ejcl-article-p129_004

european journal of comparative law and
governance 11 (2024) 129–163
Investment in Infrastructure: A Comparative Study

of the Regulation of Online Single Submission in
Indonesia, Canada, and New Zealand
Widhayani Dian Pawestri | ORCID: 0000-0001-6340-1096 ,

Vincentius Sutanto, Kukuh Leksono Suminaring Aditya,
Qona’aha Noor Maajid and Khofifah Nura Adila
Universitas Airlangga, Surabaya, Indonesia
[email protected]; [email protected];
[email protected]; [email protected];
[email protected]
Received 23 March 2022 | Accepted 2 February 2024|

Published online 21 February 2024
Abstract
The Indonesian Government is attracting foreign investment in infrastructure to

support equitable development by simplifying the bureaucratic process for business
licensing through Online Single Submission (oss). However, from the oss introduction
in 2018, it has not yet transformed Indonesia’s investment climate. This paper consists of
a normative legal study which uses a statutory, conceptual, and comparative approach
with Canada and New Zealand to identify the oss policy disharmony that negatively
impacts the investment climate in the Indonesian infrastructure. The results showed
a need to reconstruct systems and policies based on the Government Regulation of
the Republic of Indonesia Number 24 of 2018 concerning Online Integrated Business
Licensing Services and the Law of the Republic of Indonesia Number 11 of 2020
concerning Job Creation to accelerate and increase investment in the era of the fourth
industrial revolution.
Keywords
Indonesia – Canada – New Zealand – Infrastructure – Investment Law – Online Single

Submission
Published with license by Koninklijke Brill nv | doi:10.1163/22134514-bja10068
© Widhayani Dian Pawestri et al., 2024 | ISSN: 2213-4506 (print) 2213-4514 (online)
This is an open access article distributed under the terms of the CC BY 4.0 license.
130 pawestri et al
1 Introduction
This study departs from the importance of analyzing foreign investment

licensing service policies in Indonesia’s infrastructure and harmonizing Online
Single Submission (oss) regulations to accelerate investment in the era of
the fourth industrial revolution. Economic equality through infrastructure
development is crucial for the country. The ease of issuing investment permits
could improve infrastructure development being conducted through an oss
issued by the Government. However, the growing economic inequality in
society is made even worse by Indonesia’s budget deficits experienced every
single year, especially during the Covid-19 pandemic..
Data showed that Indonesia’s State Budget (apbn)1 experienced a budget
deficit from 2014 to 2019. As an example, the state revenue realized was only
90.56% or idr 1,960.63 trillion from the targeted idr 2,165 trillion, indicating a
0.87% growth in state revenue in 2018. Meanwhile, state spending was 93.83%
or idr 2,309.28 trillion from the target of idr 2,461.11 trillion. This data implies
a budget deficit of idr 348.65 trillion, 117.8% more than idr 296.0 trillion in
2019.2 The apbn deficit continues to occur in subsequent years. The largest
deficit occurred in 2020 as a result of the covid-19 pandemic, amounted to
idr 953.3 trillion.3 Furthermore, based on data from Kementerian Keuangan
Republik Indonesia (Ministry of Finance of the Republic of Indonesia), the
2021 apbn deficit amounted to idr 775.1 trillion,4 in 2022 amounted to idr
1 State budget or “Anggaran Pendapatan dan Belanja Negara” (apbn) is a national budget
drafted by the Central Government and following discussion and negotiation, adopted
as Law by the House of Representatives of the Republic of Indonesia or Indonesia’s State
Legislature or “Dewan Perwakilan Rakyat” (dpr).
2 Portal Data apbn Kementerian Keuangan Republik Indonesia. 2019. ‘Laporan Realisasi apbn
2019’ Portal Data apbn Kementerian Keuangan Republik Indonesia. 7 August. Retrieved 10
March 2021 http://www.data-apbn.kemenkeu.go.id/Dataset
3 Dewan Perwakilan Rakyat Republik Indonesia. 2021. ‘F-Gerindra: Pandemi Covid-19 Sebabkan
apbn 2020 Defisit’ Berita Paripurna. 19 August. Retrieved 24 January 2024 https://www.dpr
.go.id/berita/detail/id/34150/t/F-Gerindra:%20Pandemi%20Covid-19%20Sebabkan
%20APBN%202020%20Defisit#:~:text=Juru%20Bicara%20Fraksi%20Partai%20
Gerindra%20DPR%20RI%20Wihadi%20Wiyanto%20mengatakan,product%20
domestic%20bruto%20(PDB)
4 Kementerian Keuangan Republik Indonesia. 2022. ‘Bertemu Badan Anggaran dpr RI,
Menkeu Sampaikan Laporan Realisasi Anggaran 2021’ Berita Kementerian Keuangan
Republik Indonesia. 23 August. Retrieved 24 January 2024 https://www.kemenkeu.go.id
/informasi-publik/publikasi/berita-utama/Bertemu-Badan-Anggaran-DPR-RI-Menkeu.
European Journal of Comparative Law and Governance 11 (2024) 129–163

investment in infrastructure 131
464.3 trillion,5 and in 2023 amounted to idr 347.6 trillion.6 Thus, the data
shows that in 2021-2023 the amount of the apbn deficit has decreased from
year to year.
Indonesia’s annual debt is not balanced with a significant increase in
revenue. When the Gross Domestic Product (gdp) increased by 5.1% in 2020,
the Organization for Economic Cooperation and Development (oecd) stated
that the Government debt was 36.6% of gdp.7 This does not include the idr
6,421 trillion needed by for infrastructure development in the National Medium
Term Development Plan (rpjmn)8 from 2020 to 2024.9
The funds provided by the apbn in 2021 for infrastructure development are
only idr 417.4 trillion. This would only finance 6.5% of the total needed cost,
meaning the Government needs the contribution of State-Owned Enterprises
(soe). Then, in 2022 and 2023 from the infrastructure funding needs of idr
372.8 trillion and idr 455.8 trillion, the budget that has been set from the apbn
is only idr 125.9 trillion and idr 392 trillion. This data shows that the state
budget will never be able to cover 100% of infrastructure funding needs.10
However, within the five years, it is estimated that soe would only cover 30%
5 Kementerian Keuangan Republik Indonesia. 2023. ‘Menkeu: Kinerja Penerimaan Negara

Luar Biasa Dua Tahun Berturut-turut’ Berita Kementerian Keuangan Republik Indonesia.
4 January. Retrieved 24 January 2024 https://www.kemenkeu.go.id/informasi-publik
/publikasi/berita-utama/Kinerja-Penerimaan-Negara-Luar-Biasa.
6 Kementerian Keuangan Republik Indonesia. 2024. ‘apbn 2023 Ahead the Curve, Menkeu:
Mampu Sehatkan apbn Sendiri, Ekonomi, dan Lindungi Masyarakat’ Berita Kementerian
Keuangan Republik Indonesia. 3 January. Retrieved 24 January 2024 https://www
.kemenkeu.go.id/informasi-publik/publikasi/berita-utama/APBN-2023-Ahead-the-Curve.
7 oecd Publishing. 2022. “Country statistical profile: Indonesia 2022/1”, in Country statistical
profiles: Key tables from oecd. 18 March 2022. Retrieved 25 March 2022. https://doi
.org/10.1787/663a5db4-en.
8 “Rencana Pembangunan Jangka Menengah Nasional” (rpjmn) is a medium-term (5 years)
development plan drawn up at all levels (from the national to the village level). rpjmn
underpins the “musrenbang” process and is part of the planning phase of the budget cycle.
9 Kementerian Perencanaan Pembangunan Nasional/Badan Perencanaan Pembangunan
Nasional, ‘Rencana Pembangunan Jangka Menengah Nasional 2020-2024’ 212.
10 Annasa Rizki Kamalina. 2023. ‘Anggaran Infrastruktur 2023 Rp392 Triliun, Ini Pesan
Sri Mulyani.’ Bisnis.com. 23 January. Retrieved 24 January 2024 https://ekonomi.bisnis
.com/read/20230123/10/1620664/anggaran-infrastruktur-2023-rp392-triliun-ini-pesan
-sri-mulyani. Also see: Nanang Ansari. 2023. ‘Pembangunan Infrastruktur Gunakan
93,4% Produk Dalam Negeri’ Berita djkn. 2 October. Retrieved 24 January 2024 https
://www.djkn.kemenkeu.go.id/berita/baca/33557/Pembangunan-Infrastruktur-Gunakan
-934-Produk-Dalam-Negeri.html#:~:text=Belanja%20infrastruktur%20dalam%20
Anggaran%20Pendapatan,jembatan%2C%20pemukiman%2C%20dan%20sebagainya.

