, it is still under the old Procedure 6. Registration of the Land Deed of Land and Building (BPHTB) in the amount of 5% x system (based on Article 7 of Law 20/2000, amend- at the Tax on Land and Building Office [(transfer value or sale value or Nilai Perolehan Obyek ing Law 21/1997) in which the maximum value for Pajak (NPOP)) – (non–taxable sale value or Nilai NPOPTKP is 60,000,000. In Medan, the NPOPTKP is (PBB) under the name of the buyer Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- IDR 60,000,000. Time: 1 day KP))]. According to the law on Local Tax (Law No. Cost: No cost 28/2009), the BPHTB belongs to the local govern- Procedure 4. Execution of sale and Comments: In connection to the registration of the ment. Article 87 point 4 of the Law sets a minimum purchase of Land Deed by a Land Deed Land Deed, the change of ownership must be regis- value for the NPOPTKP at IDR 60,000,000. Official (PPAT) appointed by the Head of tered with the Land and Building Tax Office (PBB). The While waiting for Palangka Raya to apply local the National Land Office or a local Head of taxpayer reports the transfer of land title. regulations to implement the law on Local Tax, it is a Sub–District still under the old system (based on Article 7 of Law * This procedure can be completed simultaneously 20/2000, amending Law 21/1997) in which the maxi- Time: 3 days with previous procedures. mum value for NPOPTKP is 60,000,000. In Palangka Cost: IDR 13,422,239 (1% of the property value) Raya, the NPOPTKP is IDR 20,000,000. Comments: The execution of the sale and purchase of REGISTERING PROPERTY the Land Deed is made before Land Officials, namely Palangka Raya, Central Kalimantan Procedure 4. Execution of sale and a Land Deed Official (PPAT) appointed by the Head of Property value: IDR 1,342,223,913 = USD 129,000 purchase of Land Deed by a Land Deed the National Land Office after the taxes in procedures Official (PPAT) appointed by the Head of Data as of: July 2011 3 and 4 have been paid. For convenience, those pay- the National Land Office or a local Head of ments are usually made three days before the execu- Procedure 1. Land certificate examination a Sub–District tion of the sale–purchase deed. at the local Land Office (BPN) Time: 3 days The documentation shall include: Time: 1 day Cost: IDR 13,422,239 (1% of the property value ) a. Original land certificate; Cost: IDR 50,000 Comments: The execution of the sale and purchase b. Evidence of the latest payment of Tax on Land and of the Land Deed is made before Land Officials, Building (PBB). Every year, the local PBB Tax Office Comments: A land certificate examination is carried namely a Land Deed Official (PPAT) appointed by issues a tax assessment to land owners. By custom, out by a Land Deed Official. If the land book con- the Head of the National Land Office after the taxes the buyer usually wants to obtain the original of the cerned is available at the Land Office, it usually takes 1 in procedures 3 and 4 have been paid. For payment of PBB for the past three years and utility day. However, sometimes the land book is unavail- convenience, those payments are usually made bills for the last three months––though in practice able, misplaced or being used by another division of three days before the execution of the sale–pur- the office will check the last 10 years. The Land the Land Office, so then the examination process will chase deed. Deed Officer drawing up the sale and purchase be pending and it usually takes a few days to obtain deed will only need to see the most recent PBB the information from the Land Office. The Regula- The documentation shall include: while the Land Office will need a copy of the most tion of the National Land Agency Number 1 of 2010 a. Original land certificate; stipulates that the requirements to examine the land recent PBB for registering the land into the name of b. Evidence of the latest payment of Tax on Land and certificate include the following: the new owner; Building (PBB). Every year, the local PBB Tax Office c. Evidence of payment of the Tax on Transfer of Land a. Land Ownership Certificate; issues a tax assessment to land owners. By custom, and Building (Transfer Tax) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; the buyer usually wants to obtain the original of the 2); payment of PBB for the past three years and utility 92 DOING BUSINESS IN INDONESIA 2012

bills for the last three months––though in practice Comments: A land certificate examination is carried Comments: The execution of the sale and purchase of the office will check the last 10 years. The Land out by a Land Deed Official. If the land book con- the Land Deed is made before Land Officials, namely Deed Officer drawing up the sale and purchase cerned is available at the Land Office, it usually takes 1 a Land Deed Official (PPAT) appointed by the Head of deed will only need to see the most recent PBB day. However, sometimes the land book is unavail- the National Land Office after the taxes in procedures while the Land Office will need a copy of the most able, misplaced or being used by another division of 3 and 4 have been paid. For convenience, those pay- recent PBB for registering the land into the name of the Land Office, so then the examination process will ments are usually made three days before the execu- the new owner; be pending and it usually takes a few days to obtain tion of the sale–purchase deed. c. Evidence of payment of the Tax on Transfer of Land the information from the Land Office. The Regula- The documentation shall include: tion of the National Land Agency Number 1 of 2010 and Building (Transfer Tax) (obtained in Procedure a. Original land certificate; 2); stipulates that the requirements to examine the land certificate include the following: b. Evidence of the latest payment of Tax on Land and d. Evidence of payment of the Tax on Acquisition of Building (PBB). Every year, the local PBB Tax Office a. Land Ownership Certificate; Land and Building (BPHTB) (obtained in Procedure issues a tax assessment to land owners. By custom, 3); b. Copy of the applicant’s identification or its proxy; the buyer usually wants to obtain the original of the e. Evidence of deed of Company Establishment which c. Letter of request from the Land Deed Official payment of PBB for the past three years and utility was already authorized by the Ministry of Law and (PPAT) for the transfer of rights by virtue of the bills for the last three months––though in practice Human Rights; Deed of the Land Deed Officer. the office will check the last 3 years. The Land Deed f. Company Tax–Registration Numbers (NPWP) of The land title search would also involve a check at the Officer drawing up the sale and purchase deed will the seller and the purchaser (obtained in Procedure local City