The Jakarta Property Institute's (JPI) one-year study found that the implementation of building construction permits in Jakarta is still ineffective. This is caused by the following 3 things:
DPMPTSP as a government organization faces challenges such as unmet human resource needs, lack of sufficient authority to update the current licensing system, and difficulty in coordinating with other SKPDs.
Complex regulations in the building licensing process
The private sector has not been involved in policy making
These three problems need to be fixed simultaneously if the government wants Jakarta to become a top destination for investors. JPI proposes three recommendations to address the three problems above while improving and enhancing building permit services in Jakarta:
There needs to be a new regulation on DPMPTSP cooperation with other SKPDs.
Revision of Pergub 129/2012 needs to be signed immediately
A new regulation on policy-making standards is needed
Improvements in building permits can have a significant impact, especially for the property sector which has 135 derivative sectors contributing nearly 20 percent of economic growth in Jakarta. Improvement measures must be initiated immediately to avoid a decline in investment and a drop in economic growth in Jakarta.
LIST OF TERMS
ACI
Asia Competitiveness Institute
BPN
National Defense Agency
BPTSP
One-Stop Integrated Service Agency
DCKTRP
Dinas Cipta Karya, Tata Ruang, dan Pertanahan
DPMP
Investment and One-Stop Integrated Service Agency
EODB
Ease of Doing Business
IAI
Indonesian Architect Association
IMB
Building Construction Permit
Insgub
Governor Instruction
ISI
Indonesian Surveyors Association
JPI
Jakarta Property Institute
EIA KA
Terms of Reference for Environmental Impact Analysis
Kepgub
Governor Decree
KPK
Corruption Eradication Commission
KPPOD
Committee for Monitoring the Implementation of Regional Autonomy
KRK
City Plan Provision
Permen PU
Minister of Public Works Regulation
PKLH
Urban and Environmental Planning
PP
Government Regulation
REI
Real Estate Indonesia
SK
Letter of Decision
SKPD
Regional Work Unit
SLF
Certificate of Functioning
SP3L
Letter of Approval for the Principle of Site/Land Acquisition
TABG-AP
Architecture-Urban Building Expert Team
LAW
Law
ABOUT THE JPI STUDY
This study is one of a series of studies on the licensing process of tall and dense buildings in DKI Jakarta that are continuously conducted by JPI. The first series of studies is the identification of regulations related to the licensing process in DKI Jakarta. From the identification of regulations, JPI found that 12 out of 25 high-rise building licensing regulations are contradictory and unclear (see Appendix 1 for further explanation).
Furthermore, JPI together with the One-Stop Investment and Integrated Service Office (DPMPTSP) updated the building licensing regulations stipulated in Pergub 129/2012 which has been implemented during 2017. JPI contributed in providing inputs to revise this Pergub. The input provided to the government comes from direct study to countries with more advanced licensing practices, cooperation with international organizations and bodies, and also exchanging opinions with experts and practitioners in related fields. Furthermore, JPI will also conduct a study on the Certificate of Good Function (SLF).
PROBLEM BACKGROUND
The Ease of Doing Business (EODB) index published by the World Bank is often used as a reference by the Government of Indonesia in monitoring economic and investment performance. In this study, the JPI does not only refer to this index.
Instead, the JPI also refers to the ease of doing business index published by the Asia Competitiveness Institute (ACI) called the Ease of Doing Business Index on Attractiveness to Investors, Business Friendliness, and Competitive Policies (EDB Index ABC). ACI is a research institute under the Lee Kuan Yew School of Public Policy (LKYSPP), National University of Singapore.
Indonesia's Position on the World Bank EODB Index
The World Bank's Ease of Doing Business (EODB) index will be considered by investors in investing in Indonesia. According to the index, in 2018 Indonesia ranked 72nd, from 91st out of 190 countries in the previous year. However, this ranking increase is still below the target expected by President Joko Widodo, who expects Indonesia to be ranked in the top 40.
In measuring the ease of doing business index, the World Bank measures 10 topics1 that serve as indicators.