132 pawestri et al
table 1
source: 60 years data oecd (indicators for indonesia.
of the cost of developing state infrastructure.11 These figures are 63.5% less
than the idr 4,100 trillion needed for the infrastructure development budget,
covered only by the private sector, including foreign investment. But in fact,
based on the total of infrastructure investment of 6,445 trillion received by
the state between 2020-2024, soe s are only involved in 21% of the budget
requirements.12 The Government is implementing these policies to bridge the
gap in infrastructure development financing.
The World Bank explained that 11 indicators assess a country’s Ease of Doing
Business (EoDB), especially licensing in business establishment.13
Business creation is positively affected by the EoDB Index. In this regard,
more businesses are created after controlling other factors affecting business
creation. A more accessible and less costly business results in higher return
11 Badan Keahlian dpr RI, ‘Pembangunan Infrastruktur Pelayanan Dasar: Antara Kebijakan
Refocusing Anggaran Dan Prioritas Nasional’, Buletin apbn (6) (2021) 9.
12 Tim cnn Indonesia. 2020. ‘Biaya Infrastruktur Rp6.445 T, bumn-Swasta Tanggung
42 Persen’. cnn Indonesia. 11 July. Retrieved 24 January 2024 https://www.cnnindonesia.com
/ekonomi/20200711180120-78-523582/biaya-infrastruktur-rp6445-t-bumn-swasta
-tanggung-42-persen.
13 Timothy Besley, ‘Law, Regulation, and the Business Climate: The Nature and Influence of
the World Bank Doing Business Project’, Journal of Economic Perspectives (29) (2015) 102.

table 2
Rankings of Doing Business Topic in Indonesia
Indicator db 2020 Rank Topic Scores
Starting a Business 140 81.2

Dealing with Construction Permits 110 66.8
Getting Electricity 33 87.3
Registering Property 106 60.0
Getting a Credit 48 70.0
Protecting Minority Investors 37 70.0
Paying Taxes 81 75.8
Trading across Borders 116 67.5
Enforcing Contracts 139 49.1
Resolving Insolvency 38 68.1
source: world bank doing business report 202014
to firm creation. Therefore, potential entrepreneurs are encouraged to start a

firm while existing businesses are incentivized to expand and create national
income.15
In September 2021, the World Bank stated that the EoDB Index report had
been discontinued and a new, more accurate, and impartial approach was
being developed to assess the business investment climate.16 This significantly
impacted Indonesia, which integrated the EoDB Index into its planning and
bureaucratic systems. The loss of this Index creates a void of reference in
strategic planning and field programs.
The Investment Coordinating Board (bkpm) stated that other international
indices could be applied while waiting for improvements by the World Bank.17
14 eodb. ‘Ease of Doing Business Indonesia’. Retrieved 25 January 2024 https://archive.doing

business.org/en/data/exploreeconomies/indonesia.
15 Tristan Canare, “’The Effect of Ease of Doing Business on Firm Creation, Annals of
Economics and Finance’ 19-2, 555–584 (2018).
16 The World Bank. 2021. ‘World Bank Group to Discontinue Doing Business Report’ The
World Bank. 16 September. Retrieved 9 January 2023 https://www.worldbank.org/en
/news/statement/2021/09/16/world-bank-group-to-discontinue-doing-business-report.
17 Jentera. ‘Meski Indeks EoDB Berhenti, Reformasi Hukum Bisnis Harus Tetap Berjalan’
Retrieved 9 January 2023 https://www.jentera.ac.id/kabar/prospek-reformasi-hukum
-bisnis-indonesia-setelah-penghentian-indeks-ease-of-doing-business.

134 pawestri et al
This requires considering several Index selection criteria, such as relevance

and quality. A study showed that combining the Institute Management
Development (imd) World Competitiveness Index with the Rule of Law Index
(RoLI) could temporarily replace EoDB Index. imd World Competitiveness
Rankings analyzes and ranks countries according to competency management
to achieve long-term value creation.
In 2022, the imd World Competitiveness Rankings showed that Indonesia
was ranked 44th of 63 countries in the “Overall and Factor Rankings” category
in the last five years. The country ranks 42nd in the “Economic Performance”
category. Furthermore, Government Efficiency, Business Efficiency, and
Infrastructure were ranked 35th, 31st, and 52nd, respectively.18 This shows that
the regulatory framework supporting investors to start a business is suboptimal.
The Government strives to develop better ease of doing business by issuing
the Government Regulation of the Republic of Indonesia Number 24 of 2018
concerning Online Integrated Business Licensing Services (hereinafter; pp
oss). This electronic business licensing service is integrated through a portal
called oss. Referring to Article 1 point 5 pp oss, oss is a business licensing
system issued by oss institutions for and behalf of ministers, governors, and
regents or mayors to every undertaking through an integrated electronic
system.
The oss policy was issued to simplify the permitting process for investing
that has been subject of complaints by business actors who want to apply
INDONESIA RANKINGS
0 Legend
10 Competitiveness ranking
20 Digital Competitiveness ranking

Talent Ranking
30
40
50
60
2018 2018 2020 2021 2022
figure 1
source: imd world competitiveness ranking 2022
18 Institute Management Development (imd). ‘World Competitiveness Ranking (2022

Results)’. Retrieved 23 January 2023 https://www.imd.org/centers/world-competitiveness
-center/rankings/world-competitiveness/ and https://worldcompetitiveness.imd.org
/countryprofile/overview/ID.

for a business permit, due to the lengthy time and complicated bureaucracy.
Simplifying the process means investors would no longer visit various
government agencies to arrange business licensing with complicated
bureaucracy. This is expected to improve the investment climate and attract
foreigners to invest in Indonesian infrastructure.
In 2018, oss was launched to transform the investment climate in Indonesia,
but has not been effective until the end of 2019.19 Indonesia’s EoDB Index
declined slightly in 2018 after the launch of oss, and the country was ranked
73rd globally, down from the 72nd position in 2017. Similarly, the country
remained at rank 73rd globally until the fourth quarter of 2019.20 The latest
update from the EoDB Index Report states that Indonesia’s global ranking in
2020 has remained unchanged at 73rd since 2018 and 2019.21 Unfortunately,
the World Bank has decided to stop the EoDB report in 2020,22 so henceforth
the authors will refer to the rankings made by bkpm. According to the bkpm,
regarding investment in the fourth quarter of 2019, 148 foreign investment
projects in infrastructure are worth usd 35.92 million. This figure has
significantly declined compared with the same period in 2018, where the total
value reached usd 117.4 million.23
19 The Minister of Public Works and Public Housing of the Republic of Indonesia (pupr)
formalized the use of the oss system on October 5th, 2021, as stipulated in Government
Regulation Number 05 of 2021 concerning the Implementation of Risk-Based Business
Licensing, and Government Regulation Number 14 of 2021 concerning Construction
Services. oss has mandated four standard elements of business licensing, namely the
Business Entity Certification Institution License (lsbu), Professional Certification
Institution (lsp) Licenses, Business Entity Certification (sbu), and Work Certification
(skk) for the Construction Services sub-sector. See: Kementrian Pekerjaan Umum
dan Perumahan Rakyat Republik Indonesia, Lembaga Pengembangan Jasa Konstruksi
(LPJK). 2021. ‘oss: Bentuk Baru Perizinan Berusaha yang Wajib Diketahui Pelaku
Jasa Konstruksi’. 15 December 2021. Retrieved 23 January 2023 https://lpjk.pu.go.id
/oss-bentuk-baru-perizinan-berusaha-yang-wajib-diketahui-pelaku-jasa-konstruksi/.
20 Adsina Fibra, ‘The Ease of Doing Business in Indonesia’, Journal of Business Strategy and
Execution (10) (2018) 34.
21 The World Bank. 2020. ‘Ease of Doing Business Ranking 2020’ The World Bank. Retrieved
29 January 2024 https://archive.doingbusiness.org/content/dam/doingBusiness/pdf
/db2020/Doing-Business-2020_rankings.pdf.
22 The World Bank. 2021. ‘World Bank Group to Discontinue Doing Business Report’ The
World Bank. 16 September. Retrieved 28 January 2024 https://www.worldbank.org/en
/news/statement/2021/09/16/world-bank-group-to-discontinue-doing-business-report.
23 Badan Koordinasi Penanaman Modal. 2019. ‘Realisasi Penanaman Modal pmdn-pma
Triwulan iv Tahun 2019’ Badan Koordinasi Penanaman Modal. 30 January. Retrieved 15
March 2021 https://www.bkpm.go.id/images/uploads/file_siaran_pers/Paparan_Bahasa
_Indonesia_Press_Release_TW_IV_2018.pdf.

136 pawestri et al
Until the fourth quarter of 2020, the total value of the foreign investment
in infrastructure was usd 31.4 million24 still decreasing from the same period
in 2019.25 This causes Indonesia’s infrastructure to be unable to participate in
market concentration hence improvement has been needed, especially during
the pandemic, to recover the economic climate.
In 2019, Indonesia held position 72nd in the Global competitiveness
report, dropping from number 52nd in 2017. Meanwhile, in 2022, Indonesia
held position 44th and rose to 34th in 2023.26 This shows that the country’s
Market Concentration
Consolidated - Market dominated by 1-5 major

players
Infrastructure sector
in Indonesia
Fragmented - Highly competitve market without

dominant players
figure 2
source: mordor intelligence
24 Badan Koordinasi Penanaman Modal. 2021. ‘Realisasi Penanaman Modal pmdn-

pma Triwulan iv Tahun 2020’ Badan Koordinasi Penanaman Modal. 25 January.
Retrieved 13 March 2021 https://www.bkpm.go.id/images/uploads/file_siaran_pers
/Paparan_Realisasi_Investasi_TW_IV_2020_Bahasa_Indonesia.
25 Based on bkpm data, foreign investment realization in the fourth quarter of 2023
amounted to id 184.4 trillion (5.3% increase over the previous year), but this nominal
is a calculation of foreign investment for all sectors, not just the infrastructure sector.
See: cnbc Indonesia. 2024. ‘Asing Enggan ‘Chip In’ ke RI, Dolar AS Tembus Rp15.700’
cnbc Indonesia. 24 January. Retrieved 28 January 2024 https://www.cnbcindonesia.com
/market/20240124150922-17-508638/asing-enggan-chip-in-ke-ri-dolar-as-tembus-rp15700.
26 Humas. 2023. ‘Peringkat Daya Saing Indonesia Naik ke Posisi 34’ Berita Sekretariat Kabinet
Republik Indonesia. 31 August. Retrieved 24 January 2024 https://setkab.go.id/peringkat
-daya-saing-indonesia-naik-ke-posisi-34/

infrastructure is developing slower than other nations, as indicated by the

Logistics Performance Index.27
The document proves that the oss system has several policies and
implementation flaws. First, there is a disharmony between pp oss and Law
of the Republic of Indonesia Number 25 of 2007 concerning Investments
(hereinafter; Investment Law). The Investment Law is concerned with granting
business permits to create overlapping authority between the Central and Local
Governments. This creates confusion for foreign investors when considering
investing in Indonesia. Second, we have to consider the Law of the Republic
of Indonesia Number 23 of 2014 concerning Local Government (hereinafter;
Local Government Law). According to this law, the Local Government Law
authorizes Local Governments to regulate and manage their respective
regional households, including creating mechanisms for issuing their licenses.
Some examples include Jakarta Evolution (JakEVO) in Jakarta and Surabaya
table 3
Market Size: Global Competitiveness Index

Ranking of Indonesia – 2014-2019
Year 2014 2015 2016 2017 2018 2019
Global Rank 15 10 10 9 8 7
source: global competitiveness report 2014 – 2019
table 4
Economic Growth of Indonesia – 2014-2018
Year 2014 2015 2016 2017 2018 Average
Growth Rate 5.01 % 4.88% 5.03% 5.07% 5.17% 5.03%

Global Rank 49 45 37 38 40
source: globaleconomy.com 2014 – 2018
27 Manuel Fernandez, Mariam Mohamed Almaazmi, and Robinson Joseph, ‘Foreign Direct
Investment in Indonesia: An Analysis from Investors Perspective’, International Journal of
Economics and Financial 102 (10) (2020) 106. https://doi.org/10.32479/ijefi.10330.

