Online Packaged of Licensing Service in Sidoarjo, East Java
Integrated Licensing Service Agency, Sidoarjo Regency Government

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Sidoarjo Regency is the only regency in East Java that is located between two big river, river Porong and river Surabaya, that it is known as Delta City. It is situated in 7°3’ - 7°5’ S 112°5’-112°9’ E. To its north lies Surabaya City and Gresik Regency, Madura Strait to its east, Pasuruan Regency to its south and Mojokerto Regency to its west. Its strategic location, the GERBANG KERTASUSILA, is an integrated planning zone in East Java. It has several supporting factors that include: good infrastructures and utilities such as road, airport, terminal, and telecommunication; its presence as industrial city; advance fishery and agriculture. Manufacturing industry contributes to a significant 44.16% of Sidoarjo Regency’s income in 2013. Its largest potential is in Small and Medium Enterprises. This sector has been proven to be resistant to crisis. The advantage held by this sector is in the presence of household industry and Small and Medium Enterprises. In 2013, there are 154.892 micro entities, 14.863 small companies and 1.536 medium-sized enterprises. Of the total 171.291 SMEs, 96.429 (56.5%) of them are licensed which left the rest unrecognized by legal system. This will further expose the enterprises to difficulties such as inability to get loans from banks, inability to export their products, and difficulties in having business deals with the government entities. In response, Sidoarjo Regency provides single window licensing to accelerate the registration of the businesses for licensing purposes and maintains the infrastructures. The later is needed to ensure that transportations to and within Sidoarjo Regency are suitable for the ever-increasing needs of commerce. Sidoarjo Regency’s Integrated Licensing Service Agency (BPPT) handles 37 types of licenses, which in regular system must be obtained one part at a time, in the sense that an enterprise must finish the process of obtaining one license to be able to start any application for the other type. This in effect has elongated the process of starting a business so much that it creates problems such as: a. Unnecessary prolongation of licensing b. Field inspection must be done multiple time c. Multiple submission of licensing documents by the applicants d. Inefficient queuing in the agency’s front office e. Inability to fulfill the public demand for easy and certain bureaucracy f. Applicants must be present in multiple occasion only to obtain one license g. Facility and staff overload

B. Strategic Approach

 2. What was the solution?
Inputs, criticism and complains from the general publics and business people have been the trigger for the Licensing Service Agency to provide its online service. The first phase is to hold meetings between internal stakeholders discussing the service development and identifying the unnecessary duplication of documents for license application. Management Review Meeting would then agreed upon the model of the licensing package. To complete the licensing innovation package, the agency conducted external coordination meeting with other units in Sidoarjo Regency Government. Regency’s Planning Agency provided information on land utilization. Rural Development Agency advised the committee on construction works. Other agencies provided information on the type and distribution of businesses in Sidoarjo Regency, changes in land utilizations, and other related aspects of the licensing packages. Finally, we coordinated the draft for the regulation with the Legal Division of Sidoarjo Regency Secretariat. The end result is Regent’s Regulation No. 39/2010. The regulation was then socialized through social media, web site, brochures and leaflets, and business gathering by inviting foreign and local investors and small and medium enterprises. The fact that various parties are involved in the socialization is expected to open better partnership between major businesses and small and medium enterprises. To increase the coverage of our licensing, we open a One Day Service Counter in District Office twice a year and Mobile Licensing Service in shopping center once a year. This special service is available for two types of licenses; Trading Licenses and Company Registry. The counter is also opened for special occasions like the anniversary of Sidoarjo Regency. To accommodate the registration of Tax Payer Identification Number, we form cooperation with local Tax Office. The Licensing Packages are as follow: a. Package I, consist of 1) Rice Field Certificate Upgrade; 2) Building License; 3) Disturbance Permit; 4) Trading License; 5) Company Registry; and 6) Industrial Registry. b. Package II, consist of 1) Rice Field Certificate Upgrade; 2) Building License; and 3) Disturbance Permit.