One of the cities/regions that became the sample of EODB index data collection is DKI Jakarta. On the topic of building permit management, DKI Jakarta's ranking rose to 108 (see Figure 1). In this topic, there are four indicators measured, namely the length of time for licensing, procedures that must be followed, licensing fees, and building quality index.
Of the indicators in the licensing topic, DKI Jakarta experienced an increase in rank in the licensing fee indicator. Meanwhile, the time and number of procedures to obtain a building permit have not changed since 2008, which are 191 days and 17 procedures respectively (see Table 1).
Figure 1. DKI Jakarta (Indonesia) ranking on the topic of building licensing EODB World Bank
Source: World Bank Group Flagship Report Doing Business 2018
Table 1. Topics of Building Permit Processing in DKI Jakarta
DKI Jakarta Building Licensing Topic Ranking in the EODB Index
Indicator
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Time (days)
191
191
191
191
191
191
191
191
191
191
191
Procedure
17
17
17
17
17
17
17
17
17
17
17
Cost (% warehouse)
8.6
6.7
5.4
4.8
4.2
3.8
7.1
6.6
5.7
5.3
5
Building quality index (1-15)
13
13
13
13
Source: World Bank Group Flagship Report Doing Business 2018
Jakarta's Performance on the EDB Index ABC ACI Index
ACI has conducted a study on the ease of doing business in 34 provinces in Indonesia. In conducting its research, ACI not only refers to de jure matters such as regulations, but also de facto by paying attention to business sentiment related to what is actually happening on the ground.
By using a comprehensive ACI study at the regional level, it will certainly enrich the ease of doing business index issued by the World Bank.
The results of ACI's research on the ease of doing business stated that in 2017, DKI Jakarta's position fell to 4th place overall from the previous 2nd place in 2015. Although in the scope of Competitive Policies DKI Jakarta rose to 19th place, DKI Jakarta experienced a decline in two other scopes2 : Attractiveness to Investors and Business Friendliness.
Condition of Licensing in Jakarta
Findings in the field also reveal that building licensing procedures in DKI Jakarta are long and complicated. The establishment of DPMPTSP since 2015 has not yet become a solution to accelerate the licensing process in DKI Jakarta, especially for building licenses above 8 floors and more than 5,000 m2.
DKI Jakarta DPMPTSP was inaugurated on January 2, 2015. DPMPTSP, previously named the One Stop Integrated Service Agency (BPTSP), is an agency that organizes licensing and non-licensing activities in an integrated manner with a one-door system in DKI Jakarta Province. DPMPTSP's vision is to be the licensing solution for Jakarta residents.
At the beginning of its formation, DPMPTSP took care of at least 476 types of licenses and non-licenses. All license applications must be made at the DPMPTSP counter, so DPMPTSP has a very significant role in the licensing process in DKI Jakarta. However, DPMPTSP currently still has to coordinate with other Regional Work Units (SKPD) to issue licenses. DPMPSTP does not yet have full authority to issue all 476 types of licenses and non-licenses.
Several studies and assessments on DPMPTSP have been conducted. A research report conducted by the Committee for Monitoring the Implementation of Regional Autonomy (KPPOD) in 2015 on Perspectives on the Authority and Institutionalization of DKI Jakarta BPTSP3 explains that BPTSP still does not have the authority to issue licenses and non-licenses. This causes DPMPTSP to not be able to carry out effective and efficient licensing services.
Ngalimun et al (2016) also mentioned that the provincial government must strengthen the institutional organization in the context of the transfer of authority to DPMPTSP4 . This is because DPMPSTP often encounters many obstacles in carrying out its duties, considering that the authority has not been fully transferred to DPMPTSP.
The many complaints and problems faced by policy implementers in the field initiated JPI to conduct a study on the problems of the building licensing process in DKI Jakarta, especially for tall and dense buildings. Moreover, this problem has an impact on:
Department/administrator in the execution of decision making
Practitioners in deciding which regulations to refer to
Developers/investors in delays in project implementation
Consumers in obtaining a Sale and Purchase Deed (AJB)
Jakarta's economic growth
This study aims to map the licensing issues of tall and dense buildings in DKI Jakarta. This study involves the DKI Jakarta government, experts, and practitioners in the field. This study is expected to be able to help the DKI Jakarta government unravel the knot of problems and become input for the next policy steps.