138 pawestri et al
table 5
Infrastructure: Global Competitiveness

Index Ranking of Indonesia – 2014-2019
Year 2014 2015 2016 2017 2018 2019
Global Rank 56 62 60 52 71 72
source: global competitiveness report 2014 – 2019
Single Window (ssw) in Surabaya.28 However, the emergence of oss through

pp oss requires all Local Governments to abolish their respective licensing
service systems and integrate themselves into the Central oss Institutions.
The background study from which this paper arose, aimed to identify the
oss policy disharmony that negatively impacts the investment climate in
Indonesia’s infrastructure. This paper aimed to strengthen and provide legal
certainty for oss regulations in line with oss’s goal of positively transforming
the investment climate in infrastructure. Infrastructure is an investment sector
whose licensing services are facilitated by oss. Therefore, this paper focused
on infrastructure in the construction of public facilities.
This paper used a normative method with a statutory, conceptual, and
comparative approach. Various legal rules were analyzed comprehensively by
understanding the relationship between legal norms and looking for schemes
of oss implementation in Indonesia. It analyzed the regulations related to
oss policies, including pp oss, Investment Law, and Local Government Law.
When analyzing oss policies, it is important to include the Investment and
Local Government Laws because pp oss is a technical regulation of the two
laws. Furthermore, the study analyzed Law Number 11 of 2020 concerning
Job Creation (Job Creation Law). The Job Creation Law contains revisions to
articles in the Investment and Local Government Laws relating to oss. The
implementation was compared with the regulation of business licensing in
other countries with better EoDB rates than Indonesia, such as Canada and
New Zealand. This study used primary legal materials in various laws and
regulations related to oss and Foreign Direct Investment (fdi) and secondary
materials comprising books, journals, and scientific articles.
28 Inggarwati, M. P., Celia, O., & Arthanti, B. D. (2020). ‘Online Single Submission for Cyber
Defense and Security in Indonesia’ Lex Scientia Law Review, 4(1), 83-95. https://doi
.org/10.15294/lesrev.v4i1.37709.

2 Foreign Investment Business Licensing in Infrastructure
The Government allows the community to apply for the license to carry out
certain activities for the public interest, making supervision a necessity.29
In the framework of infrastructure fdi, every foreign investor must have a
Construction Services Business License (iujk) before conducting business in
Indonesia. iujk refers to Article 32 of Law of the Republic of Indonesia Number
2 of 2017 on Construction Services. In the context of foreign investment, iujk is
grouped into two clusters.30 These are Construction Service Business License
for Foreign Construction Service Business Entities (iujk bujka) and Foreign
Investment Construction Services Business Permit (iujk pma).
Article 12 Regulation of the Minister of Public Works and Public Housing
of the Republic of Indonesia Number 03/prt/M/2016 concerning Technical
Guidelines of Construction Services Business and Permits Granting for
Foreign Investment Construction Services Business Entities, regulates the
administrative requirements that foreign investors must comply with before
applying for iujk. They include principle licenses and Construction Service
Business Entities (bujk) Deed of Establishment with amendments approved by
the Minister of Law and Human Rights. Other requirements are the Company’s
Articles of Association with amendments approved by the Minister of Law and
Human Rights and Taxpayer Identification Number (npwp) of the person in
charge of the business entity (pjbu).
Furthermore, foreign investors must comply with the company’s npwp,
general information of the bujk or bujk’s company profile, Permit to Use
Foreign Workers (imta), Limited Stay Permit Cards (kitas), and passports or
identity cards belonging to pjbu, imta, and kitas. Additionally, they must
have passports or identity cards belonging to Custodian Services Company,
documents on environmental control and management, and the legality of the
office address company. The investors also need a letter stating that the pjbu
and the bujk directors are not currently serving as directors or commissioners
to other bujk s operating in Indonesia.
The complexity of the quantity and bureaucracy of administrative
requirements makes it hard for foreigners to invest in Indonesia. An example is
29 S Kamenopoulos and Z Agioutantis, ‘The Importance of the Social License to Operate

at the Investment and Operations Stage of Coal Mining Projects: Application Using a
Decision Support System’, The Extractive Industries and Society 8 (2021) 8. doi: https://doi
.org/10.1016/j.exis.2020.05.019.
30 Faishal Haris, ‘Efektivitas Pengaturan Kepemilikan Izin Usaha Jasa Konstruksi (iujk)
Bagi Sub-Kontraktor Penyedia Usaha Jasa Konstruksi’, Jurnal Universitas Brawijaya (7)
(2015) 62.

140 pawestri et al
a requirement that the deed of establishment of a Limited Liability Company

must be filed through the Minister of Law and Human Rights of the Republic of
Indonesia as regulated in Law Number 40 of 2007 concerning Limited Liability
Companies, known as Company Law. The same applies to the requirements for
environmental impact analysis, where documents must be submitted through
the Minister, Governor, Regent, or Mayor following their respective authorities.
This is according to Law Number 32 of 2009 on Environmental Protection and
Management, known as Environmental Law.
There are also requirements on the company’s office address, including
location permits and land rights management. An example is Regulation of
Agrarian Ministry Number 2 of 1999 concerning Location Permits Granting
for Foreign Investment and Domestic Investment updated through the
Regulation of Agrarian Ministry Number 5 of 2015 concerning Location
Permits. In line with this, Article 9 of this Regulation provides that location
permits are issued through a Decree from the National Land Agency,
Governors, Regents, or Mayors according to the scope of the area where the
object is located. This shows that business licensing in foreign investment in
Indonesia’s infrastructure is complex and diversified into many institutions
and ministries. The infrastructure sector investment licensing bureaucracy
needs improvement. The Indonesian Financial and Development Supervisory
Agency (bpkp)31 and Indonesian Ministry of soe highlighted the five primary
benefits of equitable infrastructure development.32
One benefit is the achievement of increasingly competitive logistics
transportation costs. The cost of logistics transportation in Indonesia is almost
twice as high compared to other Association of Southeast Asian Nations
(asean) countries. The Indonesian Chamber of Commerce and Industry
(kadin) explained that the country spends 24% of the national economy
or around idr 1.820 trillion per year for logistics costs.33 This is significantly
higher than the neighboring countries such as Malaysia, which only spends
31 Badan Pengawasan Keuangan dan Pembangunan Republik Indonesia (bpkp RI).

2021. ‘4 Alasan Utama Pentingnya Bangun Infrastruktur’. 24 Maret 2021. Retrieved 23
January 2023 https://www.bpkp.go.id/berita/read/28544/0/4-Alasan-Utama-Pentingnya
-Bangun-Infrastruktur.
32 Kartika Wirjoatmodjo, Deputy Minister of State-Owned Enterprises (soe) ii. 2020.
‘Pembangunan Infrastruktur Jadi Fokus bumn untuk Dukung Transformasi Ekonomi’. 16
September 2020. Retrieved 23 January 2023 https://www.merdeka.com/uang/pembangunan
-infrastruktur-jadi-fokus-bumn-untuk-dukung-transformasi-ekonomi.html.
33 Kementerian Perhubungan Republik Indonesia (Kemenhub RI). 2021. ‘Tingginya
Biaya Logistik Di Indonesia’ Kolom Redaksi Departemen Perhubungan. March 2021.
Retrieved 20 Mei 2021 http://dephub.go.id/post/read/tingginya-biaya-logistik-di-indonesia
-10694?language=id.

15%.34 Developed countries such as The United States of America and Japan
only spend 10% each.35 Therefore, efforts to equalize infrastructure are needed
to cut the logistics chain, with implications for realizing more competitive
logistics costs.
Massive distribution of infrastructure development creates many jobs,
increasing the economy and people’s purchasing power. More open job
opportunities during the pandemic improve the people’s economy and
purchasing power. Indonesia’s purchasing power has been significantly
influencing the country’s economy, specifically during the pandemic. A higher
people’s purchasing power increases the level of companies’ production.
9,0
8,0
7,0
6,0
(persen)
5,0
4,0
3,0
2,0
1,0
0,0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2017 2018 2019
Produk Domestik Bruto

Pengeluaran Konsumsi Rumah Tangga
Pembentukan Modal Tetap Bruto
figure 3
source: badan pusat statistik –
statistics indonesia
34 Elfi Haris, OK. Saidin, Ningrum Natasya Sirait, Maria Kaban, ‘Strengthening National
Logistic Ecosystem to Increase Indonesia Competitiveness in International Trade
Advances in Social Science, Education and Humanities Research’, volume 642 Proceedings
of the Second International Conference on Public Policy, Social Computing and
Development (icoposdev 2021).
35 Kementerian Perhubungan Republik Indonesia (Kemenhub RI). 2021. ‘Tingginya Biaya
Logistik Di Indonesia’ Kolom Redaksi Departemen Perhubungan. March 2021. Retrieved
20 Mei 2021 http://dephub.go.id/post/read/tingginya-biaya-logistik-di-indonesia-10694
?language=id.

