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FACTORS THAT AFFECT REGIONAL COMPETITIVENESS TO
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development, absorb labor and reduce poverty, which in turn will spur improvement in the overall level of people's welfare (Setkab, 2014).
The role of investment that is very important for development and economic growth is particularly concerned by the Indonesian government. Moreover, Indonesia is a developing country that continues to develop infrastructure projects both in the economic, social and community sectors and requires substantial financial support. In addition, according to a survey conducted by The Economist - Asia Business Outlook 2017, Indonesia is the top 3 destinations in attracting investors in Asia.
Hence, before investing in a country, investors will definitely do the analysis and make certain considerations to get the desired rate of return (risk and return). The attractiveness of a country, one of which is seen from its competitiveness among other countries. Competitiveness can broadly be measured based on infrastructure, the quality ofbureaucratic institutions and institutions, policies, macroeconomic stability, and the level of education (Setkab, 2014). Based on data released by the World Economic Forum, Indonesia's national competitiveness continues to fluctuate annually. In The 2016-2017 Global Competitiveness Index, the Rankings decreased to 41st place, where in the previous year 2015-2016 Indonesia was ranked 37th (Schwab, 2016).
However, in 2017-2018 Indonesia's competitiveness ranks again increased to 36th position but has not been able to excel from several countries. Based on the survey, it is seen that the weak competitiveness of Indonesia is due to labor market efficiency, health and primary education, technological readiness, higher education and training, infrastructure and institutions. Weak national competitiveness is a major challenge for the entry of investment into Indonesia both nationally and regionally (katadata.co.id, 2017). The higher the competitiveness ranking, the economic resources that are owned by the state and one region and have a high level of productivity. The high productivity will be a determinant for improving economic prosperity and the rate of return on investment through sustainable economic growth. Increased investment will increase economic growth, and high economic growth will ultimately provide high returns to investors.
National competitiveness itself is supported by regional competitiveness in Indonesia, an archipelagic country that has 33 provinces, each of which has economic potential and excellence in its region. In the implementation of regional autonomy, each region is expected to open opportunities to advance their respective regions by identifying potential sources of income to finance regional development. The process towards independence of an area in the current era of globalization cannot be separated from the need for competitiveness in shaping it. Regional competitiveness aims to provide sustainable economic growth, namely developing leading sectors in accordance with regional potential and needs in order to improve community welfare (Ministry of Finance, 2017). The study of regional competitiveness in Indonesia was also carried out by the Asean Competitiveness Institute (ACI). Based on Indonesia's 2015 regional competitiveness ranking published by ACI, it shows that 5 provinces with the best competitiveness rankings are DKI Jakarta, East Java, Central Java, West Java, East Kalimantan and North Kalimantan out of a
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total of 34 provinces. DKI Jakarta was ranked second in 2015, but unfortunately in the latest ACI survey in 2017 there was a rating decrease in DKI Jakarta to be ranked 4th in the business ease index. As a result of this index shift, DKI Jakarta no longer has the potential to become a major destination for potential investors, because it has switched to another province. This does not rule out the possibility, the economic stretch in Jakarta will slow down and affect employment. Deputy Director of ACI Mulya Amri added that the downgrade of Jakarta was due to stagnant performance, indicators such as responses to business and competitiveness policies were not as fast as other provinces (Tirto.id, 2017). Even though DKI Jakarta is one of the cities with the highest rating weight in the business convenience survey by the World Bank which shows the state of the Indonesian business environment in a global context. Business ease surveys are always a reference for the central government in taking policies related to competitiveness and investment, one of which is the issuance of 16 Economic Policy Packages related to Accelerating Business Implementation. Based on the background description above, this paper intends to explore further about the factors that influence the competitiveness of the DKI Jakarta region in increasing the ease of investment for investors.
METHODS
This research uses qualitative approach, in which the research carried out is descriptive in that it provides an accurate description and explanation of the problem at hand. The method used in data collection is done in two ways: Primary and secondary data. Primary data is collected through in-depth interviews in the Investment Office and One-Stop Integrated Services related to research issues. While secondary data was collected through literature and documentation from the research site. Besides this paper also uses desk research, According to Arikunto, desk research is a method of collecting data by searching for information in books, official archives, magazines, newspapers, and other literature that aims to form a theoretical foundation and re-do related research topics.
RESULTS/PRELIMINARY RESULT/CRITICAL REVIEW
The strength of DKI Jakarta's competitiveness can be seen from strong economic growth, according to a representative of Bank Indonesia Jakarta in the latest publications in the fields of economics and finance, Jakarta's economic growth until the end of 2017 showed continuous growth of 6.22%, increasing from the previous year in 2016 5.88% (JIC, 2018). In addition compared to other regions, DKI Jakarta accounts for around 17% of the total national gross domestic product. The Gross Regional Domestic Product (GRDP) of DKI Jakarta grew by 21.2%
within 3 years. GRDP based on market prices is the amount of gross value added that arises from all economic sectors in a region (BPS, 2017). The greater the GRDP value of a region, it can be said that the region has good domestic income. Increasing GRDP in DKI Jakarta is inseparable from both domestic and foreign investment projects that each year has increased, in 2018 DKI Jakarta was ranked 2nd for the achievement of PMDN and PMA nationally (Bank Indonesia, 2018). Self-investment activities can encourage the development of the business world and economic
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activities that produce goods and services and can create employment opportunities for the community.