DATA COLLECTION METHOD
To unravel the existing licensing problems, JPI conducted eight Focus Group Discussions (FGDs) involving the DKI Jakarta government such as DPMPTSP, the Department of Cipta Karya Tata Ruang and Land (DCKTRP), experts, building owners or managers, and consultants in the field. The FGDs were conducted during 2017 with details that can be seen in Table 2.
From these FGDs, the JPI research team collected suggestions for the revision of Pergub 129/2012 as well as collecting qualitative data for this research. As secondary data, JPI research also conducted a literature document study. The regulations studied include: Pergub 129/2012, Perda 1/2014, PP 15/2010, and SK Kepala Dinas Penanggulangan Kebakaran dan Penyelamatan DKI Jakarta no.23/2015.
RESEARCH FINDINGS
JPI's study on the licensing process in DKI Jakarta found at least three aspects that need to be the main concern in the implementation of the licensing process in DKI Jakarta. These three aspects are the challenges of DPMPTSP as an organization, the complex regulations in the building permit process, and the lack of private sector involvement in policy making and socialization. The government needs to evaluate these three aspects if it wants to reform the licensing sector.
Challenges of DPMPTSP as a Government Organization
At the time of its establishment, DKI Jakarta DPMPTSP was named DKI Jakarta One Stop Integrated Service Agency (BPTSP). The name change to DPMPSTP was carried out on January 3, 2017. This name change was due to the merger of BPTSP with the Investment Office, which previously worked separately. Until now, DPMPTSP still finds many challenges in carrying out its duties.
Challenge 1: Limited Number and Resources
At the beginning of its establishment, the DKI Jakarta BPTSP was recorded to administer more than 476 types of licenses. In 2015, BPTSP was recorded issuing 4,138,000 licenses, which means that in one day the agency produced more than 10,000 licenses.
Mr. Iwan Kurniawan, Head of Technical Services Division of DPMPTSP mentioned that ideally DPMPTSP needs at least 3,000 employees to run optimally. Meanwhile, currently DPMPTSP only has 1,200 employees.
DPMPTSP recognizes that there are limited resources that actually have a significant impact on licensing management. One example is the lack of surveyor resources in the measurement of City Plan Provisions (KRK).
DPMPTSP revealed that they only have 6 teams of surveyors from the former spatial planning and 2 teams from the Indonesian Surveyor Association (ISI). This makes developers and the government have to wait for the uncertain availability of the surveyors' time. Furthermore, this caused the licensing process to be temporarily delayed.
In addition, the expertise possessed by each surveyor is not the same. This causes differences in measurement results between surveyors in the measurement process. The limited number and expertise of these resources will directly impact on the longer licensing process practices in DKI Jakarta.
Challenge 2: Lack of Authority of DPMPTSP in Processing Licenses
The next problem is that DPMPTSP does not have enough authority to update the current licensing system. Currently, DPMPTSP, which is at the forefront of the licensing process, is trying to shorten the licensing process and time. However, these efforts are still constrained by licensing regulations that require applicants to request and obtain written recommendations directly from the relevant agency/SKPD. DPMPTSP seems to only be the administrator of licenses from other agencies.
The implementation of PTSP duties is regulated in Perda 12/2013 on the Implementation of One Stop Integrated Services. The regulation states that the activities of supervision, control and evaluation of the implementation of licensing and non-licensing issued by PTSP organizers are carried out by technical SKPD/UKPD. So that indirectly, DPMPTSP cannot be separated from other agencies.
The most obvious example is the management of the Building Construction Permit (IMB). The Decree of the Head of DPMPTSP 129/2017 describes the flow of the licensing process to obtain an IMB as shown in Figure 1.
From Figure 1, it can be seen that of the 17 procedures that must be followed to obtain an IMB, only seven procedures can be handled by DPMPTSP independently. The seven procedures are:
KRK BKPRD
Environmental permit
KRK Definitive
GPA endorsement (TABG AP)
TABG SG
TABG ME
IMB and IMB Foundation
The rest is the authority of other SKPDs, such as the Water Resources Agency, the Environmental Agency, and the Transportation Agency. Processing for each of these agencies can take weeks to months.