142 pawestri et al
Data published by bps-Statistics36 Indonesia from 2022-2023 showed that

around 52.88% of economic growth was supported by public consumption.37
In this case, the people’s purchasing power supported the production of
business actors. In 2023, the bkpm data showed that the total value of the
investment in Indonesia reached idr 374.4 trillion.38 This figure increased by
21.6% compared to 2022 due to an increase in people’s purchasing power of
5.1%, raising the confidence of foreign investors in 2023.
The Covid-19 pandemic impacted public consumption and the production
power of business actors in Indonesia. Until the second and third quarters of
2020, the people’s consumption level was still contracting at -5.5% and -4%,
respectively. This has a linear impact with a decrease in the production of
business actors in Indonesia. Furthermore, the production level was at -8.6%
and -6.5% in the second and third quarters of 2020, respectively. Opening
many jobs through equitable distribution of infrastructure development
after the pandemic would increase people’s purchasing power and support
the economic recovery. In the 3rd quarter of 2023, the people’s consumption
increased by 5,06% from the last year. The production level increased by 5.2%,
mostly supported by processing industry in the third quarter of 2023. The
increase in community mobility after the abolition of the Implementation of
Restrictions on Social Activities policy was the main reason of increased public
consumption and increased production levels. oss is expected to positively
impact investment in Indonesia by simplifying the business licensing
bureaucracy in the infrastructure sector. This is because investors must apply
for permits for their activities integrated in the oss.
3 The Precautionary Principle in Online Single Submission

Regulation
The current business licensing system differs from the bureaucracy before oss.
In the previous bureaucracy, foreign investors had to fulfill commitments in
36 bps-Statistics Indonesia, known in Indonesia as bps (Badan Pusat Statistik), is a non-

departmental government institute of Indonesia that is responsible for conducting
statistical surveys. Its main customer is the government, but statistical data is also
available to the public.
37 Badan Pusat Statistik, 2023. ‘Pertumbuhan Ekonomi Indonesia Triwulan i-2023’ Berita
Resmi Statistik, p. 5.
38 Kementerian Komunikasi dan Informatika Republik Indonesia. 2023. ‘Realisasi Investasi
Triwulan iii Tahun 2023’. 20 Oktober. Retrieved 20 January 2024 https://www.kominfo
.go.id/content/detail/52422/realisasi-investasi-triwulan-iii-tahun-2023/0/artikel_gpr.

location, environmental, and building establishment permits (imb). bkpm

issues iujk pma after meeting these conditions. The provisions are listed in
Regulation of the Minister of Public Works and Public Housing of the Republic
of Indonesia Number 03/prt/M/2016. Moreover, these requirements must be
met to implement the Precautionary Principle39 of Circumspection applied
before an impact occurs. The Precautionary Principle supports taking protective
action before there is scientific proof of a risk. In this case, action should not
be delayed due to a lack of full scientific information. The principle intends
to prevent harm to humans, environment, and ecosystems.40 Therefore, the
Government must avoid negative impacts in its planning, including halting the
activities of any party to generate adversity in the future.41
This precautionary attitude is not an unwillingness to act or a lack of courage
in facing a new challenge. It is an attitude of prudence for public policymakers
to make the right decisions regarding a particular activity with the potential
to pose a danger to society. However, this impact cannot be ascertained
because it has not occurred, and there is no scientific evidence. Every public
policymaker is obliged to balance two extreme situations of excessive fear of
a particular activity and new technology. Additionally, irresponsible actions
could endanger the community or the environment.42
Electronic Integrated Business Licensing (oss) is a business licensing
platform managed and issued by the oss Institution. This platform is issued
for and on behalf of the Minister, authorized heads of institutions, Governors,
and Regents or Mayors. It is intended for foreign and domestic undertaking
through an integrated electronic system. In line with this, oss was created to
solve the bureaucratic complexity of managing business permits. Article 5 pp
oss classifies licensing through oss into business permits and commercial or
operational licenses. The oss Institution issues business permits for and on
behalf of the Minister, authorized heads of institutions, Governors, Regents,
or Mayors. The permits are issued before commercial or business operations
to fulfill specific commitments or requirements. In contrast, commercial or
operational licenses are issued by the oss Institution for and on behalf of the
39 Kenisha Garnett and David J Parsons, ‘Multi-Case Review of the Application of the
Precautionary Principle in European Union Law and Case Law’, Risk Analysis (37) (2017)
512. https://doi.org/10.1111/risa.12633.
40 Irum Akhsan, Saima Amin Khawaja. 2016. Environmental Law Principles – Precautionary
Principle” adb Knowledge Events. 14 December. Retrieved 9 January 2023 https://events
.development.asia/materials/20161214/environmental-law-principles-precautionary
-principle.
41 ibid.
42 Emmy Latifah, “Precautionary Principle sebagai Landasan dalam Merumuskan Kebijakan
Publik” Yustisia Jurnal Hukum (5) (2016) 277.

144 pawestri et al
Minister, authorized heads of institutions, Governors, and Regents or Mayors

after each undertaking to fulfill specific commitments.
Before issuing a business license, environmental and location permits
should be granted to implement the precautionary principle.43 However, pp
oss offers a different concept, where business permits are issued even before
commitments in location, and environmental permits and imb are fulfilled by
foreign investors. That is why it is called a Business License with Commitment.
The obligation to fulfill these commitments still exists as with the old
regulations, fulfillment can be done following the issuance of Business Licenses
with Commitments, and while fulfilling those commitments, foreign investors
can conduct business commencement activities. The issuance of a business
license before fulfilling the commitment enables foreign investors to initiate
business activities earlier as regulated in Article 38 of the pp oss. This includes
completing specific certifications or eligibility, changing the size of the land
area, and conducting land acquisition. Other activities include hiring Human
Resources to run a business, preparing for production, procuring equipment or
business facilities, and conducting a commissioning or production trial.
Article 40 of pp oss states that the oss Institution has the absolute authority
to cancel the Business License with the Commitment when it is not fulfilled by
the foreign investor after a predetermined period. When the commitments have
been fulfilled, the Business Permit and Commercial or Operational Permits
with Commitments previously issued would be determined as absolutely
and legally valid. However, allowing every investor to conduct commissioning
practices without an environmental permit opens the door for activities
such as business land clearing that endanger the environment or residents
around the location. The concept offered by pp oss, where business permits
are issued even before environmental permits, commitments in location, and
imb fulfillment, does not erase the precautionary principle in issuing business
licenses to foreign investors but only makes the placement more profitable
and attracts foreigners to invest in Indonesia. However, this convenience has
created the possibility of a reduced precautionary principle in issuing business
licenses for foreign investors.
With its advantages and disadvantages, the Government promotes the oss
regulation to attract foreign investors in infrastructure. However, Indonesia’s
EoDB index shows that the oss has not shown a positive trend in fdi
development since its publishing in 2018 until the final quarter of 2019. The
EoDB index declined slightly from 2018 after implementing oss to the fourth
43 Loura Hardjaloka, The Accuracy of Implementing Precautionary Principle as Ius Cogens

in the Case of mt. Mandalawangi’, Jurnal Yudisial (5) (2012) 148.

quarter of 2019, when Indonesia was ranked 73rd globally, down from the
72nd position in 2017.44 Since the eodb Index stopped in 2020, we use data
indicators published by bkpm to show the progress of implementing the oss
system regulations on fdi until 2023 in Indonesia. bkpm regarding investment
realization in the first quarter of 2023 showed 33,340 foreign investment
projects worth usd 11.96 billion in infrastructure.45 This figure has not increased
optimally than the achievements in the same period in 2022, where the total
value reached usd 10.25 million.46 It implies problems with oss regulations
for investment, indicating that oss has not optimally increased investment
flows in infrastructure.
4 Online Single Submission Disharmonization of Regulations
The juridical problem of oss regulation lies in the legality of the pp oss
that spearheaded the oss system emergence in Indonesia. This regulation is
a derivative regulation of the Investment Law and Local Government Law.
Therefore, these two laws are essential for the present study since they are the
juridical basis of government regulations such as the oss.
The Investment Law regulates business licensing through the One-Stop
Integrated Service (ptsp) System. Article 26 paragraph (2) of the Investment
Law states that ptsp is implemented by the authorized agency or institution in
the investment sector. In this case, the investment sector receives delegation of
authority from agencies or institutions mandated for licensing or non-licensing
matters at the central, provincial, district, or city levels. The Investment Law
does not explain the implementation of the authority delegation or the details
of the ptsp. On the contrary, these regulations are found in Presidential
Regulation Number 97 of 2014 concerning the Implementation of One-Stop
Integrated Services (hereinafter; Perpres ptsp). The Presidential Regulation
implements the ptsp delegated by Article 26 paragraph (3) of the Investment
Law. Furthermore, Chapter iii of Perpres ptsp divides the ptsp investment
into Central and Local Governments.
The contradicting provisions within this regulation prove the disharmony.
For instance, Article 7 of the Perpres ptsp regulates that bkpm implements
ptsp in the investment sector by the Government. In contrast, Articles 10-11
44 Fibra (n 7).
45 Kementerian Investasi/bkpm, 2023. ‘Investment realization fdi & ddi Quarter i
(January–March) 2023’, Press Release Kementerian Investasi/bkpm, 28 April, p. 27.
46 Kementerian Investasi/bkpm, ‘Investment realization fdi & ddi Quarter 1 (January–
March) 2022’, Press Release Kementerian Investasi/bkpm, 27 April, p. 11.