Planning Office, located at the localgovern- only need to see the most recent PBB while the 4); ment office, to determine the intended use of the said Land Office will need a copy of the most recent PBB for registering the land into the name of the new g. Deed of Establishment and its amendments of both plot of land, whether for residences, industry or green owner; the seller and purchaser; belt. No written statement is given, but a note is made on the certificate saying ‘Has been examined and c. Evidence of payment of the Tax on Transfer of Land h. Corporate approvals of the seller to dispose of according to the Land Registry/ Land Book at the Land and Building (Transfer Tax) (obtained in Procedure the land and the purchaser to acquire the land as Office, dated______, time ______’ and is initialed 2); required in the Articles of Association of both the by the officer at the Land Office. seller and purchaser; d. Evidence of payment of the Tax on Acquisition of Land and Building (BPHTB) (obtained in Procedure i. Advise Planning from the City Administration Procedure 2. Seller pays Transfer Tax at a 3); Institution; bank e. Evidence of deed of Company Establishment which j. Permit for Building Establishment. Time: 1 day was already authorized by the Ministry of Law and Procedure 5. Registration of the Land Deed Cost: IDR 67,111,196 (5% of the property value) Human Rights; at the local Land Office (BPN) under the Comments: The seller pays the Tax on Transfer of f. Company Tax–Registration Numbers (NPWP) of name of the buyer Land and Building (Transfer Tax) in the amount of 5% the seller and the purchaser (obtained in Procedure which is calculated on the transfer value. Taxes to the 4); Time: 8 days central government are paid at a bank appointed by g. Deed of Establishment and its amendments of both Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- the State Treasury by the state–owned bank (Bank the seller and purchaser; erty value) + IDR 6,000 stamp duty per document (2 BUMN); those to the local government are paid at the h. Corporate approvals of the seller to dispose of required)) Local Government Bank and/or other private com- the land and the purchaser to acquire the land as Comments: After the buyer submits the registration mercial bank (as per Article 4.2 of Law No. 7/1983, required in the Articles of Association of both the of the Land Deed, she/he leaves it there and has amended by Law No. 10/1994 and Law 17/2000 seller and purchaser; concerning Income Tax and Parts 2.1 and 5.1 of the to return some days later to pick up the Land Deed i. Advise Planning from the City Administration Director General of Taxation Circular No. SE–04- that has been registered under the buyer’s name. In Institution; between submission of the deed and pick–up, the /P.J.33/1996 dated August 26, 1996). buyer has to phone the Officer at the Land Office to j. Permit for Building Establishment. ask about the progress. The Land Office crosses out Procedure 3*. Buyer pays Tax on the name of the previous owner and inserts the name Acquisition on Land and Building at a bank Procedure 5. Registration of the Land Deed of the buyer, stamps and signs it. at the local Land Office (BPN) under the Time: 1 day name of the buyer Procedure 6. Registration of the Land Deed Cost: IDR 64,111,196 (5% of property value minus IDR 60 million which is tax–free) Time: 14 days at the Tax on Land and Building Office Cost: IDR 1,404,224 (IDR 50000 + (0.1% of prop- (PBB) under the name of the buyer Comments: The buyer pays the Tax on Acquisition of Land and Building (BPHTB) in the amount of 5% x erty value) + IDR 6,000 stamp duty per document (2 Time: 1 day [(transfer value or sale value or Nilai Perolehan Obyek required)) Cost: No cost Pajak (NPOP)) – (non–taxable sale value or Nilai Comments: After the buyer submits the registration Comments: In connection to the registration of the Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- of the Land Deed, she/he leaves it there and has Land Deed, the change of ownership must be regis- KP))]. According to the law on Local Tax (Law No. to return some days later to pick up the Land Deed tered with the Land and Building Tax Office (PBB). The 28/2009), the BPHTB belongs to the local govern- that has been registered under the buyer’s name. In taxpayer reports the transfer of land title. ment. Article 87 point 4 of the Law sets a minimum between submission of the deed and pick–up, the value for the NPOPTKP at IDR 60,000,000. buyer has to phone the Officer at the Land Office to * This procedure can be completed simultaneously ask about the progress. The Land Office crosses out with previous procedures. For Palembang, the local regulation (Perda No. 1/2011) stipulates a NPOPTKP of IDR 60,000,000. the name of the previous owner and inserts the name REGISTERING PROPERTY of the buyer, stamps and signs it. Procedure 4. Execution of sale and Palembang, South Sumatra Procedure 6. Registration of the Land Deed purchase of Land Deed by a Land Deed at the Tax on Land and Building Office Property value: IDR 1,342,223,913 = USD 129,000 Official (PPAT) appointed by the Head of (PBB) under the name of the buyer Data as of: July 2011 the National Land Office or a local Head of Time: 1 day Procedure 1. Land certificate examination a Sub–District Cost: No cost at the local Land Office (BPN) Time: 3 days Cost: IDR 13,422,239 (1% of the property value) Comments: In connection to the registration of the Time: 1 day Land Deed, the change of ownership must be regis- Cost: IDR 50,000 tered with the Land and Building Tax Office (PBB). The taxpayer reports the transfer of land title. * This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES 93

REGISTERING PROPERTY Procedure 4. Execution of sale and Cost: No cost Pekanbaru, Riau purchase of Land Deed by a Land Deed Comments: In connection to the registration of the Land Deed, the change of ownership must be regis- Property value: IDR 1,342,223,913 = USD 129,000 Official (PPAT) appointed by the Head of the National Land Office or a local Head of tered with the Land and Building Tax Office (PBB). The Data as of: July 2011 taxpayer reports the transfer of land title. a Sub–District Procedure 1. Land certificate examination Time: 5 days * This procedure can be completed simultaneously at the local Land Office (BPN) with previous procedures. Cost: IDR 13,422,239 (1% of the property value ) Time: 1 day Comments: The execution of the sale and purchase of REGISTERING PROPERTY Cost: IDR 55,000 the Land Deed is made before Land Officials, namely Comments: A land certificate examination is carried a Land Deed Official (PPAT) appointed by the Head of Pontianak, West Kalimantan out by a Land Deed Official. If the land book con- the National Land Office after the taxes in procedures Property