Bureaucratic Red Tape

Nov 21st, 2006, in Business & Economy, by

An example of some of the bureaucratic red tape that companies face in Indonesia.

The city government of Malang in East Java helpfully provides some of the rules and regulations for doing business in their fair city in online form, including, in this case, the requirements for obtaining permission to employ women workers at night (“Woman Night Time Working Permit”). pemkot-malang

In order for female workers to be legally employed during the night-time hours companies must provide the following documents:

  • a letter requesting to employ women at night
  • company owner’s residency and business permits
  • the company’s trading permit
  • the company’s land permit
  • list of the names of women to be employed
  • “infrastructure lists”
  • photographs of the women

After these documents are provided twenty two days are needed to process the application/s. This is what the application process entails:

  • the applicant comes to the Employment Department and brings all the above forms and then fills in a “request form”;
  • Employment Department staff will check and accept the documents;
  • a receipt is given for the documents;
  • applicant will be given a registration number;
  • documents will be handed over to processing staff for review;
  • processing staff will check the application and then make a recommendation to the mayor, signed by the Head of Employment Department;
  • based on the recommendation from the Employment Department, the Mayor will sign the approving or refusing of the Woman Night Time Working Permit proposal;
  • after the permit has been signed by the mayor, the documents are returned to the Employment Department;
  • Employment Department staff calculate the costs and fees for the application;
  • Employment Department staff give a payment instruction letter, or invoice, to the cashier of the Employment Department;
  • After the applicant has paid the fee, the cashier will give a receipt to the applicant;
  • The applicant then takes the receipt to another window/locket;
  • The service staff gives the permit to the applicant;
  • Retribution Deposit Mechanism is based on the Mayor’s decision of Malang City Number 55 Year 2003 about the acceptance and payment of Local Income in the scope of City Government of Malang City.

After this exhaustive process the company will be entitled to employ the women concerned for one year, after which time the permit must be renewed.

3 Comments on “Bureaucratic Red Tape”

  1. Magy says:

    Oh, this was quite an extensive list, how much money do you have to hand out during the process? I think though the discussion about bribes need to be elaborated. In my opinion you have to separate Corruption, Inequality and legal uncertainty. Of these three only the last is really of significance as regarding the efficency of the economy. Obviously having a society where laws, and priciples and moral reasoning were the only considerations by the public servants would be ideal. However, in a “poor” developing society like RI this is to hope for too much too soon. In my view this does not necessarily mean much bad for the business climate as somtimes is suggested.

    Let me first give an example of people seeking medical care for some illness that they have, not deadly but bad enough for wanting to be treated for it. It is unequal to let physicists choose patients that pay the most, and certainly corrupt, nevertheless it is highly efficient, since both the patient and the doctor wins the most on this transaction, rather than treating someone that has no money. Unequal, but not inefficient in an economic sense. We can further this example, to for instance permits to start a business or buy attractive land for production fascilities. The one that pays the most get the permit, corrupt, yes, unequal, perhaps, but not inefficient and probably not hurting the economy, perhaps the contrary.

    Is it not corrupt to have to pay all public servants all the time, yes obviously, but many times it is not so much, its often pocket money, and you could really compare it with the tipping that are so frequent in the US. I don’t defende this at all, but I want to raise the issue of this perhaps is neither of any huge importance for the efficency of the economy and for instance growth.

    The third aspect, though, is of great importance. Legal uncertainty. It is here the most effort need to be put. Certainty to have legal right that protect your investment. Everything from permits, judges, legal documents, etc. IF you want investments the investor must be able to calculate on legal certainty.

    Often corruption and legal certainty go hand in hand – nevertheless – it is not fair to say that just because you can pay or have to pay to get ypur way through the system this makes RI very corrupt in a very bad sense. However, the legal uncertainty that still exists is really negative for the businees investment climate.
    How would invest 100 million dollars, just to se your competitor bribe some judge, and your production permit get stalled? It’s too much at stake. Here RI has a really bad reputation. As you still can buy judges – RI has to start implementing changes immidiately and focus must be on legal certainty.

  2. Ihaknt says:

    OH MY GOOOOOOODDD!!!!!! No wonder the economy is crumbling down! No wonder not many foreign co’s want to invest. Too much work, gotta have a huge capital backing. I felt like pulling my hair out reading this.
    What stupid and ridiculous rules! And for what???

  3. Syonan says:

    Its seems to me that Indonesia is embarking to curtail its female citizens and this is against Undang-Undang Republik Indonesia No.39 Tahun 1999 Tentang Hak Asasi Manusia. Are Indonesian females regarded as inferior under the existing laws of Indonesia and without rights?

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