146 pawestri et al
state that the ptsp investment implementation by the Local Government is

conducted by the Provincial and Regency or City Government. Implementation
through the Provincial Government is performed by the Provincial Investment
Body and One-Stop Integrated Service (bpmptsp) with the Governor’s
authority. The implementation of ptsp by the Regency or City Government is
carried out by bpmptsp authorized by the Regent or Mayor.
This study showed disharmony in the division of authority for implementing
business licensing in Indonesia. It dichotomized licensing regime in the
Investment Law juncto Perpres ptsp with the organizing authority of oss under
pp oss regulation. pp oss does not specify that the implementation of ptsp
by bkpm at the Central, Provincial bpmptsp, and Regency or City bpmptsp
levels are abolished with oss’s birth. However, a mandatory clause in Article 19
paragraph (1) of pp oss regulates that business licenses, including documents
relating to business permits, must be conducted through the oss Institution.
This indicates that business licensing is no longer the Central Government’s
absolute authority through the bkpm and the Local Government through the
Provincial and Regency or City bpmptsp but is centralized through the oss
Institute.
The centralism of the implementation of business licensing is seen through
the following two contents of the pp oss:47
a. Article 19 paragraph (2) states that the oss Institution is authorized to
issue business licenses based on the Government Regulation for and on
behalf of the Minister, head of the institution, Governor, and regent or
mayor.
b. The oss institution is defined in Article 1 point 11 as a Non-Ministerial
Government agency authorized to conduct government affairs in invest-
ment coordination.
These two provisions indicate that the Government wants to centralize business
licensing through the oss Institution as a Non-Ministerial Government agency
through the pp oss. This mechanism contradicts the provisions stipulated in
the Investment Law. The Law divides the authority to implement business
licensing between ptsp by the Central Government through bkpm and ptsp
by the Local Government through Provincial bpmptsp and Regency or City
bpmptsp.
The Local Government Law authorizes Local Governments to regulate
and manage their regional households, including creating mechanisms for
47 Irvan Dermawan, ‘Efektivitas Pendaftaran Izin Usaha Melalui Sistem Online Single
Submission (oss) Sebagai Sarana Pelayanan Perizinan Terpadu Satu Pintu (ptsp) Di
Indonesia’, Jurnal Universitas Sriwijaya (2019) 3.

issuing licenses. However, the emergence of oss through pp oss requires all
Local Governments to abolish their licensing service systems and integrate
themselves into the Central oss Institutions. Disharmonization of oss
regulations in pp oss occurs with the Local Government Law.
Article 350 paragraph (1) stipulates that the Regional Head is authorized to
implement licensing according to statutory regulations. Paragraph (2) explains
that each region conducts such licensing by forming a ptsp unit in line with the
Investment Law and the Perpres ptsp. In this case, the Perpres ptsp delegate
the authority to perform business licensing within one province, district, or
city to the respective Local Governments.48 This results in inconsistencies or
disharmony between pp oss and Local Government Law and an ineffective
oss implementation. Consequently, there is a negative discourse on business
licensing implementation in foreign investment in infrastructure.
Article 350 of the Local Government Law also reflects regional autonomy
in business licensing for foreign investment in Indonesia. Regional autonomy
originates from decentralization or the delegation of administrative
and political authority from the Central to the Local Government. The
decentralization principle transfers the responsibility of implementing
regional affairs to the Local Government as authority delegation.49 Therefore,
it becomes appropriate when the business licensing affairs for foreign
investment in the province, regency, or city is fully managed by the Local
Government through Provincial bpmptsp and Regency or City bpmptsp.
Centralizing the authority to administer business licensing to the main level
through the pp oss derogates from the rights of each region to their respective
decentralization principles. The next section discusses oss implementation
by considering the Local Government autonomy in business licensing.
5 Online Single Submission Regulation After the Job Creation Law
The disharmony between the pp oss, Investment Law, and Local Government
Law hindered the optimal implementation of oss. The Government should
restructure oss regulations to eliminate disharmony to materialize the positive
goals of oss. This requires simplifying the bureaucracy and increasing the ease
48 Gani Angga, Amiek Soemarmi, and Nabitatus Sa’adah, ‘Pelaksanaan Peraturan Daerah
Istimewa Yogyakarta Nomer 6 Tahun 2005 Tentang Usaha Perikanan Dan Usaha Kelautan
Di Provinsi Daerah Istimewa Yogyakata (Studi Tentang Perizinan Usaha Perikanan Di
Daerah Istimewa Yogyakarta’, Diponegoro Law Journal (5) (2016) 10.
49 Chema G, Shabir, and Rondinelli, Decentralization, and Development, Policy Implementation
in Development Countries (California: Sage, 1983) p.53.

148 pawestri et al
of doing business, especially in infrastructure. In line with this, the House of

Representatives and the President of the Republic of Indonesia established
the Job Creation Law on October 5, 2020. This Law is the first statutory
instrument that applies the Omnibus Law method by revising several related
laws and codifying them into one Law.50 The Investment Law and the Local
Government Law were among the legislative acts revised in the Omnibus Law
on Job Creation. This Law contains revisions to articles in the Investment Law
and the Local Government Law relating to oss. Some of the revised provisions
include:
The revision of the implementation of business licensing in the Job
Creation Law increases legitimacy for oss in Indonesia. The provisions in the
Investment Law and the Local Government Law initially divided the authority
to administer business licenses between the Central and Local Governments.
These provisions have been revised by the Job Creation Law, requiring business
licensing operations under the authority of the Central and Local Governments
to be based on procedures determined by oss. The Job Creation Law has
legally resolved the disharmony between the pp oss, the juridical basis for
the birth of the oss, with the Investment and Local Government Laws. This
table 6 The difference between Article 350 of the Local Government Law and the Job
Creation Law
Article 350 Local Government Law Article 176 Job Creation Law
(Revision of Article 350 Local
Government Law)
The Head of the Regional The Head of the Regional Government

Government is obliged to provide must provide Business Licensing
licensing services under laws and services per procedures stipulated by
regulations. the Central Government.
In providing these licensing services, The Business Licensing Service must
the Regional Government form a use an electronic system managed by
ptsp unit. the Central Government.
50 Kaharudin, Wibowo, G.D.H., & Ilwan, M. (2021). ‘Structuring legislation through omnibus
law: Opportunities and challenges in the Indonesian legal system’, Journal of Legal, Ethical
and Regulatory Issues, 24(7), 1-11.

table 7 The difference between Article 25 of the Investment Law and the Job
Creation Law
Article 25 Investment Law Article 77 Job Creation Law

(Revision of Article 25
Investment Law)
Companies undertaking business activ- Companies undertaking business
ities must obtain a license following the activities must fulfill Business
provisions of laws and regulations from Licensing based on the norms,
the competent authority. standards, and procedures stipu-
lated by the Central Government.
harmonization has resulted in implementing Indonesia’s investments value in

2023. Total investment realization for Q1 of 2023 has been increasing compared
to the same period in 2022. Indonesia received an fdi realization of about idr
177.0 trillion (usd 11.96 billion) for Q1 of 2023, an increase of 1.1% from last
year’s realization in the same period.
Eliminating the disharmony through the revision of the Law does not
eliminate the restraints on regional autonomy in implementing the business
license administration under its authority. Articles 77 and 176 of Job Creation
Law maintain the business licensing centralization through the obligation for
each Local Government to follow the oss standards and procedures. Although
this is beneficial for investors, it derogates and limits regional autonomy. This
is because Local Governments lack the freedom to exercise their authority
because of the obligation to centralize their business licensing standards and
bureaucracy following those stipulated by the Central Government. Regional
autonomy requires independence in managing the area’s potential. The
infrastructure sector that drives regional progress is also maximized to increase
competitiveness and improve people’s welfare. Similarly, ease of investment is
an indicator for increasing regional competitiveness. This ensures that each
region has the right to determine its investment policy to attract investors.
6 Transformation of Business License Becoming Risk-Based Business

Licensing through oss as a Follow Up to Job Creation Law
The Government Regulation of the Republic of Indonesia Number 5 of 2021

concerning Implementation of Risk-Based Business Licensing (pp Risk-Based

150 pawestri et al
table 8
fdi Investment Realization Q1, 2022
Investment
Sector Project
(US$ Million)
Metal, Metal Goods, Except Machinery and 2,577.9 443
Equipment Industry
Mining 1,171.1 255
Electricity, Gas, and Water Supply 982.5 220
Transportation, Warehouse, and 872.1 490
Telecommunication
Chemical and Pharmaceutical Industry 854.0 650
Food Industry 685.9 951
Vehicle and Other Transportation Industry 542.0 468
Housing, Industrial Estate, and Office Building 516.1 771
Other Services 458.3 2,252
Food Crops, Plantations, and Livestock 456.2 561
Trade and Reparation 184.5 3,462
Paper and Printing Industry 156.4 198
Hotel and Restaurant 155.3 2,151
Machinery, Electronic, Medical Instrument, 138.8 466
Electrical Equipment, Precision, Optical and
Watch Industry
Textile Industry 126.1 395
Non-Metallic Mineral Industry 101.5 112
Leather Goods and Footwear Industry 96.8 150
Rubber and Plastic Based Goods Industry 67,2 368
Other Industries 60,0 79
Construction 24.5 170
Wood Industry 22.6 158
Forestry 8.0 26
Fishery 1.2 67
Total 10,259.0 15,173
source: badan koordinasi penanaman modal (bkpm) indonesia

