EFFECTIVENESS OF LICENSING PRACTICES IN INDUSTRY
Gadjah Mada University
Yogyakarta, 2017
A. Background
The implementation of licensing is based on the theory of the modern rule of law or the
rule of law democratic) in the legal perspective is a combination of the concept of the rule of law
(rechtstaat) and the concept of the welfare state (welfare state), therefore the consequences
Indonesia as a Welfare State, namely the government obliged to interfere in every aspect of the
life of the community or its citizens, which where the government's action as a state
administration official requires a means law is a means of licensing. The granting of this permit is
one of the public services (public services) provided by the government in terms of carrying out
state functions. The concept of the welfare state itself is to place the role of the state not only
limited as mere guardians of order as is the case in the concept of nachtwakerstaat, but it is also
possible for the state to participate in all aspects of people's lives.
The purpose of the state in the concept of a welfare law state is none other than to
realize the welfare of every citizen. Based on these objectives, the state required to participate
in all aspects of community life, this is in accordance with basic ideas about the purpose of the
state, as outlined in the Preamble to the Act 1945 Constitution of the Republic of Indonesia.
The government in providing public services in this case is licensing, of course, it must
not apply differently to the community so that the government is required to apply non-
discriminatory principles in the administration of matters related to licensing, besides that what
needs attention in this case is service management, openness and ease of procedures, setting
clear and affordable rates, professionalism of the apparatus in service techniques, availability of
a place for public complaints, and the availability of a monitoring system for the implementation
of procedures. We can find the definition related to licensing in the laws and regulations in
Article 1 point (19) of Law no. 30 of 2014 concerning Government Administration which states
that: Permit is a decision of an authorized Government Official as a form of approval of the
request of the Citizens in accordance with the provisions of the legislation.
Furthermore, the researcher will focus on permits which are permits in the industrial
sector as described above that this type of permit is one of several other types of permits
related to aspects of people's lives in implementing state goals. As has been mandated by the
provisions in Article 2 paragraph (1) PP No. 107 of 2015 concerning Industrial Business Permits,
that every industrial business activity must or is required to have an IUI. 107 of 2015 concerning
Industrial Business Permits which state that: “Industrial Business Permits, hereinafter
abbreviated as IUI, are permits granted to everyone to carry out industrial business activities.
The existence of licensing in the industrial sector is important because achieving industrial
growth requires business certainty through the regulation of industrial business licensing. So
that licensing is required to be able to provide motivation that can encourage and attract
investors to invest in the industrial sector. Licensing is one of the Government's policies that can
be a tool to move the development of the business world into fields that support industrial
development. Therefore, the licensing system can be utilized, among others, for the even
distribution of Industrial distribution, efficient and optimal utilization of Industrial resource
Page 1 of 16
, potential, and Industrial data collection. This Industrial Business Permit is mandatory and
obtained in every establishment of an industrial company, however, exceptions to this provision
are excluded for small industrial businesses, however, for this type of small industrial business, it
must still be registered so that later it will obtain an Industrial Registration Certificate which also
applies as a permit. Industrial estates, which are defined as areas where industrial activities are
concentrated, equipped with supporting facilities and infrastructure developed and managed by
industrial estate companies, which are places or locations for industrial business activities, need
to issue an Industrial Estate Business Permit hereinafter abbreviated as IUKI. The authority
possessed by the Minister, Governor, and Regent/Mayor who can issue Industrial Business
Permits and Industrial Estate Business Permits as stipulated in PP No. 107 of 2015 concerning
Industrial Business Permits and Regulation of the Minister of Industry of the Republic of
Indonesia No. 39/M-IND/PER/6/2016 concerning Procedures for Granting Industrial Estate
Business Permits and Industrial Estate Expansion Permits. One Stop (PTSP) in this case is the
Investment Coordinating Board or hereinafter abbreviated as BKPM.
Of course, without licensing, particularly in the industrial sector, as required by laws and
regulations, there are hurdles in the implementation process because many enterprises
operating in the industrial sector have yet to apply for a permit, resulting in her not receiving
one. People frequently complain about the public services provided by the state apparatus, in
this case the government, which is the subject of discussion in this is the government that is in
the licensing sector, but related to this must also be studied from the perspective of the parties,
not just from the perspective of society. Furthermore, based on information found on the
Court's website, there are numerous Supreme Court and Administrative Court of State decisions
related to licensing, particularly in the field of licensing, involving cases that are referred to the
state administrative court for further legal action, such as an appeal to the State Administrative
High Court, a cassation, or a judicial review to Supreme Court.
Based on the foregoing, which demonstrates that licensing, particularly licensing in the
industrial sector, particularly dealing with permits Industrial Business or hereinafter abbreviated
as IUI, plays an important role in the state's administration process and it is interesting to learn
more, the author is interested in conducting research as outlined in the form of research reports
with the title "EFFECTIVENESS OF LICENSING ISSUANCE PRACTICES IN THE FIELD OF INDUSTRY
ON INDUSTRIAL BUSINESS LICENSE”.