value: IDR 1,342,223,913 = USD 129,000 cerned is available at the Land Office, it usually takes 1 3 and 4 have been paid. For convenience, those pay- Data as of: July 2011 day. However, sometimes the land book is unavail- ments are usually made three days before the execu- able, misplaced or being used by another division of tion of the sale–purchase deed. Procedure 1. Land certificate examination the Land Office, so then the examination process will The documentation shall include: at the local Land Office (BPN) be pending and it usually takes a few days to obtain a. Original land certificate; Time: 2 days the information from the Land Office. The Regula- tion of the National Land Agency Number 1 of 2010 b. Evidence of the latest payment of Tax on Land and Cost: IDR 50,000 stipulates that the requirements to examine the land Building (PBB). Every year, the local PBB Tax Office Comments: A land certificate examination is carried certificate include the following: issues a tax assessment to land owners. By custom, out by a Land Deed Official. If the land book con- the buyer usually wants to obtain the original of the a. Land Ownership Certificate; cerned is available at the Land Office, it usually takes 1 payment of PBB for the past three years and utility day. However, sometimes the land book is unavail- b. Copy of the applicant’s identification or its proxy; bills for the last three months––though in practice able, misplaced or being used by another division of c. Letter of request from the Land Deed Official the office will check the last 10 years. The Land the Land Office, so then the examination process will (PPAT) for the transfer of rights by virtue of the Deed Officer drawing up the sale and purchase be pending and it usually takes a few days to obtain Deed of the Land Deed Officer. deed will only need to see the most recent PBB the information from the Land Office. The Regula- The land title search would also involve a check at the while the Land Office will need a copy of the most tion of the National Land Agency Number 1 of 2010 local City Planning Office, located at the localgovern- recent PBB for registering the land into the name of stipulates that the requirements to examine the land ment office, to determine the intended use of the said the new owner; certificate include the following: plot of land, whether for residences, industry or green c. Evidence of payment of the Tax on Transfer of Land a. Land Ownership Certificate; belt. No written statement is given, but a note is made and Building (Transfer Tax) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; on the certificate saying ‘Has been examined and 2); c. Letter of request from the Land Deed Official according to the Land Registry/ Land Book at the Land d. Evidence of payment of the Tax on Acquisition of (PPAT) for the transfer of rights by virtue of the Office, dated______, time ______’ and is initialed Land and Building (BPHTB) (obtained in Procedure Deed of the Land Deed Officer. by the officer at the Land Office. 3); The land title search would also involve a check at the e. Evidence of deed of Company Establishment which local City Planning Office, located at the localgovern- Procedure 2. Seller pays Transfer Tax at a was already authorized by the Ministry of Law and ment office, to determine the intended use of the said bank Human Rights; plot of land, whether for residences, industry or green Time: 1 day f. Company Tax–Registration Numbers (NPWP) of belt. No written statement is given, but a note is made Cost: IDR 67,111,196 (5% of the property value ) the seller and the purchaser (obtained in Procedure on the certificate saying ‘Has been examined and Comments: The seller pays the Tax on Transfer of 4); according to the Land Registry/ Land Book at the Land Land and Building (Transfer Tax) in the amount of g. Deed of Establishment and its amendments of both Office, dated______, time ______’ and is initialed 5% which is calculated on the transfer value. Taxes the seller and purchaser; by the officer at the Land Office. to the central government are paid at a bank ap- h. Corporate approvals of the seller to dispose of pointed by the State Treasury by the state–owned the land and the purchaser to acquire the land as Procedure 2. Seller pays Transfer Tax at a bank (Bank BUMN); those to the local government required in the Articles of Association of both the bank are paid at the Local Government Bank and/or other seller and purchaser; Time: 1 day private commercial bank (as per Article 4.2 of Law i. Advise Planning from the City Administration No. 7/1983, amended by Law No. 10/1994 and Law Cost: IDR 67,111,196 (5% of the property value) Institution; 17/2000 concerning Income Tax and Parts 2.1 and 5.1 Comments: The seller pays the Tax on Transfer of of the Director General of Taxation Circular No. SE– j. Permit for Building Establishment. Land and Building (Transfer Tax) in the amount of 04/P.J.33/1996 dated August 26, 1996). 5% which is calculated on the transfer value. Taxes Procedure 5. Registration of the Land Deed to the central government are paid at a bank ap- Procedure 3*. Buyer pays Tax on at the local Land Office (BPN) under the pointed by the State Treasury by the state–owned Acquisition on Land and Building at a bank name of the buyer bank (Bank BUMN); those to the local government are paid at the Local Government Bank and/or other Time: 1 day Time: 20 days private commercial bank (as per Article 4.2 of Law Cost: IDR 64,111,196 (5% of property value minus IDR Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- No. 7/1983, amended by Law No. 10/1994 and Law 60 million which is tax–free) erty value) + IDR 6,000 stamp duty per document (2 17/2000 concerning Income Tax and Parts 2.1 and 5.1 Comments: The buyer pays the Tax on Acquisition required)) of the Director General of Taxation Circular No. SE– of Land and Building (BPHTB) in the amount of 5% x Comments: After the buyer submits the registration 04/P.J.33/1996 dated August 26, 1996). [(transfer value or sale value or Nilai Perolehan Obyek of the Land Deed, she/he leaves it there and has Pajak (NPOP)) – (non–taxable sale value or Nilai to return some days later to pick up the Land Deed Procedure 3*. Buyer pays Tax on Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- that has been registered under the buyer’s name. In Acquisition on Land and Building at a bank KP))]. According to the law on Local Tax (Law No. between submission of the deed and pick–up, the Time: 1 day 28/2009), the BPHTB belongs to the local govern- buyer has to phone the Officer at the Land Office to ment. Article 87 point 4 of the Law sets a minimum ask about the progress. The Land Office crosses out Cost: IDR 64,111,196 (5% of (property value minus value for the NPOPTKP at IDR 60,000,000. the name of the previous owner and inserts the name IDR 60 million which is tax–free)) For Pekanbaru, the local regulation (Perda No. of the buyer, stamps and signs it. Comments: The buyer pays the Tax on Acquisition 4/2010) stipulates a NPOPTKP of IDR 60,000,000. of Land and Building (BPHTB) in the amount of 5% x Procedure 6. Registration of the Land Deed [(transfer value or sale value or Nilai Perolehan Obyek at the Tax on Land and Building Office Pajak (NPOP)) – (non–taxable sale value or Nilai (PBB) under the name of the buyer Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- KP))]. According to the law on Local Tax (Law No. Time: 1 day 94 DOING BUSINESS IN INDONESIA 2012