Business Licensing) is effective from June 2, 2021. The regulation ordered

business actors to accelerate the implementation of their license commitments
and submit them through the oss system no later than May 25, 2021. The
business license would be issued by the oss system before June 2, 2021.51
This is because there would be a slight transformation in implementing
attempted licensing through oss. This implementation would be further
maximized at the risk of each business activity.52 Therefore, business actors
should fulfill the commitment or make new attempted licensing applications
through the oss system after May 25, 2021. The attempted licensing would then
be processed based on Risk Based-Business Licensing as the implementation
of pp Risk-Based Business Licensing and bkpm Regulation Number 4 of 2021
on Guidelines and Procedures of Risk-Based Business Licensing Services and
Investment Facilities. The two are derivative regulations of the Job Creation
Law mandate.
Article 1, number 2 of pp Risk-Based Business Licensing defines risk as a
potential injury, loss, threat, or combination between the position and the
result arising from an activity. Furthermore, Article 1 number 3 defines risk-
based business licensing as the implementation of attempted licensing based
on the risk possibility of business activities. The Risk-Based Business Licensing
aims to issue the attempted licensing and supervise business more effectively.
It also intends to supervise structured, and transparent business activities
accounted for in line with the laws and regulations. The implementation of
Risk-Based Business Licensing is based on Article 6 pp Risk-Based Business
Licensing covering the marine and fisheries, agricultural, environmental
and forestry, and energy and mineral resource sectors. Other sectors are
military, industry, trade, public works and housing, transportation, health,
medicine, and food. Additionally, Article 6 pp Risk-Based Business Licensing
covers education and culture, tourism, religion, postal, telecommunications,
51 Starting from 4 August – 18 September 2021, the oss system has issued 205,373 Business
Identification Numbers (or Nomor Induk Berusaha/nib). See: Humas. 2021. ‘Diluncurkan
Agustus, Sistem oss Telah Terbitkan Lebih dari 200 Ribu Nomor Induk Berusaha’ Berita
Sekretariat Negara Republik Indonesia. 22 September. Retrieved 24 January 2024 https
://setkab.go.id/diluncurkan-agustus-sistem-oss-telah-terbitkan-lebih-dari-200-ribu
-nomor-induk-berusaha/.
52 Badan Pemeriksa Keuangan Republik Indonesia (bpk RI). 2021. ‘Database Peraturan:
Peraturan Pemerintah Nomor 5 Tahun 2021 tentang Penyelenggaraan Perizinan Berusaha
Berbasis Risiko, pp No. 5 Tahun 2021 tentang Penyelenggaraan Perizinan Berusaha
Berbasis Risiko’. jdih bpk RI. 2 February, Retrieved 17 August 2021 https://peraturan.bpk
.go.id/Home/Details/161835/pp-no-5-tahun-2021.

152 pawestri et al
table 9
fdi Investment Realization Q1, 2023
Investment
Sector Project
(US$ Million)
Metal, Metal Goods, Except Machinery, and 2,903.8 776

Equipment Industry
Transportation, Warehouse, and 1,213.5 1,504
Telecommunication
Chemical and Pharmaceutical Industry 1,068.4 1,059
Mining 919.9 520
Paper and Printing Industry 830.6 323
Electricity, Gas, and Water Supply 615.5 455
Food Industry 615.4 1,745
Housing, Industrial Estate, and Office Building 596.5 2,474
Other Services 596.2 6,181
Vehicle and Other Transportation Industry 531.7 726
Food Crops, Plantations, and Livetsock 435.2 799
Machinery, Electronic, Medical Instrument, 355.4 906
Electrical Equipment, Precision, Optical and
Watch Industry
Trade and Reparation 293.4 8,721
Leather Goods and Footwear Industries 190.2 310
Hotel and Restaurant 189.1 3,129
Rubber and Plastic Based Goods Industry 173.5 585
Non-Metallic Mineral Industry 119.6 185
Textile Industry 114.2 727
Construction 71.9 786
Other Industries 69.2 840
Wood Industry 54.5 310
Forestry 44.3 87
Fishery 12.4 192
Total 11,960.5 33,340
source: badan koordinasi penanaman modal (bkpm) indonesia

broadcasting, electronic transaction systems, defense and security, and the

labor sectors.
Article 7 pp Risk-Based Business Licensing stipulates that Risk-Based
Business Licensing is implemented based on risk level determination and Small
and Medium Micro Enterprises (umkm) and macro businesses. The risk level
is determined based on a transparent and accountable analysis that prioritizes
prudence through data and professional assessment. The classification of
business risks is an implementation of the precautionary principle.53 In
conducting business risks, the precautionary principle entails assessing the
level and potential for hazard to occur, as well as the risk. It rates the business
scale and identifies the type of license. The business licenses granted differ
based on the level of risk determined from the assessment, which includes low,
medium, and high-risk level. All assessments used in the risk analysis ensure
that no risks are overlooked when determining the type of Business Licensing.
The Central Government assesses the risk analysis by identifying business
activities and assessing danger and potential impact. The assessment also
involves determining the level of risk, the scale of business activities, and
the licensing effort. The hazard level is reviewed based on health, safety,
environmental sustainability, and the utilization and management of natural
resources. An assessment of danger and the potential impact of hazards, risk,
as well as the scale rating of business activities is classified as low, medium,
and high-risk.
Business Licensing for low-risk business activities must include a Business
Identification Number as an identity of a business actor and legality in
conducting business activities. The evidence of legality for low-risk business
activities applies to umkm and macro businesses. Business Licensing for
medium risk level must include a Business Identification Number and Standard
Certificate as proof of legality to conduct business operations. Furthermore, it
includes a statement that an actor has met the standardization of conducting
business activities issued by the relevant institution or agency through the
oss system. Business activities with high-risk levels must include a Business
Identification Number and Standard Certification. The certification is an
approval from the Central or Regional Government that business actors must
fulfill before conducting operations.
53 Daniel Steel, Philosophy and the Precautionary Principle (United Kingdom: Cambridge
University Press, 2015) p.17. See also: Loura Hardjaloka, ‘The Accuracy of Implementing
Precautionary Principle as Ius Cogens in the Case of Mt. Mandalawangi’, Jurnal Yudisial,
(5) (2012) 141.

154 pawestri et al
The Central or Local Governments issue the licensing and certification

for risk-based business activities in line with their respective authorities.
The issuance is based on a transparent and comprehensive assessment
and verification of standard compliance, where the entire administrative
bureaucracy is integrated centrally into the oss system. A business license for
foreign investment is issued by a government agency authorized to conduct the
affairs in investment coordination. In this case, the license is issued by bkpm,
but the entire bureaucracy management could still be centralized through the
oss system.
7 Online Single Submission Regulation after the Constitutional

Court Decision Concerning Judicial Review of Job Creation Law
Against the 1945 Constitution
The Constitutional Court of the Republic of Indonesia by The Constitutional

Court Decision Number 91/puu-xviii/2020 concerning Judicial Review of the
Job Creation Law against the 1945 Constitution of the Republic of Indonesia
(hereinafter; the 1945 constitution)54 has decided that the Job Creation Law is
“conditionally unconstitutional”. As the guardian of the constitution with the
final constitutional interpretation, the Constitutional Court explained that the
Job Creation Law contradicts the 1945 Constitution as “the Land of the Law.”
Subsequently, the Constitutional Court granted judicial review for the Law
against the 1945 Constitution.
There are several important things in the legal consideration of the
Constitutional Court’s decision. The first issue is the absence of meaningful
community participation in establishing the Job Creation Law. Second, the
Job Creation Law contradicts the law establishment procedures stipulated in
Law Number 15 of 2019 concerning Changes to Law Number 12 of 2011 on the
Establishment of Laws and Regulations. Although the oss regulation in the
Job Creation Law still applies, equalizing and improving its implementation
has been hampered. Consequently, this inhibits the oss regulation goals in the
Job Creation Law.
The Job Creation Law complicates and confuses the host country and
investors because regulations related to oss become inharmonious, resulting
in legal uncertainty.
54 The Constitutional Court Decision No. 91/puu-xviii/2020, The Constitutional Court of

the Republic of Indonesia, November 25, 2021.

This paper submits that the Constitutional Court decision should be an

opportunity for the Government to amend the current business licensing
system taking inspiration from best practices from Canada and New Zealand.
When the Government fails to make improvements, so the Law is declared
invalid, and the rules related to oss would descend from previous regulations.
The previous regulations created a disharmony in the oss regime before
the Job Cration Law was enacted, a policy that would greatly affect EoDB in
Indonesia.
8 Licensing Service Policy in Infrastructure in Canada
Canada has implemented electronic-based business licensing that provides

license and permit information to businesses and their locations across all
government levels as well as multiple access points. It integrates requirements
at the federal, provincial, territorial, and many municipal levels to provide
information on all the formalities to establish and operate a business and help
business owner understand better the regulatory environments.55 In 2019,
the World Bank data showed that Canada’s EoDB index was still consistently
ranked 23rd out of the 190 countries reviewed.56 In the imd 2023 World
Competitiveness Ranking, Canada secured the 15th position, showing a slight
shift from its 14th ranking in 2022 and 2021. imd’s World Competitiveness
Ranking considers a multitude of factors including productivity, efficiency,
business legislation, investment, innovation, and the environment, painting
a comprehensive picture of competitive standing.57 For this reason, Canada’s
licensing system should be a model to be emulated by Indonesia.
Canada has a constitution known as The Constitution Act of 1982,58
containing rules related to the distribution of power or authority in public
55 Grava, Lars Nikolajs; Wille, John Raymond. ‘Achieving Integrated Government-to

-Business Service Delivery: A Planning Guide for Reformers (English)’. The World Bank
Group. 29 October. Retrieved 24 January 2024 http://documents.worldbank.org/curated
/en/229401604053492832/Achieving-Integrated-Government-to-Business-Service
-Delivery-A-Planning-Guide-for-Reformers.
56 Business Finland. 2023. ‘Doing Business in Canada Updated 30.3.2023’ Business Finland.
30 March. Retrieved 24 January 2024 https://www.businessfinland.fi/4a4551/globalassets
/finnish-customers/05-go-to-market/locations/doing-business-reports/doing-business-in
-canada.pdf.
57 International Institute for Management Development, imd World Competitiveness Booklet
2023. (Lausanne: International Institue for Management Development, 2023) p.64.
58 Kenneth Munro, ‘The Constitution Act, 1982 and the Crown: Twenty-Five Years Later’
Constitutional Forum/ Forum constitutionnel (17) (2011).

