Directorate for the Analysis of Laws and Regulations

Regulatory Reform as Effort to Support

Achieving National and Regional Priorities

Ministry of National Development Planning/

National Development Planning Agency

Background (Issues)

• The need for laws and regulations that can provide legal certainty as

required in the process of safeguarding and overseeing state

administration and development activities, especially investment

climate and business climate;

• There is tendency to solve various problems through the formulation of

laws and regulation without seeing and considering the direction of

future development agenda, giving rise to symptoms of Hyper

Regulation

• There are regulations in the provinces and districts that were intended

solely to raise revenue, without considering efforts to improve the

business climate and handle job creation and economic growth;

• Government efforts to overcome the problems associated with the

legislation needs to be improved, especially towards the legislation

available at present (existing regulation) considering the number of laws

and regulations that overlapping, conflict, inconsistent and multi-

interpretative etc.

• There is a need for innovative and systematic measures in solving

regulatory problems that could potentially disrupt national development

priorities, among others through regulatory reform.

2

• Burden on the community to pay more than they should

• Cost inefficiencies: investment cost; implementation and law enforcement

cost

• Interest declining in investment, particularly foreign direct investment

• Investment competitiveness declining due to the fact of no legal certainty

• The loss of opportunities and vacancies

• Loss of opportunities to conduct other development programs, such as

poverty alleviation, health, etc.

Consequences of “Problematic” Regulations

3

• The Ministry of Home Affairs has cancelled some local regulations (particularly those

which inhibit business climate);

• Laws and regulations harmonization which is coordinated by The Ministry of Law and

Human Right;

• Various government and local government efforts to evaluate local regulations in

certain areas such as infrastructure (Strategic Coordination Activities of 2010: The

Coordinating Ministry for Economic Affairs, The National Development Planning Agency

(Bappenas), The Ministry of Home Affairs, The Investment Coordinating Board (BKPM);

• Encouragement from various business associations who aspire improved business

climate;

• Rules and tax administration reform conducted by The Directorate General of Taxes in

terms of intensification and extensification of national taxes revenue;

• Establishment plan of new laws on decentralization which one of the goals is to set

authorities or principles of local government in issuing local regulations;

• Training activities and the use of Regulatory Impact Assessment that supported by

variety of donors, such as The Asia Foundation, GTZ and UNDP, which have been done

in a number of regencies in Indonesia. Also RegMAP activities supported by USAID-

Senada;

• Activities sponsored by NGOs eg. KPPOD which so far has been doing an inventory of

over 7.000 local regulations and conducts analyses of some local regulations that

valued to be hampering business and investment activities;

Government and Stakeholders’ Efforts

4

REGULATORY REFORM A Solution

definition:

Changes that are intended to improve the quality of

regulations, ie. simplify legislation (simplification of

regulation), in order to improve performance, to increase

cost effectiveness and legality of regulations, as well as

rules regarding the procedures/technical instructions, etc.

5

Existing Future

REGULATORY REFORM

Identify legislations which are indicated as problematic/ potentially problematic

The process of forming legislation (national and local)

6

Regulatory Framework needs in terms of achieving the development priorities

Action Plan to reform legislations which are indicated

as problematic/potentially problematic

Regulation Analysis Model (MAPP) Analysis Model for Future Regulations

(MAKARA)

Simplification of Regulation

7

8 8 8

Proposed

Regulatory

Framework RKP:

K / L - DIT.

Bappenas Sector

(Matrix / KR Needs

Form)

ANALYSIS

DAPP-Dit. Sectoral

(MAKARA)

Budget

Allocation,

Central: Dit. of Budget

Allocation for

Development

RKP RPJMN

Proposed

Regulatory

Framework RKPD:

SKPD –

Bureau/Division of

Legal Affairs-

Regional/Local

Development

Planning Agency/

BAPPEDA

(Regulatory

Framework Need

Assessment

Matrix/Form)

ANALYSIS

Bureau for Legal

Affairs – BAPPEDA

(MAKARA)

BUDGET

ALLOCATION

BAPPEDA

RPJMD

REG

ION

AL/

LOC

AL

FLOW OF REGULATORY FRAMEWORK

RKPD

CEN

TRA

L

• Bilateral Meeting (Bappenas & K/L)

• Minutes of

Regulatory

Framework

• Bilateral Meeting (Bappeda & SKPD)

• Minutes of

Regulatory

Framework

REGULATION ANALYSIS MODEL (MAPP)

No. REGULATIONS ANALYSIS ANNOTATIONS

LEGALITY

NEEDS

BUSINESS FRIENDLY

Evaluator: Position:

Signature

LEGAL

ILLEGAL

URGENT

NOT URGENT

BUSINESS FRIENDLY

NOT BUSINESS FRIENDLY

Ministries/Agencies: ………………………………………………

No Criteria Yes No Annotations

A Readiness of Proposing Ministry/Agency

1 Readiness of Academic Draft

2 Readiness of Draft of Proposed Law (RUU)

No Criteria Evaluation

Analysis Annotations Agree Disagree

B Needs

1 The proposed law is needed by the public/supporting national development intended to solve problems and there is

no alternative outside the law to solve the problems.

2 The proposed law is formed with clear purpose and argument:

(a) Commanded by the 1945 Constitution, (b) Commanded by other laws, (c) Impact of decision by the

Constitutional Court, or (d) Ratification of International Treaties

C Indication of Problems/Potential Problems

1

The substance is to be regulated in the form of Law (UU) 2

The substance to be regulated by the proposed law is not regulated by any other law proposals. D Conformity with National Priorities

1 The Law to be proposed has been contained in RPJM

2 The Law to be proposed is conform with national priorities.

E Budget Implication

1 The proposed Law does not have implications for the formation of new institutions

2 The proposed Law does not have implications for infrastructure needs

3 The proposed Law does not have implications for the formation of implementing regulations

4 The proposed Law does not have implications for budget allocation in specific development areas/programs

Analysis Model For Future Regulations (MAKARA) - RKP Directorate : …………………………………………………………………..

Laws Proposed : …………………………………………………………………..

Ministry/Agency : …………………………………………………………………..

Regulations

Indicated as

Constraining the

Achievement of

National

Development

Priorities

Analysis/

Issues and Problems

Effort

conducted

Resolution

Strategy

Resolution

Timeframe

Ministry/

Institutions

Involved

Action Plan/

Recommendation

Regulatory Reform Action Plan

Prioriity:: Improvement of the quality of natural resource management and capacity for handling climate change

11

Challenges to Regulatory Reform in Indonesia

• Legal basis: there are not yet legal basis that specifically regulate

how regulatory reform will be implemented, who are the persons in

charge , and how are local governments involved in this activity.

• Institutional: any process of regulatory reform requires institutions

which are responsible for coordinating the implementations. In

Indonesia, this has not yet been determined, whether to form a

separate institution or optimize existing institutions.

• Human Resources: Lack of human resources at the Bureau for

Legal Affairs of each ministries/agencies, both qualitatively and

quantitatively.

• Scope of Area and Number of Regulation: the large number of

local governments (provincial and district level) and the many types

of regulations make regulatory reform can not be done quickly

THANK YOU