28/2009), the BPHTB belongs to the local govern- Procedure 6. Registration of the Land Deed 28/2009), the BPHTB belongs to the local govern- ment. Article 87 point 4 of the Law sets a minimum at the Tax on Land and Building Office ment. Article 87 point 4 of the Law sets a minimum value for the NPOPTKP at IDR 60,000,000. value for the NPOPTKP at IDR 60,000,000. (PBB) under the name of the buyer For Pontianak, the local regulation (Perda No. 6/2010) For Semarang, the local regulation (Perda No. 2/2011) stipulates a NPOPTKP of IDR 60,000,000. Time: 1 day stipulates a NPOPTKP of IDR 60,000,000. Cost: No cost Procedure 4. Execution of sale and Comments: In connection to the registration of the Procedure 4. Verification of the property purchase of Land Deed by a Land Deed Land Deed, the change of ownership must be regis- market value at the Local Revenue Office Official (PPAT) appointed by the Head of tered with the Land and Building Tax Office (PBB). The (DPKAD) taxpayer reports the transfer of land title. the National Land Office or a local Head of Time: 5 days a Sub–District * This procedure can be completed simultaneously Cost: No cost with previous procedures. Time: 3 days Comments: The Land Deed Official (PPAT) must Cost: IDR 13,422,239 (1% of the property value) verify at the local revenue office (DPKAD) that the REGISTERING PROPERTY Comments: The execution of the sale and purchase of value of the property transfer is in line with market the Land Deed is made before Land Officials, namely Semarang, Central Java prices. After the assessment, a note is issued and provided to the PPAT. There is no legal basis for this a Land Deed Official (PPAT) appointed by the Head of Property value: IDR 1,342,223,913 = USD 129,000 procedure, but it required in practice for property the National Land Office after the taxes in procedures Data as of: July 2011 3 and 4 have been paid. For convenience, those pay- transfers in Semarang. ments are usually made three days before the execu- Procedure 1. Land certificate examination Procedure 5. Execution of sale and tion of the sale–purchase deed. at the local Land Office (BPN) purchase of Land Deed by a Land Deed The documentation shall include: Time: 2 days a. Original land certificate; Official (PPAT) appointed by the Head of Cost: IDR 50,000 the National Land Office or a local Head of b. Evidence of the latest payment of Tax on Land and Comments: A land certificate examination is carried a Sub–District Building (PBB). Every year, the local PBB Tax Office out by a Land Deed Official. If the land book con- Time: 3 days issues a tax assessment to land owners. By custom, cerned is available at the Land Office, it usually takes 1 the buyer usually wants to obtain the original of the day. However, sometimes the land book is unavail- Cost: IDR 13,422,239 (1% of the property value ) payment of PBB for the past three years and utility able, misplaced or being used by another division of Comments: The execution of the sale and purchase of bills for the last three months––though in practice the Land Office, so then the examination process will the Land Deed is made before Land Officials, namely the office will check the last 10 years. The Land be pending and it usually takes a few days to obtain a Land Deed Official (PPAT) appointed by the Head of Deed Officer drawing up the sale and purchase the information from the Land Office. The Regula- the National Land Office after the taxes in procedures deed will only need to see the most recent PBB tion of the National Land Agency Number 1 of 2010 2 and 3 have been paid. For convenience, those pay- while the Land Office will need a copy of the most stipulates that the requirements to examine the land ments are usually made three days before the execu- recent PBB for registering the land into the name of certificate include the following: tion of the sale–purchase deed. the new owner; a. Land Ownership Certificate; The documentation shall include: c. Evidence of payment of the Tax on Transfer of Land and Building (Transfer Tax) (obtained in Procedure b. Copy of the applicant’s identification or its proxy; a. Original land certificate; 2); c. Letter of request from the Land Deed Official b. Evidence of the latest payment of Tax on Land and d. Evidence of payment of the Tax on Acquisition of (PPAT) for the transfer of rights by virtue of the Building (PBB). Every year, the local PBB Tax Office Land and Building (BPHTB) (obtained in Procedure Deed of the Land Deed Officer. issues a tax assessment to land owners. By custom, 3); No written statement is given, but a note made on the the buyer usually wants to obtain the original of the payment of PBB for the past three years and utility e. Evidence of deed of Company Establishment which certificate saying ‘Has been examined and according to the Land Registry/ Land Book at the Land Office, bills for the last three months––though in practice was already authorized by the Ministry of Law and the office will check the last 10 years. The Land Human Rights; dated______, time ______’ and initialed by the officer at the Land Office. Deed Officer drawing up the sale and purchase f. Company Tax–Registration Numbers (NPWP) of deed will only need to see the most recent PBB the seller and the purchaser (obtained in Procedure Procedure 2. Seller pays Transfer Tax at a while the Land Office will need a copy of the most 4); bank recent PBB for registering the land into the name of g. Deed of Establishment and its amendments of both the new owner; Time: 1 day the seller and purchaser; c. Evidence of payment of the Tax on Transfer of Land h. Corporate approvals of the seller to dispose of Cost: IDR 67,111,196 (5% of the property value ) and Building (Transfer Tax) (obtained in Procedure the land and the purchaser to acquire the land as Comments: The seller pays the Tax on Transfer of 2); required in the Articles of Association of both the Land and Building (Transfer Tax) in the amount of 5% d. Evidence of payment of the Tax on Acquisition of seller and purchaser; which is calculated on the transfer value. Taxes to the Land and Building (BPHTB) (obtained