 3. How did the initiative solve the problem and improve people’s lives?
As a result of procedure trimming and license packaging, and the fact that the applications are online, the time for license issuance is also trimmed. The comparisons are as follow: a. Based on completion time: - Package I trims the time from 24 days to 14 days. - Package II trims it even shorter to 10 days from the previous 21 days. b. Based on the frequency of field inspection: - Package I trims it to one inspection from three inspections - Package II trims it to one inspection from three inspections in conventional licensing. c. Based on the number of documents requirements: - Package I requires 16 documents, from the previous 40 documents - Package II requires 11 documents, from the previous 25 documents d. Both packages reduce the volume of queuing in our front office because service users can submit their application online e. Both packages increase public service transparency because it eliminates illegal brokerage f. It reduces the frequency of applicant’s presence: - Packages I and Package II only require the applicants to be present once from the previous 6 and 3 times respectively. g. Both packages optimize the already limited infrastructures. h. The avalibality of computers and data entry assistance in the front offices i. The provision of mobile counters in special occasions and places.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
Our agency must first consolidate the program with other units in Sidoarjo Regency Government. It is important that every unit share a clear vision on what the Online Packaged Licensing Service would be. The development of the online application is conducted with a third party which include assistance for the application’s operators; customer service for the reception of applicant’s documents, back office for document’s validation and field inspection. Our Customer Service is a group of 5 staffs who master the complete requirements and procedure for the issuance of all 37 licenses within the Agency’s jurisdiction. Back Office consists of 20 staffs that have suitable competence and technical knowledge in verifying the documents. As part of our efforts in increasing the transparency of our service, an information board displaying the Public Service Standard is available our office and other public areas. The information regarding the fees for the services are made accessible for public through our agency’s web page, leaflets, brochures and local computer display in our office.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The stakeholders are as follows: a. The Agency’s internal parties as the initiator and executor of the program. b. The Organization Division of Sidoarjo Regency Secretariat as the coordinating unit for public service in the regency. c. The Legal Division of Sidoarjo Regency Secretariat that is responsible for any legal action of the Regency Government. d. All the technical units of Sidoarjo Regency Government as our partner in optimizing the public benefits of the program. e. External parties such as software developers, surveying organization, and certification standard companies. Sidoarjo Regency Integrated Licensing Service Agency composed Accountability Reports at the end of every fiscal year. As a public document, the reports are used by all of those stakeholders.
 6. How was the strategy implemented and what resources were mobilized?
From its inception in 2012, it has taken up roughly USD24.793 of the government’s budget that includes spending for software and hardware purchases, network subscription and server maintenance. Human resources deployed in realizing the online package are: a. 5 Customer Service who master the complete procedures of every licensing b. 20 Back Office staffs c. 3 Administration staffs Budget allocation is supported fully by Sidoarjo Regency Government (The Regent and House of Representative) in a bottom-up mechanism in which proposal for the initiative was processed in the lower units. We also socialized the initiative to the public and other service units in Sidoarjo Regency.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
Efficiencies felt by the applicants are: a. Based on completion time: - Package I 58% - Package II 71% b. Based on the frequency of field inspection: - Package I 33% - Package II 33% c. Documents filed: - Package I 66% - Package II 68.57% d. Cost efficiency for allowing business owner to apply for license in packages instead of individually: - Package I 50.57% (IDR250.000 compared to a total of IDR505.800 if submitted separately) - Package II 56.62% (IDR190.000 compared to a total of IDR438.000 if submitted separately) e. Based on applicants presence to Licensing Service Agency: - Package I and Package II only requires the applicants to be present once from the previous 6 and 3 times. f. The number of license packages being processed is increasing every year. In 2012 we processed 66 packages. The number increased to 171 license packages in 2013 and as of September 2014, we have processed 117 license packages. g. The number of registered small and medium enterprises is increasing from 88.996 entities (52%) in 2012 to 96.429 entities (56.3%) in 2013 h. The public satisfaction index is increasing from 82.17% in 2012 to 82.36% in 2013. The index for 2014 is at the moment being processed.

 8. What were the most successful outputs and why was the initiative effective?
The monitoring for Online Packaged Licensing Service is conducted by analyzing the punctuality of each license that we process. The result of the analysis comes every quarter, semester and at year-end. Internal audit was conducted during May through October, and external audit with ISO 9001:2008 standard by Sucofindo Co. begins in December each year. Members of public can directly evaluate our performance through dedicated computers (with touchscreen) in our front office. The result of this survey, in combination with online survey in our web page, Text Message Gateway and Regency’s own public reporting menu in, is used for the compliment of the results of internal and external audit.

