The Energy and Mineral Resources Ministry will streamline the licensing procedures for oil and gas businesses after earlier introducing a simpler process for electricity-related investment through the Investment Coordinating Board’s (BKPM) newly launched one-stop services. The Energy and Mineral Resources Ministry’s acting chief for oil and gas I Gusti Nyoman Wiratmadja said the ministry was considering simplifying the issuance of 10 types of business permits.
The licensing process and issuance will be handled by the BKPM’s new services unit that was established by President Joko “Jokowi” Widodo only recently. “Those 10 permits are basic permits in the upstream and downstream oil and gas sector, including permits previously handled by SKKMigas [the Upstream Oil and Gas Regulatory Special Task Force]. If we see good progress, we will let the BKPM licensing office also deal with many more permits,” Wiratmadja said. He declined to provide details of the 10 permits that will be handled by the BKPM.
According to Wiratmadja, there are currently around 50 permits directly related to oil and gas. In addition, there are also other 200 permits that cover cross-sector issues, including those related to the forestry and environment ministry, manpower ministry or local administrations. Wiratmadja said the energy ministry was aiming to gradually transfer the processing of permits for oil and gas sector to the BKPM before the year end. So far, investors domestic and foreign need to pass through a number of desks at several ministries to process business licenses. Such practices have been blamed for the slow realization of investment.
Eventually, it makes the oil and gas sector, which is a major contributor to the national economy, less attractive. Therefore, simplifying the bureaucracy is a priority for the current government. The prolonged process of obtaining a permit to do business has been an issue in Indonesia. The World Bank’s Doing Business 2015 report ranks Indonesia in 114th place out of 189 nations assessed. Thus, easing the licensing process is seen as necessary to boost economic growth in the country, where investment accounts for around 30 percent of gross domestic product.
Earlier this year, the Energy and Mineral Resources Ministry officially transferred the permitting process for investments related to the electricity sector to the BKPM. Under the new one-stop service, investors interested in investing in the electricity sector will only need to apply with the BKPM, where the energy ministry has assigned officers to process and verify all permits needed.
Meanwhile, the BKPM’s head Franky Sibarani said his office has not decided on whether to process the business permits for the oil and gas sector considering that it is still dealing with the workload related to processing business permits for the electricity sector. “The most difficult thing now is to simplify the permits. The numbers are still high,” Franky said. Normally, investors keen on investing in the electricity sector need to secure around 52 permits.
The Indonesian Petroleum Association (IPA) president, Craig Stewart, said the oil and gas industry would welcome any move to simplify the permitting process in the sector. “Like other industries, the oil and gas industry also sees lengthy business permit processing. We definitely support any efforts to improve the situation,” he said. “However, until we see the details of how this will work and how it interfaces with SKKMigas, we cannot comment on the plan,” Stewart added.
Source: The Jakarta Post, 11 February 2015