in Procedure i. Advise Planning from the City Administration central government are paid at a bank appointed by 3); the State Treasury by the state–owned bank (Bank Institution; e. Evidence of deed of Company Establishment which BUMN); those to the local government are paid at the was already authorized by the Ministry of Law and j. Permit for Building Establishment. Local Government Bank and/or other private com- Human Rights; mercial bank (as per Article 4.2 of Law No. 7/1983, Procedure 5. Registration of the Land Deed amended by Law No. 10/1994 and Law 17/2000 f. Company Tax–Registration Numbers (NPWP) of at the local Land Office (BPN) under the concerning Income Tax and Parts 2.1 and 5.1 of the the seller and the purchaser (obtained in Procedure name of the buyer Director General of Taxation Circular No. SE–04- 5); Time: 30 days /P.J.33/1996 dated August 26, 1996). g. Deed of Establishment and its amendments of both the seller and purchaser; Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- erty value) + IDR 6,000 stamp duty per document (2 Procedure 3*. Buyer pays Tax on h. Corporate approvals of the seller to dispose of required)) Acquisition on Land and Building at a bank the land and the purchaser to acquire the land as required in the Articles of Association of both the Comments: After the buyer submits the registration Time: 1 day seller and purchaser; of the Land Deed, she/he leaves it there and has Cost: IDR 64,111,196 (5% of property value minus IDR to return some days later to pick up the Land Deed 60 million which is tax–free) i. Advise Planning from the City Administration Institution; that has been registered under the buyer’s name. In Comments: The buyer pays the Tax on Acquisition between submission of the deed and pick–up, the of Land and Building (BPHTB) in the amount of 5% x j. Permit for Building Establishment. buyer has to phone the Officer at the Land Office to [(transfer value or sale value or Nilai Perolehan Obyek ask about the progress. The Land Office crosses out Pajak (NPOP)) – (non–taxable sale value or Nilai the name of the previous owner and inserts the name Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- of the buyer, stamps and signs it. KP))]. According to the law on Local Tax (Law No. LIST OF PROCEDURES 95

Procedure 6. Registration of the Land Deed Comments: The seller pays the Tax on Transfer of h. Corporate approvals of the seller to dispose of at the local Land Office (BPN) under the Land and Building (Transfer Tax) in the amount of the land and the purchaser to acquire the land as 5% which is calculated on the transfer value. Taxes required in the Articles of Association of both the name of the buyer to the central government are paid at a bank ap- seller and purchaser; Time: 30 days pointed by the State Treasury by the state–owned i. Advise Planning from the City Administration Cost: IDR 1,404,224 (IDR 50000 + (0.1% of prop- bank (Bank BUMN); those to the local government Institution; are paid at the Local Government Bank and/or other erty value) + IDR 6,000 stamp duty per document (2 j. Permit for Building Establishment. required)) private commercial bank (as per Article 4.2 of Law Comments: After the buyer submits the registration No. 7/1983, amended by Law No. 10/1994 and Law Procedure 5. Registration of the Land Deed of the Land Deed, she/he leaves it there and has 17/2000 concerning Income Tax and Parts 2.1 and 5.1 of the Director General of Taxation Circular No. SE– at the local Land Office (BPN) under the to return some days later to pick up the Land Deed name of the buyer that has been registered under the buyer’s name. In 04/P.J.33/1996 dated August 26, 1996). between submission of the deed and pick–up, the Time: 30 days buyer has to phone the Officer at the Land Office to Procedure 3*. Buyer pays Tax on Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- ask about the progress. The Land Office crosses out Acquisition on Land and Building at a bank erty value) + IDR 6,000 stamp duty per document (2 the name of the previous owner and inserts the name Time: 1 day required)) of the buyer, stamps and signs it. Cost: IDR 63,361,196 (5% of (property value minus Comments: After the buyer submits the registration IDR 75 million which is tax–free)) of the Land Deed, she/he leaves it there and has Procedure 7. Registration of the Land Deed Comments: The buyer pays the Tax on Acquisition to return some days later to pick up the Land Deed at the Tax on Land and Building Office of Land and Building (BPHTB) in the amount of 5% x that has been registered under the buyer’s name. In (PBB) under the name of the buyer [(transfer value or sale value or Nilai Perolehan Obyek between submission of the deed and pick–up, the Time: 1 day Pajak (NPOP)) – (non–taxable sale value or Nilai buyer has to phone the Officer at the Land Office to ask about the progress. The Land Office crosses out Cost: No cost Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- KP))]. According to the law on Local Tax (Law No. the name of the previous owner and inserts the name Comments: In connection to the registration of the 28/2009), the BPHTB belongs to the local govern- of the buyer, stamps and signs it. Land Deed, the change of ownership must be regis- ment. Article 87 point 4 of the Law sets a minimum tered with the Land and Building Tax Office (PBB). The value for the NPOPTKP at IDR 60,000,000. Procedure 6. Registration of the Land Deed taxpayer reports the transfer of land title. at the Tax on Land and Building Office For Surabaya, the local regulation (Perda No. 11/2010) * This procedure can be completed simultaneously stipulates a NPOPTKP of IDR 75,000,000. (PBB) under the name of the buyer with previous procedures. Time: 1 day Procedure 4. Execution of sale and Cost: No cost REGISTERING PROPERTY purchase of Land Deed by a Land Deed Comments: In connection to the registration of the Surabaya, East Java Official (PPAT) appointed by the Head of Land Deed, the change of ownership must be regis- Property value: IDR 1,342,223,913 = USD 129,000 the National Land Office or a local Head of tered with the Land and Building Tax Office (PBB). The Data as of: July 2011 a Sub–District taxpayer reports the transfer of land title. Time: 3 days * This procedure can be completed simultaneously Procedure 1. Land certificate examination Cost: IDR 13,422,239 (1% of the property value ) with previous procedures. at the local Land Office (BPN) Comments: The execution of the sale and purchase of Time: 3 days the Land Deed is made before Land Officials, namely REGISTERING PROPERTY Cost: IDR 50,000 a Land Deed Official (PPAT) appointed by the Head of Surakarta, Central Java the National Land Office after the taxes in procedures Comments: A land certificate examination is carried Property value: IDR 