Makassar, December 16, 2004 – PENSA, the International Finance Corporation's program for small and medium-sized business development in Eastern Indonesia, and Yayasan Adil Sejahtera have joined forces to show how local government can make starting a business more efficient. Based on PENSA’s One Stop Shop review in Indonesia, the purpose of the alliance is to help reduce private sector regulatory barriers.
“Business licensing processes, tax administration, labor regulations and land issues are among the main obstacles to business development. Local government can create a good investment climate by streamlining those issues,” said Business Development Officer of IFC-PENSA Akil Abduljalil. “A conducive investment climate will bring investment and employment to the area and add local revenue in the long run. A strong commitment to reform from the head of the government is the best starting point.”
The Director of YAS, Ilham Iskandar, pointed to South Sulawesi’s great growth potential. “We just need to tackle the right problems as the OSS report shows,” he said. “The technical assistance project is very important for local economic growth by identifying problems and supporting a systematic approach to solutions. I believe the project will be successful and sustainable because it is demand-driven and takes into account the local needs, culture and environment.”
“Improvements in issuing permits is a must. The Ministry of Home Affairs has suggested local governments implement a single place to grant business licenses, permits and approvals under the One Stop Service concept,” said the Governor of South Sulawesi H.M. Amin Syam, during his keynote speech,” Although OSS has not been implemented to the same degree throughout Indonesia, efforts and intentions by local governments are shown through today’s attendance.”
IFC’s 50 years of experience in the developing world has demonstrated that a regulatory climate promoting a healthy and competitive private sector creates jobs and is key to sustainable economic growth. Encouragement of the private sector has a proven capacity to increase social mobility and expand opportunities around the world. The case for improving conditions could hardly be more powerful than in Indonesia, where 94 percent of those employed work for a private employer or are self-employed, according to World Bank and International Labor Organization data.
The technical assistance provided by PENSA borrows from its international experiences that is tailored to fit the local needs and environment. For example, PENSA collaborates with Foreign Investment Advisory Service, a joint service of IFC and the World Bank, in providing advice on business registration and licensing issues. Similar technical assistance provided by IFC has been successful in many developing countries including China, Vietnam, Latvia and Turkey.
IFC-PENSA, is one of IFC’s technical assistance facilities supporting small and medium enterprises. IFC is the private sector arm of the World Bank Group. The PENSA facility has a five-year mandate and has been co-funded by IFC and the governments of Australia, Canada, Japan, Switzerland and The Netherlands, with initial funding commitments of $22 million.