Based on the description above, the problem can be formulated as following:
1. What are the requirements and procedures for the licensing application mechanism,
especially in the field of industry?
2. What are the obstacles in the implementation of the licensing process in the industry?
3. How to resolve disputes that arise in the case of the issuance of a special permit industrial
license?
B. Methodology
This research is intended to find out how licensing practices especially licensing in the field of
industry in the field, terms, and procedures licensing application mechanism, things that
become obstacles in the implementation of the process licensing, and settlement of disputes
Page 2 of 16
, that arise in the case of the issuance of a permit especially permits in the industrial sector.
Judging from the composition of the formulation of the problem and the purpose of this
research, legal research is included in the classification of juridical research empirical, as well as
normative research. Empirical juridical research is research that based on data acquisition in the
field, both of which will investigate further regarding primary data in the field. Normative
research which can also be called with this doctrinal usually examines pure law, statutory
regulations and the articles contained therein, which further examines the data The available
secondary legal materials are primary, secondary and tertiary legal materials.
a. Research sites
The research location is in the Special Region of Yogyakarta. As for the place the research
locations are: Yogyakarta Special Region Investment and Licensing Service.
b. Research time
The research time will start from Monday 27 March 2017 to Friday 31 March 2017 at 08.00
to 16.00 WIB, in the event that the research can be done in 1 (one) day then no further
research is needed.
c. Interviewees
Interviewees who provide information and data related to the research to be conducted
done is: Head of the Yogyakarta Special Region Investment and Licensing Service
d. Data Collection Tools:
i. Interview, in which the researcher prepares a list of questions to be asked directly asked
the informant to obtain data and the required information.
ii. Stationery and Recording Equipment, namely stationery and recording equipment (tape
recorder) which the researcher brought himself, which one before using it the
researcher should asked permission in advance from the informants that the statement
sources will be recorded through this tape recorder.
iii. Literature Study, the researcher collects data from the literature, laws and regulations,
norms, and theories related to researched problem.
C. Analysis
I. Terms and Procedures Mechanism of Applying for Permits, Especially in the Industrial
Sector
Public services basically cover aspects of the life of the wider community. In the life of
the state, the government has the function of serving the public, in the form of regulating
and issuing permits in order to meet the needs of the community in all fields. Public
services that must be provided by the government in terms of issuing permits include
administrative services.
The licensing process is an internal process carried out by the apparatus/officers. In
general, the permit application must follow certain procedures determined by the
government, as the permit giver and the permit applicant must also meet certain
requirements that are determined unilaterally by the government or the permit giver. The
licensing procedures and requirements vary depending on the type of permit, the purpose
of the permit, and the licensing agency. The essence of licensing regulation and
deregulation is the procedure for licensing procedures whose contents must meet values
including being simple, clear, not involving many parties, minimizing physical contact
Page 3 of 16
Gadjah Mada University
Yogyakarta, 2017
A. Background
The implementation of licensing is based on the theory of the modern rule of law or the
rule of law democratic) in the legal perspective is a combination of the concept of the rule of law
(rechtstaat) and the concept of the welfare state (welfare state), therefore the consequences
Indonesia as a Welfare State, namely the government obliged to interfere in every aspect of the
life of the community or its citizens, which where the government's action as a state
administration official requires a means law is a means of licensing. The granting of this permit is
one of the public services (public services) provided by the government in terms of carrying out
state functions. The concept of the welfare state itself is to place the role of the state not only
limited as mere guardians of order as is the case in the concept of nachtwakerstaat, but it is also
possible for the state to participate in all aspects of people's lives.
The purpose of the state in the concept of a welfare law state is none other than to
realize the welfare of every citizen. Based on these objectives, the state required to participate
in all aspects of community life, this is in accordance with basic ideas about the purpose of the
state, as outlined in the Preamble to the Act 1945 Constitution of the Republic of Indonesia.
The government in providing public services in this case is licensing, of course, it must
not apply differently to the community so that the government is required to apply non-
discriminatory principles in the administration of matters related to licensing, besides that what
needs attention in this case is service management, openness and ease of procedures, setting
clear and affordable rates, professionalism of the apparatus in service techniques, availability of
a place for public complaints, and the availability of a monitoring system for the implementation
of procedures. We can find the definition related to licensing in the laws and regulations in
Article 1 point (19) of Law no. 30 of 2014 concerning Government Administration which states
that: Permit is a decision of an authorized Government Official as a form of approval of the
request of the Citizens in accordance with the provisions of the legislation.