1,342,223,913 = USD 129,000 out by a Land Deed Official. If the land book con- 3 and 4 have been paid. For convenience, those pay- Data as of: July 2011 cerned is available at the Land Office, it usually takes 1 ments are usually made three days before the execu- day. However, sometimes the land book is unavail- tion of the sale–purchase deed. Procedure 1. Land certificate examination able, misplaced or being used by another division of The documentation shall include: at the local Land Office (BPN) the Land Office, so then the examination process will a. Original land certificate; be pending and it usually takes a few days to obtain Time: 3 days b. Evidence of the latest payment of Tax on Land and the information from the Land Office. The Regula- Cost: IDR 50,000 Building (PBB). Every year, the local PBB Tax Office tion of the National Land Agency Number 1 of 2010 issues a tax assessment to land owners. By custom, Comments: A land certificate examination is carried stipulates that the requirements to examine the land the buyer usually wants to obtain the original of the out by a Land Deed Official. If the land book con- certificate include the following: payment of PBB for the past three years and utility cerned is available at the Land Office, it usually takes 1 a. Land Ownership Certificate; bills for the last three months––though in practice day. However, sometimes the land book is unavail- b. Copy of the applicant’s identification or its proxy; the office will check the last 10 years. The Land able, misplaced or being used by another division of the Land Office, so then the examination process will c. Letter of request from the Land Deed Official Deed Officer drawing up the sale and purchase be pending and it usually takes a few days to obtain (PPAT) for the transfer of rights by virtue of the deed will only need to see the most recent PBB the information from the Land Office. The Regula- Deed of the Land Deed Officer. while the Land Office will need a copy of the most recent PBB for registering the land into the name of tion of the National Land Agency Number 1 of 2010 The land title search would also involve a check at the the new owner; stipulates that the requirements to examine the land local City Planning Office, located at the localgovern- certificate include the following: ment office, to determine the intended use of the said c. Evidence of payment of the Tax on Transfer of Land a. Land Ownership Certificate; plot of land, whether for residences, industry or green and Building (Transfer Tax) (obtained in Procedure belt. No written statement is given, but a note is made 2); b. Copy of the applicant’s identification or its proxy; on the certificate saying ‘Has been examined and d. Evidence of payment of the Tax on Acquisition of c. Letter of request from the Land Deed Official according to the Land Registry/ Land Book at the Land Land and Building (BPHTB) (obtained in Procedure (PPAT) for the transfer of rights by virtue of the Office, dated______, time ______’ and is initialed 3); Deed of the Land Deed Officer. by the officer at the Land Office. e. Evidence of deed of Company Establishment which The land title search would also involve a check at the was already authorized by the Ministry of Law and local City Planning Office, located at the localgovern- Procedure 2. Seller pays Transfer Tax at a Human Rights; ment office, to determine the intended use of the said bank f. Company Tax–Registration Numbers (NPWP) of plot of land, whether for residences, industry or green Time: 1 day the seller and the purchaser (obtained in Procedure belt. No written statement is given, but a note is made on the certificate saying ‘Has been examined and Cost: IDR 67,111,196 (5% of the property value ) 4); according to the Land Registry/ Land Book at the Land g. Deed of Establishment and its amendments of both Office, dated______, time ______’ and is initialed the seller and purchaser; by the officer at the Land Office. 96 DOING BUSINESS IN INDONESIA 2012

Procedure 2. Seller pays Transfer Tax at a f. Company Tax–Registration Numbers (NPWP) of No written statement is given, but a note is made on bank the seller and the purchaser (obtained in Procedure the certificate saying ‘Has been examined and accord- 4); ing to the Land Registry/ Land Book at the Land Office, Time: 1 day g. Deed of Establishment and its amendments of both dated______, time ______’ and is initialed by the Cost: IDR 67,111,196 (5% of the property value) the seller and purchaser; officer at the Land Office. Comments: The seller pays the Tax on Transfer of h. Corporate approvals of the seller to dispose of Land and Building (Transfer Tax) in the amount of 5% the land and the purchaser to acquire the land as Procedure 2. Seller pays Transfer Tax at a which is calculated on the transfer value. Taxes to the required in the Articles of Association of both the bank central government are paid at a bank appointed by seller and purchaser; Time: 1 day the State Treasury by the state–owned bank (Bank i. Advise Planning from the City Administration Cost: IDR 67,111,196 (5% of the property value ) BUMN); those to the local government are paid at the Institution; Local Government Bank and/or other private com- Comments: The seller pays the Tax on Transfer of mercial bank (as per Article 4.2 of Law No. 7/1983, j. Permit for Building Establishment. Land and Building (Transfer Tax) in the amount of 5% amended by Law No. 10/1994 and Law 17/2000 which is calculated on the transfer value. Taxes to the concerning Income Tax and Parts 2.1 and 5.1 of the Procedure 5. Registration of the Land Deed central government are paid at a bank appointed by Director General of Taxation Circular No. SE–04- at the local Land Office (BPN) under the the State Treasury by the state–owned bank (Bank /P.J.33/1996 dated August 26, 1996). name of the buyer BUMN); those to the local government are paid at the Local Government Bank and/or other private com- Time: 45 days Procedure 3*. Buyer pays Tax on mercial bank (as per Article 4.2 of Law No. 7/1983, Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- Acquisition on Land and Building at a bank amended by Law No. 10/1994 and Law 17/2000 erty value) + IDR 6,000 stamp duty per document (2 concerning Income Tax and Parts 2.1 and 5.1 of the Time: 1 day required)) Director General of Taxation Circular No. SE–04- Cost: IDR 64,111,196 (5% of property value minus IDR Comments: After the buyer submits the registration /P.J.33/1996 dated August 26, 1996). 