IMB Licensing Flow according to DPMPTSP Head Decree No. 129/201
In addition, it can also be seen that each license requires coordination with other SKPDs.
Location permits and Permits for Utilization and Use of Space (IPPR) are obtained from the results of the Regional Space Utilization Coordinating Board (BKPRD) leadership meeting.
Technical consideration requirements of the National Land Agency (BPN) are issued by BPN.
Further requirements regarding dewatering are issued by the Ministry of Energy and Mineral Resources (ESDM)
Building Floor Peil (PLB) permit must coordinate with the Water Resources Agency
Traffic impact analysis (Andalalin) study with the Transportation Agency
Terms of Reference for Environmental Impact Analysis (KA ANDAL), ANDAL, and Wastewater Treatment Installation Permit (IIPAL) with the Environmental Office
Agreement on the fulfillment of IPPR obligations must be carried out by the Urban Planning and Environment Bureau (PKLH).
From the explanation above, it can be seen that most of the licensing processes require coordination and authority from other SKPDs. There are at least seven other agencies that have the authority to issue recommendations and other permits as a condition for obtaining IMB.
This could have been shortened with improved regulations by DPMPTSP. However, this will be difficult to do if DPMPTSP does not have sufficient authority in handling licensing.
Complex Regulations in the Building Permit Process
JPI has conducted two studies on the licensing process, namely a study on regulations governing building licensing and a study on Governor Regulation 129/2012. From both studies, it was found that there are rules that need to be clarified, inconsistencies between one rule and another, and the existence of regulatory gaps.
Several problems arising from these problematic regulations have an impact on the licensing process. At least, several problems were found, starting from the ownership of the Principle Approval Letter for Location/Land Acquisition (SP3L), which has now changed its name to Location Permit, to the issuance of IMB. The following are some examples of problems arising from regulatory issues:
1. Rules that need to be clarified
An example of a regulation that needs to be clarified is the Head of DPMPTSP Decree 129/2017. In this decree, there are several regulations that are very complicated and complex. An example is when applying for a dewatering permit. Dewatering is a water control activity for the purpose of draining an excavation area that will be used as an underground building or for various purposes.5 There are two activities that must be carried out in obtaining a dewatering permit, namely; 1) soil investigation activities, and 2) the dewatering activity itself.
Current regulations still require dewatering for all buildings with or without basements. Experts say that buildings without basements do not need to carry out these two activities. Thus, developers should not need to take care of the licensing. However, bureaucratically developers are still required to take care of dewatering permits. If there are licensing stages that are missed by the developer, then this will potentially become a finding of the Corruption Eradication Commission (KPK) in the future.
2. Regulatory inconsistency
An example of regulatory inconsistency is the difference in the rules regarding the provision of operational areas for hardstanding of fire trucks stipulated in Pergub No. 200/2015 and Decree of the Head of the Fire and Rescue Agency No. 23/2015. In Pergub 200/2015 it is stated that the area required for hardstanding is 6x15 meters, while in the Head of Fire and Rescue Service Decree No. 23/2015 for the hardstanding area of fire trucks an area of 10x18 meters is required. During the TABG hearing, representatives of the Fire and Rescue Service often requested that the provision of the hardstanding area be adjusted to the letter of the decree. In fact, the SK has no legal force unless it has become a Governor Instruction or Governor Regulation.
3. Regulatory vacuum
A regulatory vacuum exists in the regulation regarding the formulation of the calculation of fines/administrative sanctions for building owners who carry out construction before the IMB is issued. The current regulation on regional retribution is DKI Local Regulation No. 1/2015 which is an amendment to DKI Local Regulation No. 3/2012. However, in Perda DKI 1/2015 the calculation formulation of administrative fines/sanctions was removed from the Perda.