156 pawestri et al
services, including business licensing. Part iii of the Constitution Act of 1982
on Equalization and Regional Disparities59 in Article 36 paragraph (1) provides
that, without changing the authority of the parliamentary or provincial
legislature or their rights relating to their legislative authority, parliaments,
and bodies, the Legislature, the Canadian, and Provincial Governments, shall:
a. Provide equal opportunity and treatment for all Canadian citizens;
b. Maximize economic development to reduce disparities of opportunity
and socio-economic inequality; and
c. Provide public services essential for the quality distribution of all
Canadian citizens.
Article 36 shows that Canada adheres to decentralization (like Indonesia) and
grants the right to domestic affairs to each province concerned. This is also
applied to public services, including fdi business licensing. Therefore, the
Canada Business Corporations Act of 1985, known as cbca 1985, was made
based on that constitution. cbca 1985 is a federal law that regulates business
structure as a clearinghouse for companies in Canada. It includes rules for
establishing corporations or other business structures, the requirements it
uses and approved procedures for dissolving companies. Article 4 of cbca
1985 mentions among the purposes of this Act “to revise and reform the
law applicable to business corporations incorporated to carry on business
throughout Canada” and “to advance the cause of uniformity of business
corporation law in Canada”. Furthermore, the Act regulates the provision of
infrastructure facilities in business licensing.
cbca 1985 does not provide arrangements related to fdi business licenses.
It regulates more administrative and technical provisions that must be met
when people want to start a business in Canada. Article 118 paragraph (3)
of cbca 1985 stipulates that at least 25% of the directors of an established
company must be residents of Canada. When 25% of the directors are not
round numbers, the calculation is rounded to the nearest number. In this case,
when a corporation has less than four directors, at least one director must be
a resident of Canada.60
59 Adam Dodek, The Canadian Constitution (Canada: Dundurn, 2013) p. 252.

60 Susan Ward, ‘How to Start a Business in Canada When You’re Not Canadian’ (2 October
2020) 1. In the context of foreign direct investment, the establishment of business by
foreign nationals in Canada is carried out in three forms, namely the expansion of the
company by establishing a branch company in Canada or through a merger mechanism
with a company that has been established in Canada, establishing a new company in
Canada by migrating (settling in Canada), or set up a new company without settling or
living in Canada. All three have their bureaucracies following the regulations of each
province or territory where the business will be established.

Further regulations relating to establishing a business in fdi in Canada are

stipulated in the Investment Canada Act (hereinafter; ica). Furthermore, it
provides regulations relating to the foreign citizens conducting acquisitions or
mergers with companies established in Canada and those establishing a new
business entity.
Article 1 ica requires a new business entity to notify or apply for review
based on ica regulations. The notification obligation that foreign investors
must fulfill is to submit detailed information on the business actors and the
comprehensive planning of business activities to be carried out in Canada.61
In the context of fdi in infrastructure, a review would be conducted on this
notification, where foreign investors are considered to have completed the
investment licensing requirements proposed. This happens when the Minister
of Innovation, Science, and Economic Development, Industry Minister, and
Minister of Public Safety assesses that the foreign investment in infrastructure
would be beneficial and not harm the public and the Canadian economic
security.62
ica did not regulate the concrete bureaucracy in implementing business
licensing. Each province in Canada is authorized to organize and determine
the needed bureaucracy for implementing business licensing. This includes
setting additional requirements for obtaining business licenses in specific
sectors that significantly influence the region.63 Therefore, regulations
related to business licensing in Canada are similar to the ptsp mechanism in
Indonesia. Each region has the authority to implement its licensing system
through the Regional bpmptsp.
Canada has a centralized electronic-based platform similar to oss, called
BizPal, an online system-based service that enables business actors to identify
the permits and licenses needed by each province and the procedures to
obtain them.64 Through BizPal, people investing in Canada easily choose the
type of business they want to establish, the sector, and the province. Moreover,
BizPaL automatically displays a list of all licenses and permits to be fulfilled
from Canadian Federal, Provincial, Territorial, or Municipal Governments.
BizPal displays a list of licenses and permits with basic information related
to each sector and region. It then directs the business actor to the website
61 Steven Globerman, ‘An Economic Assessment of the Investment Canada Act’, Fraser
Institue Journal (2015) 3.
62 ibid.
63 Ontario Business Central. ‘The Right Way to Obtain Your Business License in Ontario’
Retrieved 28 April 2021 https://www.ontariobusinesscentral.ca/business-license-canada
.php.
64 Ontario Business Central (n 38).

158 pawestri et al
link of the Provincial Government, where the business would be established.

Provincial Governments in Canada must provide offline and online
infrastructure for implementing business licensing in their regions as their
autonomous right. BizPal resembles oss because both are electronic-based
platforms managed by the Central Government. However, BizPal in Canada is
a different model compared to oss in Indonesia.
pp oss regulates that implementing business licensing, initially the
authority of the Local Government according to Local Government Law,
is delegated to the main level through the oss Institution. The Regional
Government must delegate their authority to the Central Government through
the oss Institution. Therefore, the oss Institution intervenes in administering
and issuing business licenses of the Local Government. In contrast, BizPal
Canada does not use such a model as oss Indonesia. Based on the division
of authority, Indonesia and Canada both allow each region to carry out their
respective business licensing. This resulted in a similar implementation, where
Surabaya has ssw and Jakarta has JakEVO. Also, each province in Canada has
its business licensing system, such as Ontario, which has an Ontario Business
Permit and License. It is conducted offline through the Provincial Government
or online through the website provided by the province.
The BizPal system is an electronic platform that provides information and
bridges business actors, foreign investors, and the province to set up a business.65
It functions as a place for the online licensing system from each province. This
makes it easier for foreign investors when considering conducting business
in a province in Canada by eliminating the need for requirements and goals
for licensing independently. It is conducted centrally through BizPal, which
automatically connects to the electronic website link of the business destined
province.
BizPal was not authorized by the Local Government to regulate the
implementation and issuance of business licenses. The regional authority
remains the Local Government’s authority without interference by the
Canadian Central Government. The BizPal concept is different from the oss,
which changes regulations related to regional authority in implementing and
issuing business licenses through the oss Institution. Therefore, when the
BizPal system is adopted, the bureaucratic ease of doing business could be
achieved without derogating regional autonomy regarding the authority to
administer business licensing.
65 Organization for Economic Cooperation and Development (oecd, oecd Studies on sme s
and Entrepreneurship sme and Entrepreneurship Policy in Canada (oecd Publishing 2017).

The differences in BizPal and oss concepts also impact foreign investors.
The order of obligation for each Regional Government to integrate its business
license into the Central Government as stipulated in Article 19 pp ptsp, has
implications for foreign investors to take care of their business licenses through
oss only. Such regulations eliminate the role of ptsp in each region, and all
would be devolved to the Central Government through the oss Institution.
BizPal only serves as a container that connects foreign investors with
business licensing platforms from every province in Canada without
intervening or abolishing the provincial authority. In this case, business actors,
including foreign investors, have a choice to take care of their business license
online or manually through the Provincial Government concerned.
The workings of BizPal impact the absence of regulatory overlap or
implementation between the Central and the Regional Government.
Consequently, there would be no overlap between BizPal and Ontario Business
Permit and License. The reason is that BizPal is just a connecting platform
between regions without any central authority. This contrasts with the current
conditions that cause double regulation between the Central and the Regional
Government in Indonesia. The regulation causes the double implementation
of attempted licensing between the Central and the Regional Government,
such as between ssw in Surabaya and oss at the central level. Taking the BizPal
model into consideration, the Indonesian Government should consider oss
usability to provide basic information on each permit and license required.
It should also avail links to specific websites that provide more information
and allow for online application. This means that the authority of regional
autonomy to administer business licensing should be established.
9 Licensing Service Policy in the Infrastructure Sector in

New Zealand
New Zealand is an archipelago state acting as the primary destination for

foreign investors due to its world-class investment regulations and ease of
doing business. According to the World Bank, the country received a positive
trend in the EoDB index from 2010 to 2019. It was ranked third globally
regarding ease of doing business from 2010 to 2013 and became the 2nd in 2014.
From 2015 to 2019, New Zealand maintained the first rank in doing business
and has been touted as the best country in this field.66 This is the reason New
66 Trading Economics. 2019. ‘Ease of Doing Business in Canada 2008-2019 Data’ Retrieved 16
April 2021 https://tradingeconomics.com/canada/ease-of-doing-business.

160 pawestri et al
Zealand’s competitive licensing system should be a model for Indonesia to

follow. Unfortunately, the EoDB index stopped in 2020.
The New Zealand Constitution is not codified into a single document. It
has various sources, including legislation, legal documents, and standard law
system obtained from court decisions and constitutional practices generated
from agreements on conventions.67 Regulations related to Local Government
in New Zealand are stipulated in the Local Government Act 2002 as part of
the constitution. Local Government Act 2002 regulates the general framework
of power, including the structure and functions of Local Government in New
Zealand.68 Furthermore, the Act regulates Local Governments’ primary duties
and functions in implementing regional public services. According to Article
17A paragraph (1), Local Government Act 2002, Local Governments must design
and review the effectiveness of regulations to meet people’s needs for quality
infrastructure, local public services, and the performance of government
functions in region-related sectors.
Article 12 of the Local Government Act 2002 regulates that the Local
Governments could delegate their authority in each sector to Territorial
Authorities and Regional Councils in performing its functions. Territorial
Authorities is a district or city council responsible for organizing and providing
local services. These include clean drinking water, parks, libraries, cultural
and community facilities, recreation centers, urban planning, and regional
economic development. In contrast, Regional Councils are provincial in
Indonesia, while Territorial Authorities are a regional device in the district or
city.
Territorial Authorities and Regional Councils have a similar role to the
service system in Indonesia’s Local Governments. When the system is reflected
in the Local Government structure, the Regional Councils and Territorial
Authorities serve as Provincial and Regional Apparatus at the district or city
level, respectively. They have various functions adjusted to each region’s
concerns and needs. Therefore, the Local Government Act 2002 does not
explicitly regulate the authority of the Regional Councils and Territorial
67 New Zealand’s Constitutions of 1852 with Amendments through 2014-2020 (Constitute

Project Journal).
68 Te Tari Taiwhenua. 2011. ‘Local Government Act 2002’ Te Tari Taiwhenua. Retrieved 15
April 2021 http://www.localcouncils.govt.nz/lgip.nsf/wpgURL/Policy-Local-Government
-Legislation-Local-Government-Act-2002.