60 million which is tax–free) of the Land Deed, she/he leaves it there and has Comments: The buyer pays the Tax on Acquisition to return some days later to pick up the Land Deed Procedure 3*. Buyer pays Tax on of Land and Building (BPHTB) in the amount of 5% x that has been registered under the buyer’s name. In Acquisition on Land and Building at a bank [(transfer value or sale value or Nilai Perolehan Obyek between submission of the deed and pick–up, the Time: 1 day Pajak (NPOP)) – (non–taxable sale value or Nilai buyer has to phone the Officer at the Land Office to Cost: IDR 64,111,196 (5% of property value minus IDR Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- ask about the progress. The Land Office crosses out 60 million which is tax–free) KP))]. According to the law on Local Tax (Law No. the name of the previous owner and inserts the name 28/2009), the BPHTB belongs to the local govern- of the buyer, stamps and signs it. Comments: The buyer pays the Tax on Acquisition ment. Article 87 point 4 of the Law sets a minimum of Land and Building (BPHTB) in the amount of 5% x value for the NPOPTKP at IDR 60,000,000. Procedure 6. Registration of the Land Deed [(transfer value or sale value or Nilai Perolehan Obyek Pajak (NPOP)) – (non–taxable sale value or Nilai For Surakarta, the local regulation (Perda No. 13/2010) at the Tax on Land and Building Office Perolehan Obyek Pajak Tidak Kena Pajak (NPOPT- stipulates a NPOPTKP of IDR 60,000,000. (PBB) under the name of the buyer KP))]. According to the law on Local Tax (Law No. Time: 1 day 28/2009), the BPHTB belongs to the local govern- Procedure 4. Execution of sale and Cost: No cost ment. Article 87 point 4 of the Law sets a minimum purchase of Land Deed by a Land Deed Comments: In connection to the registration of the value for the NPOPTKP at IDR 60,000,000. Official (PPAT) appointed by the Head of Land Deed, the change of ownership must be regis- For Yogyakarta, the local regulation (Perda No. the National Land Office or a local Head of tered with the Land and Building Tax Office (PBB). The 8/2010) stipulates a NPOPTKP of IDR 60,000,000. a Sub–District taxpayer reports the transfer of land title. Procedure 4. Execution of sale and Time: 3 days * This procedure can be completed simultaneously Cost: IDR 13,422,239 (1% of the property value) with previous procedures. purchase of Land Deed by a Land Deed Comments: The execution of the sale and purchase of Official (PPAT) appointed by the Head of the Land Deed is made before Land Officials, namely REGISTERING PROPERTY the National Land Office or a local Head of a Land Deed Official (PPAT) appointed by the Head of Yogyakarta, DI Yogyakarta a Sub–District the National Land Office after the taxes in procedures Time: 2 days 3 and 4 have been paid. For convenience, those pay- Property value: IDR 1,342,223,913 = USD 129,000 Cost: IDR 13,422,239 (1% of the property value ) ments are usually made three days before the execu- Data as of: July 2011 tion of the sale–purchase deed. Comments: The execution of the sale and purchase of Procedure 1. Land certificate examination the Land Deed is made before Land Officials, namely The documentation shall include: at the local Land Office (BPN) a Land Deed Official (PPAT) appointed by the Head of a. Original land certificate; the National Land Office after the taxes in procedures Time: 1 day b. Evidence of the latest payment of Tax on Land and 3 and 4 have been paid. For convenience, those pay- Building (PBB). Every year, the local PBB Tax Office Cost: IDR 50,000 ments are usually made three days before the execu- issues a tax assessment to land owners. By custom, Comments: A land certificate examination is carried tion of the sale–purchase deed. the buyer usually wants to obtain the original of the out by a Land Deed Official. If the land book con- The documentation shall include: payment of PBB for the past three years and utility cerned is available at the Land Office, it usually takes 1 a. Original land certificate; bills for the last three months––though in practice day. However, sometimes the land book is unavail- the office will check the last 10 years. The Land able, misplaced or being used by another division of b. Evidence of the latest payment of Tax on Land and Deed Officer drawing up the sale and purchase the Land Office, so then the examination process will Building (PBB). Every year, the local PBB Tax Office deed will only need to see the most recent PBB be pending and it usually takes a few days to obtain issues a tax assessment to land owners. By custom, while the Land Office will need a copy of the most the information from the Land Office. The Regula- the buyer usually wants to obtain the original of the recent PBB for registering the land into the name of tion of the National Land Agency Number 1 of 2010 payment of PBB for the past three years and utility the new owner; stipulates that the requirements to examine the land bills for the last three months––though in practice the office will check the last 10 years. The Land c. Evidence of payment of the Tax on Transfer of Land certificate include the following: Deed Officer drawing up the sale and purchase and Building (Transfer Tax) (obtained in Procedure a. Land Ownership Certificate; deed will only need to see the most recent PBB 2); b. Copy of the applicant’s identification or its proxy; while the Land Office will need a copy of the most d. Evidence of payment of the Tax on Acquisition of c. Letter of request from the Land Deed Official recent PBB for registering the land into the name of Land and Building (BPHTB) (obtained in Procedure (PPAT) for the transfer of rights by virtue of the the new owner; 3); Deed of the Land Deed Officer. c. Evidence of payment of the Tax on Transfer of Land e. Evidence of deed of Company Establishment which and Building (Transfer Tax) (obtained in Procedure was already authorized by the Ministry of Law and 2); Human Rights; LIST OF PROCEDURES 97

d. Evidence of payment of the Tax on Acquisition of Land and Building (BPHTB) (obtained in Procedure 3); e. Evidence of deed of Company Establishment which was already authorized by the Ministry of Law and Human Rights; f. Company Tax–Registration Numbers (NPWP) of the seller and the purchaser (obtained in Procedure 4); g. Deed of Establishment and its amendments of both the seller and purchaser; h. Corporate approvals of the seller to dispose of the land and the purchaser to acquire the land as required in the Articles of Association of both the seller and purchaser; i. Advise Planning from the City Administration Institution; j. Permit for Building Establishment.

Procedure 5. Registration of the Land Deed at the local Land Office (BPN) under the name of the buyer Time: 30 days Cost: IDR 1,404,224 (IDR 50,000 + (0.1% of prop- erty value) + IDR 6,000 stamp duty per document (2 required)) Comments: After the buyer submits the registration of the Land Deed, she/he leaves it there and has to return some days later to pick up the Land Deed that has been registered under the buyer’s name. In between submission of the deed and pick–up, the buyer has to phone the Officer at the Land Office to ask about the progress. The Land Office crosses out the name of the previous owner and inserts the name of the buyer, stamps and signs it.