Unfortunately, DKI Jakarta still has problems in increasing regional competitiveness to support investment convenience. Whereas according to Edy as the Head of Investment and One-Stop Services, DKI Jakarta, which is one of the five main investment destinations in Indonesia and in the Asian region, is targeting an investment increase of Rp. 50 Trillion annually (Jakartabisnis, 2017).
So of course it is necessary to take continuous improvement steps by looking at any factors that influence the improvement of regional competitiveness to support the ease of investment in DKI Jakarta.
Referring to the main key indicators considered to determine regional competitiveness according to Piter Abdullah (2002), first it can be seen that the governance indicators and government policies are intended as a measure of the quality of administration and service of local governments, especially with related to regulations and policies that support ease of investment for the investors. Regarding regulation, the DKI Jakarta government has actually issued the policy of accelerating the achievement ease of doing business regulated on Instruksi Gubernur Provinsi DKI Jakarta number 26 of 2016 which aims to simplify the management of permits so that it can shorten the deadline for issuance permits. However base on competitiveness surveys conducted by Asean Competitiveness Institute (ACI), in 2017 DKI Jakarta was ranked 4th in ease of business defeat from East Java, West Java and Central Java, in addition to the other EODB surveys conducted by World Bank, where the starting business indicator is still ranked 151 of 190 countries. Starting Business indicators is the process of managing various permits that need to be done to start a business or investment, related to the procedure, time and cost for small to medium-sized limited liability companies. Based on a survey conducted by the Regional Autonomy Implementation Monitoring Committee (KPPOD) DKI Jakarta takes 17.5 days with 9 procedures that must be fulfilled in licensing to establish a business but in reality the investors still have to wait longer than the specified time. Of course this indicates that until now the complexity of the existing problems has made it difficult for businesses and investors to start a business or investment in DKI Jakarta.
Based on the results of an interview with Sehan as Head of DKI Jakarta Investment Sector Control Section, the length of the licensing process was due to the existence of ego sectoral from each Regional Government Work Unit (SKPD) and the authority in the management of permits that are not entirely within one SKPD but also involves other relevant agencies and nationalgovernment agencies. To overcome this problem in 2018 the central government reformed by launching the Single Submission Online (OSS), is a web-based business permits system that aims to cut red tape involved in obtaining business permits and integrated between the central government and local governments. Furthermore according to him, the policy that has come out is also felt to be still imperfectly run effectively and still require regional regulations that support the implementation of the policy.
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Other indicators in the success of regional competitiveness to increase the ease of investment cannot be separated from the role of government institutions in implementing policies. The government institution is DKI Jakarta's one-stop integrated service which is the front guard in providing licensing services and in the form of Regional Regulation Number 12 of 2013. In the regional regulation it is stated that there are four levels of service (institutional design) held, starting from the sub-district andvillage level executive units, city and district level as well as agencies at the provincial level that each level of service has different tasks and functions in the licensing process. The problem is that some of the regulations in the regional regulation are still general and have the potential to cause uncertainty and inefficiency in the implementation of licensing services for investors and it is feared that it will further alienate the realization of excellent service in the implementation of PTSP DKI Jakarta. In this case, the readiness of each village and sub-district implementing unit is needed as the main gate of investment-related licensing services because of the devolution of authority that is adjusted to the existing policy.
In addition, other important indicators in the success of regional competitiveness to increase the ease of investment are human resources. The intended human resources are civil servants who have duties and authorities that are directly related to the service and permits processes both administratively and technically in DKI Jakarta. Based on the results of the interview, actually the civil servants, especially those in one-stop integrated service and the investment sector in DKI Jakarta, are among the top and selected people who have competent competence in the field of work. The problem that occurs is that there is a high overload of work for employees because of demands for ease of doing business both from the community, directives from the governor and instructions from the president are very high but the number of employees is very limited. This causes a lack of time for employees to conduct technical guidance training even though the work faced requires technical expertise and knowledge because in terms of service and licensing processes not only talk about quantity but also the quality provided to investors. And it is difficult for employees to continue their education to the next level which can support their careers and jobs. Although in fact the training process for bimtek is still carried out in collaboration with BKPM and with limited time from employees.
CONCLUSIONS
Based on the discussion of the results of the research stated above, the conclusions that can be drawn are on governance indicators and government policies showing that DKI Jakarta has a policy that supports the ease of investing but the policy is still not effective because there are still some obstacles related to the licensing process. There is a need for significant remedial measures from the local government to support reforms carried out by the central government through Online Single Submission (OSS) which is expected to facilitate investors in investing. Whereas in institutional indicators, work units that support the ease of investing in DKI Jakarta actually already have work units that support the ease of investment and are regulated in regional regulations. But again there needs to be a re-evaluation and strengthening of strong and specific local regulations to avoid the ineffectiveness of the duties and authorities of each of the relevant
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agencies. Finally, seen from the indicators of human resources, where civil servants in one-stop integrated service and the investment sector in DKI Jakarta already have the expertise and competent competencies to handle large demands in the investment facilitation of all parties, even with a limited amount of human resources. But the problem is the lack of time for employees to conduct technical guidance training to support their work. So that it is necessary to collaborate with other institutions related to training in civil servants in DKI Jakarta, among others in collaboration with BKPM.
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