These are just some examples of problems that are detrimental to implementers and enforcers. From the developer or designer side, they will experience setbacks and the longer the licensing process. From the government side, the enforcement of the hierarchy of licensing regulations that should be followed will be increasingly ambiguous. In addition, from the consumer or community side, there will also be losses due to delays in obtaining a Sale and Purchase Deed (AJB) from the developer.
The explanation above is only a problem in the planning stage of building construction. Other obstacles will certainly increase at the next stage, namely the implementation stage and the supervision stage. However, with the above description, at least it is identified that since the planning stage, there are already quite a lot of obstacles faced by the designer or building owner.
Lack of Private Involvement in Policy Making and Socialization Processes
JPI has been following the revision of Pergub 129/2012 which was initiated by DPMPTSP. JPI members participated in providing input and suggestions to improve the licensing regulations. However, until now Pergub 129/2012 has not yet been issued.
Following the revision of Pergub 129 that has not yet been issued, DPMPTSP issued a Decree of the Head of DPMPTSP regarding the Flow of Licensing Processes in the Field of Land Use, Environmental Assessment and Development for Development Activities. DPMPTSP took this step to fill the void of IMB issuance rules.
However, what is unfortunate is the absence of socialization of the DPMPTSP Head Decree on the Flow of the Licensing Process to the public and parties involved in this new regulation, such as planners, architects, and developers.
DPMPTSP feels that it has socialized this regulation to the Regional Executive Board of Real Estate Indonesia (REI) DKI Jakarta. However, this is not enough to fulfill the representation of policy implementers as a whole. Planners, architects, developers, and owners of tall buildings as stakeholders were not given information about the implementation of the related decree.
The absence of comprehensive socialization will result in a difficult transition process from the previous rule to the new rule. It will also make it difficult for DPMPTSP staff to explain the same thing repeatedly to practitioners and license applicants.
Another example of the absence of private sector involvement in the development and socialization of government policy is the issuance of the Decree of the Head of the Fire and Rescue Agency of DKI Jakarta No. 57/2016. Despite the socialization activities, the private sector was completely unaware of the decree.
The government should accommodate the aspirations of the private sector and practitioners as rule implementers who certainly know the field conditions well. Thus, the rules made can be more realistic and can also answer the problems and challenges faced by rule implementers in the field.
Table 2. Kaleidoscope of JPI FGDs
Activity
Date
Stakeholders
FGD 1
December 15-16, 2016
DPMPTSP, DCKTRP
FGD 2
December 22-23, 2016
DPMPTSP
FGD 3
February 2-3, 2017
DPMPTSP
FGD 4
April 12, 2017
DPMPTSP, JPI Member
FGD 5
May 17, 2017
DPMPTSP, JPI Member
FGD 6
August 30, 2017
JPI Member, IAI
FGD 7
September 15, 2017
Member JPI, IAI
FGD 8
October 3, 2017
Member JPI, IAI
FGD 9
November 2, 2017
DPMPTSP, Member JPI, IAI
RECOMMENDATIONS
Based on the above discussion, the following are JPI's recommendations to improve and enhance building construction licensing services in Jakarta.
New Regulations on Cooperation between DPMPTSP and Other SKPDs are Needed
Rules regarding cooperation between DPMPTSP and other SKPDs need to be issued. This regulation will regulate the authority, rights and obligations of each SKPD in the licensing process. The form of cooperation that can be carried out is by placing several representatives of related SKPDs in DPMPTSP to facilitate coordination and communication. This will also shorten the licensing time and procedures. The existence of this regulation will also reduce conflicts between SKPDs.
Revision of Pergub 129/2012 Needs to be Signed Immediately
Building permits for tall buildings with certain criteria need to be regulated separately from other buildings. This is based on consideration of the level of complexity of the building to facilitate reference to regulations.
In addition, one of the efforts that can be made by DPMPTSP is to create a high-rise building licensing flow that can be carried out in parallel, so that the licensing process does not take a long time due to stagnation in one of the processes.
The elimination of some IMB provisions for tall buildings also needs to be done. Some of the rules in Pergub 129/2012 are deemed no longer suitable with the current conditions. So, revisions are needed for technical rules such as andalalin, building floor peil, and dewatering which are no longer needed considering the congestion and flood intensity that often occurs in DKI Jakarta.