Procedure 6. Registration of the Land Deed at the Tax on Land and Building Office (PBB) under the name of the buyer Time: 1 day Cost: No cost Comments: In connection to the registration of the Land Deed, the change of ownership must be registered with the Land and Building Tax Office. The taxpayer reports the transfer of land title. * This procedure can be completed simultaneously with previous procedures. 98

Acknowledgments

Doing Business in Indonesia 2012 was produced by Doing Business in Indonesia 2012 would not be possible the IFC Indonesia Advisory Services and the Global without the expertise and generous input of more than Indicators and Analysis Department of the World 210 local contributors and government officials, in- Bank Group in collaboration with the Regional cluding accountants, architects, business consultants, Autonomy Watch (Komite Pemantauan Pelaksanaan engineers, lawyers, property experts, utility providers, Otonomi Daerah-KPPOD). The team was led by Sandra and other professionals routinely administering or Pranoto and Aikaterini Leris under the general direc- advising on the relevant legal and regulatory require- tion of Mierta Capaul and Farida Lasida Adji. The team ments in Indonesia. comprised Alessio Zanelli, Madalina Papahagi, and Robert Murillo. The KPPOD team was led by Robert This project was made possible thanks to the sup- Endi Jaweng under the general direction of P.Agung port of the State Ministry for Administrative Reforms Pambudhi. The team comprised Sigit Murwito, Boedi (Kementerian Pendayagunaan Aparatur Negara dan Rheza, Sri Mulyati, Rista Amalia, Cynthia A. Pusparani, Reformasi Birokrasi-Menpan) and the Ministry of Home and Maria Regina Retno Budiastuti. Affairs (Kementerian Dalam Negeri-MoHA). Special thanks go to Minister Azwar Abubakar, Wiharto, The team is grateful for valuable comments provided Koeshardo, Endi Fatoni, Mahendra, Hendrumal by colleagues across the World Bank Group. Peer Panjaitan, Yopie Rompas, Ngalimun, Eko Widjanarko review comments were received from Adam Sack, and Dewi Muslikhah from the State Ministry for Sarvesh Suri, Alejandro Espinosa-Wang, Fararatri Administrative Reforms for their support and Widyadari and Gerlin May Catangui. Stefan Koeberle, leadership. P.S. Srinivas, and Greg Elms from World Bank Indonesia delivered guidance during the project implementa- Doing Business in Indonesia 2012 benefitted from the tion. Annie Amalia Loppies, Ariavita Purnamasari, support of Chairman Gita Wirjawan, Azhar Lubis, Dobromir Christow, Farah Hussein, Frederic Meunier, Natalia Ratna Kentjana, Indra Darmawan, Slamet Frederic Bustelo, Claudia Contreras, Karim Belayachi, Purwo Santoso and Johny Ferauchi Djafar from the Maria Camila Roberts, Novita Patricia Wund, Nuril Investment Coordinating Board, Minister Gamawan Aulia Munawaroh, Pilar Sanchez-Bella, Trimor Mici, Fauzi, Widodo Sigit Pudjianto, and Dody Riyadmadji and field coordinators and surveyors provided valuable from the Ministry of Home Affairs , and Prasetijono assistance at various stages of the project. The report Widjojo, Amalia Adininggar Widyasanti, and Ratna was edited by Cintra Scott and designed by G. Quinn Mustikaningsih from National Development Planning Information Design. Agency for their assistance throughout the course of the project and to the more than 50 local city gov- The project was funded by the governments of ernment officials and representatives from national Australia, Finland, the Kingdom of the Netherlands, government agencies who participated in the project. New Zealand, Switzerland, and the IFC Funding The names of those wishing to be acknowledged indi- Mechanism for Technical Assistance and Advisory vidually are listed on the following pages. Services. ACKNOWLEDGEMENTS 99

PUBLIC OFFICIALS

BALIKPAPAN GORONTALO JAMBI M. Syafrudin Saiful, SH ONE STOP SHOP OF MEDAN CITY CITY PLANNING AGENCY Asranuddinsyah Miranti Yunus Kartono LICENSING AND THE REGIONAL INVESTMENT ONE STOP SHOP GORONTALO CITY NATIONAL LAND BOARD Sugeng Karyono AGENCY (KPPT) NATIONAL LAND BOARD SEMARANG M.Fauzi Darwas Ninik Puji Astuti ONE STOP SHOP OF JAMBI (KPTSP) Masdiana Safitri ONE STOP SERVICE OFFICE OF SEMARANG LAND OFFICE JAKARTA PALANGKA RAYA CITY Achmad Sanusi MAKASSAR Muhammad Yusuf SECRETARIAT OF THE VICE PRESIDENT’S PALANGKARAYA ONE STOP SERVICE (KPPT) BANDA ACEH Darwin Surachman, SH Suyono OFFICE NATIONAL LAND BOARD Agustyarsyah INDUSTRY, TRADE AND INVESTMENT LOCAL Syamsurizal NATIONAL LAND BOARD OFFICE Eka Hamda AGENCY LAND OFFICE SECRETARIAT OF THE VICE PRESIDENT’S SURABAYA Ahmad Putra H. Hasjrif. S Teddy Bahan OFFICE Didik Sahadi HEAD OF SECTION OF INFORMATION AND SPATIAL PLANNING AND BUILDING CITY PLANNING AND BUILDING DOMESTIC TRADE SECTION COMPLAINING SERVICES Ir. Cerdas Kaban MANAGEMENT LOCAL AGENCY MANAGEMENT LOCAL AGENCY STATE MINISTRY FOR ADMINISTRATIVE Emila Sovayana Eko Prianggodo REFORMS (MENPAN) NATIONAL LAND BOARD ONE STOP SERVICE OFFICE OF BANDA MANADO PALEMBANG ACEH CITY M. Luthfi Arming Johanis Sorisi Mahirudin Ike Diyah P INVESTMENT COORDINATING BOARD NATIONAL LAND BOARD CITY PLANNING OFFICE CITY PLANNING AND SETTLEMENT OFFICE BANDUNG Muhammad Imanuddin Herel Menajang Rosidi Ali Samad Soemarga STATE MINISTRY FOR ADMINISTRATIVE ONE STOP SHOP (BPPT) TRADE AND LOCAL INDUSTRY AGENCY SURAKARTA NATIONAL LAND BOARD OFFICE REFORMS (MENPAN) Noldy Lomban Heru Muljanto Zainal Zahri NATIONAL LAND BOARD Soni Bakhtiyar Muhammad Rusdi INTEGRATED LICENSING AGENCY (BADAN NATIONAL LAND BOARD OSS OF BANDUNG CITY (BPPT) STATE MINISTRY FOR ADMINISTRATIVE PELAYANAN PERIZINAN TERPADU, BP2T) Jaka Santosa A. REFORMS (MENPAN) PEKANBARU CITY PLANNING OFFICE BATAM MATARAM Raksaka Mahi Andreas Toto Asmanto Padmo Soejoto Noviandra COORDINATING MINISTRY OF ECONOMIC Halid Aslamudin NATIONAL LAND BOARD SURAKARTA OSS ONE STOP SHOP AGENCY BATAM CITY AFFAIRS NATIONAL LAND BOARD Edi Satria Tamba Hutapea Lalu Agus Supriyadi INTEGRATED LICENSING AGENCY (BADAN YOGYAKARTA DENPASAR INVESTMENT COORDINATING BOARD CITY PLANNING OFFICE PERIZINAN TERPADU, BPT) Heri Karyawan Anak Agung Gede Rai Soryawan LICENSING AGENCY DENPASAR LICENSING OFFICE Ucu Lusia Irawati Jeki Nurman SECRETARIAT OF THE VICE PRESIDENT’S ONE STOP SHOP AGENCY MATARAM CITY CITY PLANNING OFFICE Triyono I Gusti Putu Anindya Putra OFFICE (KPPT) NATIONAL LAND BOARD CITY PLANNING AND BUILDING LOCAL Zaenal Arifin PONTIANAK AGENCIES MEDAN MINISTRY OF HOME AFFAIRS Erpan Efendi, SH Tri Nugraha Benny Iskandar NATIONAL LAND BOARD NATIONAL LAND BOARD CITY PLANNING OFFICE M. Akib BP2T PONTIANAK CITY

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