 9. What were the main obstacles encountered and how were they overcome?
It its practice, our online service has not been fully utilized by applicants. Information is fairly limited due to applicant’s lack of Internet connection and digital equipment for filing their documents. The applicants are also lack of sufficient skills for online-based service that sometimes resulted in the forms are not filled correctly. To solve those problems, we have taken the following steps: a. Widening the scope or our socialization programs b. Providing computers and scanners in our front office to facilitate the applicants who wish to submit their application online. c. Providing assisting operator to complete the online forms and upload the documents. Assigning the staffs to verify the documents will allow direct feed back from our staff if they are incomplete. d. Delivering such services closer to business owner and general member of the society through One Day Service Counter in District Offices and shopping centers. Aside from processing the licenses, the counter will help us in socializing the importance of registering one’s business.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The benefits from this initiative are: • Small and medium enterprises are increasingly registered thanks to the modernization of our licensing services. Of all 171.291 business entities in our Regency, 52% of them, 88.996 business entities, are registered in 2012 and increased to 56.3% (96.429 entities) in 2013. In total, we have issued 12.191 licenses in 2013. • Time consumption for licensing process is trimmed from 24 to 14 days in License Package I and from 21 to 10 days for License Package II. Field inspection frequency is lessened to once from the previous three times. • Increasing the satisfaction index from 82.17% in 2012 to 82.36% in 2013. • The society has better and easier access to high quality services. The service also opens chances for business owner to file their complaints and provide inputs for further development of the online service. • Sidoarjo Regency Integrated Licensing Service Agency received various accolades during 2013: o “Region in an Innovative Breakthrough on Education Service” category of Jawa Pos Institute of Pro Otonomi (JPIP) Award 2013. The award was presented by East Java Governor. o In East Java Investment Award (Main Category), Sidoarjo Regency is the winner for three consecutive years since 2011, and dubbed “The Largest Investment Magnet”

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
Online Packaged Licensing Service will be sustainable if the following conditions are met: • All parties are committed to developing and improving the service • Proper legality of its implementation is maintained through various government regulations. Sidoarjo Regent’s Regulation No. 39/2011 is an example of this. Since October 2014 we have issued regulations for new license packages that combines Trading License with Company Registry and the combination of Company Registry and Tourism Company Registry. The regulation is meant to facilitate the business community to start and expand their business. • Continuous supports from Sidoargo Regency Government in the form of operational funds, development and maintenance and other infrastructure for the improvement of our human resources. • The transfer of authority for processing license, from various technical units in Sidoarjo Regency Government to its Integrated Licensing Service Agency. We are at the process of issuing regulation for such transfer from Sidoarjo Regency’s Tourism Agency and will take effect in January 2015. Attempts for replicating our system by other regencies and cities will be successful with minor adjustments regarding the social and economic conditions in their region. 16 Regency and Cities have shown their interest in such replication and visited Sidoarjo Regency (as part of their leadership trainings) to retrieve comprehensive knowledge and information regarding of the service.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
In conclusion, the commitment from all parties in providing immediate, transparent, simple and accountable services will encourage the society, especially business owners to get involve in developing the economy. The involvement is expected to increase growth and society’s prosperity. We realize that aside from the given opportunity as the connecting line of economic activity in East Java, Sidoarjo Regency must strive to further improve its public services, especially in licensing, to maximize such potentials. Statistically, manufacture industry and commerce and service sectors are the main supporters of our economy. Consequently, licensing services holds an important role in encouraging business investments to flourish. Time efficiency and the simplification of other procedures give a significant impact in public’s satisfaction and enthusiasm when legalizing their business. Such eagerness must be met with proper facilitation, and we are doing just that: socialization is frequent, hardware and software are well maintained, and service coverage is widened. The implementation of Quality Management System ISO 9001:2008 is a prove of our commitment to implement proper standard in public service and increase public’s confidence in Good Governance and Clean Governance. The commitment would also mean that we are open to constructive criticism and complains regarding our services.

Contact Information

Institution Name:   Integrated Licensing Service Agency, Sidoarjo Regency Government
Institution Type:   Government Agency  
Contact Person:   Drs. Achmad Zaini, MM Drs. Achmad Zaini, MM
Title:   Head of Integrated Licensing Service Agency of Sid  
Telephone/ Fax:   +62 31 8052090, Fax: +62 31 8953472
Institution's / Project's Website:  
Address:   Jl. Pahlawan No. 141 Sidoarjo
Postal Code:   61217
City:   Sidoarjo
State/Province:   East Java

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