DPMPTSP must also be proactive towards the rapid growth rate. The existence of technological advances that can facilitate development must be balanced with up-to-date regulations so that the licensing process can run well.
New Rules Need to be Made Regarding Policy Making Standards
The creation of this new regulation is to accommodate the aspirations of practitioners and stakeholders in the field. Thus, the new regulations will not only facilitate policy enforcers, but also policy implementers. It is also necessary to regulate the respondents or participants in the socialization activities that will be carried out by the government when the rules are finalized so that information about new policies can be distributed thoroughly. Policy-making standards will become a reference for SKPDs in making/revising rules, so that the issuance of new rules will be more directed and in accordance with applicable guidelines.
For the sake of mutual interest, all of the above issues need to be addressed simultaneously. The three recommendations above can be input for the government to improve the quality of licensing services in DKI Jakarta.
APPENDIX
Appendix 1: Mapping Regulations on Building Licensing in Jakarta
Appendix 2: 25 regulations governing building permits in DKI Jakarta
No
Regulation
About
1
LAW 26/2007
Spatial Planning
2
LAW 28/2002
Building
3
PP 15/2010
Implementation of Spatial Planning
4
PP 36/2005
Implementation regulation of Law No. 28 of 2002
5
PUPR Regulation 25/2007
Guidelines for Building Function Certificate
6
PUPR Regulation 5/2016
Building Construction Permit
7
PUPR Regulation 26/2008
Technical Requirements for Fire Protection Systems in Buildings and Environments
8
Permendagri 32/2010
Guidelines for granting Building Construction Permit
9
Regional Regulation 1/2012
Regional Spatial Plan 2030
10
Perda 3/2012
Regional Retribution
11
Local Regulation 1/2014
Detailed Spatial Plan and Zoning Regulation
12
Local Regulation 1/2015
Amendment to Local Regulation No. 3/2012
13
Perda 7/2010
Building
14
Pergub 200/2015
Technical Requirements for Fire Fighting Access
15
Pergub 129/2012
Procedures for Providing Services in the Building Permit Sector
16
Pergub 209/2016
Licensing and Recommendations for Space Utilization
17
Pergub 5/2016
Establishment, organization and work procedures of apartment management unit
18
Pergub 210/2016
Imposition of compensation for exceeding the building floor coefficient value
19
Pergub 210/2016
Implementation of regional regulation no. 12 of 2013 concerning the implementation of one-stop integrated services
20
Gubernatorial Decree 540/1990
Guidelines for the implementation of the principle approval letter for the acquisition of location/land for the physical development of the city in DKI Jakarta.
21
Kepgub 640/1992
Provisions for land acquisition without permission from the Governor of DKI Jakarta.
22
Kepgub 76/2000
Procedures for obtaining Building Construction Permit, Building Use Permit and Building Use Feasibility in DKI Jakarta Province.
23
Insgub 68/2015
Provision of gas utility networks in buildings
24
BPTSP Book
Technical Guidelines for Building Layout in City Planning Space Utilization BPTSP
25
Decree of the Head of Fire and Rescue Agency No. 23/2015
Technical Guidelines for Fire Safety Inspection of Buildings
The ten topics that are indicators of the World Bank's EODB measurement are: starting a business, building permits, access to electricity, property registration, access to credit, protection of small investors, paying taxes, cross-border trade, contract enforcement, and bankruptcy resolution. These ten topics have equal weight in the measurement of the EODB index
.
In the area of Attractiveness to Investors, DKI Jakarta experienced a decline in ranking from 1st place in 2015, to 3rd place in 2017. In the scope of Business Friendliness, DKI Jakarta's ranking fell from position 2 in 2015 to position 7 in 2017
.
Committee for Monitoring the Implementation of Regional Autonomy (KPPOD), Foreign and Commonwealth Office (FCO) British Embassy. Research Report: BPTSP in DKI Jakarta Province: Authority and Institutional Perspectives
.
Ngalimun, et al. (2016). Innovation in Regional Public Service for Sustainability: One Door Integrated Service Bureaucracy Known as (PTSP) in Indonesia
.