Authorities. This is because these matters are handed over to the Region’s
Local Government following the needs of each region.69
Business licensing for foreign investment in New Zealand is regulated in
the Overseas Investment Act 2005 and Companies Act 1993. Foreign investors
wishing to undertake fdi in infrastructure must be approved by the Overseas
Investment Office.70 The approval is reviewed based on residential and non-
residential infrastructure for housing and non-housing purposes, respectively.
Upon approval, foreign investors should apply for a company establishment
license to run its business in New Zealand. Article 3 of The Companies Act
1993 regulates several requirements that foreign investors must comply with
when applying for a company establishment permit. One requirement is the
environmental feasibility document to implement the precautionary principle
carried out in the business licensing bureaucracy in New Zealand.
These requirements are applied to be registered under the Companies
Act 1993 as an overseas company and filed to the New Zealand Companies
Office. The Companies Office then reviews and assesses the submitted
documents, including the conditions for the location to establish the
company to avoid overlap. The Office issues the permit certificate when the
documents are approved. After the foreign investment approval as stated in
the Overseas Investment Act 2005 or the company establishment approval
stated in the Companies Act 1993, the investor establishes his company and
conducts business activities in infrastructure. This shows that New Zealand,
like Indonesian oss bureaucracy, did not allow leniency in fulfilling the
requirements. Foreign investors only carry out the start-up production
activities shortly after the Overseas Investment Office and Companies Office
have issued a valid business license.
The Overseas Investment Office and Companies Office are Central
Government agencies that provide investment licensing services and company
establishment in New Zealand.71 In perfecting their duties and authority, the
agencies have electronic platforms under the Central Government’s direct
control. This enables foreign investors to take care of investment licensing
and company establishment. Therefore, the New Zealand-owned Overseas
Investment Office and Companies Office electronic platforms are similar to
oss in Indonesia, whose implementation is placed on the Central Government.
69 Commonwealth Local Government Forum. 2018. ‘The Local Government System in

New Zealand’ Country Profile 2017-2018 Article. Retrieved 20 May 2021 http://www.clgf
.org.uk/default/assets/File/Country_profiles/New_Zealand.pdf.
70 Russel McVeagh, ‘Investing in New Zealand’, Russel McVeagh Article (2019) 7.
71 Overseas Investment Office, ‘Overseas Investment Office Webforms’. Toitū Te Whenua
Land Information New Zealand. Retrieved 2 May 2020 https://oio.linz.govt.nz/.

162 pawestri et al
The difference between the Overseas Investment Office and Companies

Office platforms and the oss lies in the regulations and roles of Local
Governments. In the New Zealand bureaucracy, Regional Government has a
role in implementing and reviewing these licenses. The Overseas Investment
Office and Companies Office have representatives from Regional Councils and
Territorial Authorities from each region. This is different from the regulations
in Indonesia, especially in the Job Creation Law, which centralizes the
authority to administer and issue business licenses to the Central Government
through the oss Institution. In this case, the bkpm does not have provincial
representatives as the Overseas Investment Office and Companies Office in
New Zealand.
New Zealand, an archipelago country with many regions, holds business
licenses in centralized investment without eliminating the role of the Local
Government. It considers the Local Government a party aware of the primary
regional needs. This concept is true without providing concessions to meet
requirements such as environmental feasibility documents that impact
the precautionary principle. According to the World Bank, in 2020, New
Zealand still ranks first globally in the ease of doing business. EoDB index was
discontinued in 2020.
10 Conclusion
oss aims to increase Indonesia’s EoDB index by facilitating and attracting

foreign investors, especially in infrastructure. Nevertheless, since the
publication of the oss in 2018, Indonesia’s EoDB index has not increased
optimally. There are three main issues related to the oss system, including (1)
Overlaps between the Investment Law, the Local Government Law, and the oss
system, (2) Derogation of Local Governments’ regional autonomy for business
licensing matters, (3) Violation of the precautionary principle arising from
the leniency in business licensing, namely through the issuance of business
license with commitments.
The oss system and its regulations (pp oss) normatively contradict the
Investment Law and Local Government Law. The centralization of authority
to administer licensing to the oss Institution derogated regional autonomy.
Consequently, each region is obliged to integrate itself into the oss Institution
at the central level. The new mechanism for issuing fdi business licenses
in Indonesia permits investors to immediately initiate business activities,
including commissioning without fulfilling environmental feasibility. This

new mechanism in the oss bureaucracy injures the precautionary principle to

allow for a smoother foreign investment in infrastructure.
Harmonizing oss through the Job Creation Law would juridically eliminate
the pp oss disharmony and minimize the negative discourse on infrastructure
investment in Indonesia. However, the oss in the Job Creation Law needs to
be reconstructed. First, it should be the main entrance or one-stop service that
only hosts electronic ptsp platforms in each region, similar to the licensing
bureaucracy in Canada. Business actors could explore the permits and
licenses required by each province and the procedures for obtaining them by
accessing one platform similar to Bizplay in Canada. Second, it is necessary to
change the composition of the oss Institution agencies. These should include
representative members of the ptsp in each region to implement regional
autonomy, similar to the Overseas Investment Office and Companies Office in
New Zealand. Local Governments in Indonesia should be authorized to monitor
and review permits in the oss regime. Third, licensing requirements should be
evaluated and strengthened by issuing Business Permits with Commitments.
This could harm the precautionary principle that needs consideration in
issuing permits. The oss regulation must be reconstructed within three years
to increase investments for national economic recovery. Additionally, this is a
concrete obligation due to the Constitutional Court’s decision regarding the
Constitution on Job Creation Law.

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european journal of comparative law and

governance 11 (2024) 129–163

Investment in Infrastructure: A Comparative Study

Widhayani Dian Pawestri | ORCID: 0000-0001-6340-1096 ,

Received 23 March 2022 | Accepted 2 February 2024|

The Indonesian Government is attracting foreign investment in infrastructure to

Indonesia – Canada – New Zealand – Infrastructure – Investment Law – Online Single

This study departs from the importance of analyzing foreign investment

European Journal of Comparative Law and Governance 11 (2024) 129–163

5 Kementerian Keuangan Republik Indonesia. 2023. ‘Menkeu: Kinerja Penerimaan Negara

European Journal of Comparative Law and Governance 11 (2024) 129–163

source: 60 years data oecd (indicators for indonesia.

European Journal of Comparative Law and Governance 11 (2024) 129–163

Rankings of Doing Business Topic in Indonesia

Indicator db 2020 Rank Topic Scores

Starting a Business 140 81.2

to firm creation. Therefore, potential entrepreneurs are encouraged to start a

14 eodb. ‘Ease of Doing Business Indonesia’. Retrieved 25 January 2024 https://archive.doing

European Journal of Comparative Law and Governance 11 (2024) 129–163

This requires considering several Index selection criteria, such as relevance

20 Digital Competitiveness ranking

2018 2018 2020 2021 2022

18 Institute Management Development (imd). ‘World Competitiveness Ranking (2022

European Journal of Comparative Law and Governance 11 (2024) 129–163

European Journal of Comparative Law and Governance 11 (2024) 129–163

Consolidated - Market dominated by 1-5 major

Fragmented - Highly competitve market without

24 Badan Koordinasi Penanaman Modal. 2021. ‘Realisasi Penanaman Modal pmdn-

European Journal of Comparative Law and Governance 11 (2024) 129–163

infrastructure is developing slower than other nations, as indicated by the

Market Size: Global Competitiveness Index

Year 2014 2015 2016 2017 2018 2019

Economic Growth of Indonesia – 2014-2018

Year 2014 2015 2016 2017 2018 Average

Growth Rate 5.01 % 4.88% 5.03% 5.07% 5.17% 5.03%

European Journal of Comparative Law and Governance 11 (2024) 129–163

Infrastructure: Global Competitiveness

Year 2014 2015 2016 2017 2018 2019

Single Window (ssw) in Surabaya.28 However, the emergence of oss through

European Journal of Comparative Law and Governance 11 (2024) 129–163

2 Foreign Investment Business Licensing in Infrastructure

29 S Kamenopoulos and Z Agioutantis, ‘The Importance of the Social License to Operate

European Journal of Comparative Law and Governance 11 (2024) 129–163

a requirement that the deed of establishment of a Limited Liability Company

31 Badan Pengawasan Keuangan dan Pembangunan Republik Indonesia (bpkp RI).

European Journal of Comparative Law and Governance 11 (2024) 129–163

2017 2018 2019

Produk Domestik Bruto

European Journal of Comparative Law and Governance 11 (2024) 129–163

Data published by bps-Statistics36 Indonesia from 2022-2023 showed that

3 The Precautionary Principle in Online Single Submission

36 bps-Statistics Indonesia, known in Indonesia as bps (Badan Pusat Statistik), is a non-

European Journal of Comparative Law and Governance 11 (2024) 129–163

location, environmental, and building establishment permits (imb). bkpm

European Journal of Comparative Law and Governance 11 (2024) 129–163

Minister, authorized heads of institutions, Governors, and Regents or Mayors

43 Loura Hardjaloka, The Accuracy of Implementing Precautionary Principle as Ius Cogens

European Journal of Comparative Law and Governance 11 (2024) 129–163

4 Online Single Submission Disharmonization of Regulations

European Journal of Comparative Law and Governance 11 (2024) 129–163