Furthermore, the researcher will focus on permits which are permits in the industrial
sector as described above that this type of permit is one of several other types of permits
related to aspects of people's lives in implementing state goals. As has been mandated by the
provisions in Article 2 paragraph (1) PP No. 107 of 2015 concerning Industrial Business Permits,
that every industrial business activity must or is required to have an IUI. 107 of 2015 concerning
Industrial Business Permits which state that: “Industrial Business Permits, hereinafter
abbreviated as IUI, are permits granted to everyone to carry out industrial business activities.
The existence of licensing in the industrial sector is important because achieving industrial
growth requires business certainty through the regulation of industrial business licensing. So
that licensing is required to be able to provide motivation that can encourage and attract
investors to invest in the industrial sector. Licensing is one of the Government's policies that can
be a tool to move the development of the business world into fields that support industrial
development. Therefore, the licensing system can be utilized, among others, for the even
distribution of Industrial distribution, efficient and optimal utilization of Industrial resource
Page 1 of 16
, potential, and Industrial data collection. This Industrial Business Permit is mandatory and
obtained in every establishment of an industrial company, however, exceptions to this provision
are excluded for small industrial businesses, however, for this type of small industrial business, it
must still be registered so that later it will obtain an Industrial Registration Certificate which also
applies as a permit. Industrial estates, which are defined as areas where industrial activities are
concentrated, equipped with supporting facilities and infrastructure developed and managed by
industrial estate companies, which are places or locations for industrial business activities, need
to issue an Industrial Estate Business Permit hereinafter abbreviated as IUKI. The authority
possessed by the Minister, Governor, and Regent/Mayor who can issue Industrial Business
Permits and Industrial Estate Business Permits as stipulated in PP No. 107 of 2015 concerning
Industrial Business Permits and Regulation of the Minister of Industry of the Republic of
Indonesia No. 39/M-IND/PER/6/2016 concerning Procedures for Granting Industrial Estate
Business Permits and Industrial Estate Expansion Permits. One Stop (PTSP) in this case is the
Investment Coordinating Board or hereinafter abbreviated as BKPM.
Of course, without licensing, particularly in the industrial sector, as required by laws and
regulations, there are hurdles in the implementation process because many enterprises
operating in the industrial sector have yet to apply for a permit, resulting in her not receiving
one. People frequently complain about the public services provided by the state apparatus, in
this case the government, which is the subject of discussion in this is the government that is in
the licensing sector, but related to this must also be studied from the perspective of the parties,
not just from the perspective of society. Furthermore, based on information found on the
Court's website, there are numerous Supreme Court and Administrative Court of State decisions
related to licensing, particularly in the field of licensing, involving cases that are referred to the
state administrative court for further legal action, such as an appeal to the State Administrative
High Court, a cassation, or a judicial review to Supreme Court.
Based on the foregoing, which demonstrates that licensing, particularly licensing in the
industrial sector, particularly dealing with permits Industrial Business or hereinafter abbreviated
as IUI, plays an important role in the state's administration process and it is interesting to learn
more, the author is interested in conducting research as outlined in the form of research reports
with the title "EFFECTIVENESS OF LICENSING ISSUANCE PRACTICES IN THE FIELD OF INDUSTRY
ON INDUSTRIAL BUSINESS LICENSE”.
Based on the description above, the problem can be formulated as following:
1. What are the requirements and procedures for the licensing application mechanism,
especially in the field of industry?
2. What are the obstacles in the implementation of the licensing process in the industry?
3. How to resolve disputes that arise in the case of the issuance of a special permit industrial
license?
B. Methodology
This research is intended to find out how licensing practices especially licensing in the field of
industry in the field, terms, and procedures licensing application mechanism, things that
become obstacles in the implementation of the process licensing, and settlement of disputes
Page 2 of 16
, that arise in the case of the issuance of a permit especially permits in the industrial sector.
Judging from the composition of the formulation of the problem and the purpose of this
research, legal research is included in the classification of juridical research empirical, as well as
normative research. Empirical juridical research is research that based on data acquisition in the
field, both of which will investigate further regarding primary data in the field. Normative
research which can also be called with this doctrinal usually examines pure law, statutory
regulations and the articles contained therein, which further examines the data The available
secondary legal materials are primary, secondary and tertiary legal materials.
a. Research sites
The research location is in the Special Region of Yogyakarta. As for the place the research
locations are: Yogyakarta Special Region Investment and Licensing Service.
b. Research time
The research time will start from Monday 27 March 2017 to Friday 31 March 2017 at 08.00
to 16.00 WIB, in the event that the research can be done in 1 (one) day then no further
research is needed.
c. Interviewees
Interviewees who provide information and data related to the research to be conducted
done is: Head of the Yogyakarta Special Region Investment and Licensing Service
d. Data Collection Tools:
i. Interview, in which the researcher prepares a list of questions to be asked directly asked
the informant to obtain data and the required information.
ii. Stationery and Recording Equipment, namely stationery and recording equipment (tape
recorder) which the researcher brought himself, which one before using it the
researcher should asked permission in advance from the informants that the statement
sources will be recorded through this tape recorder.
iii. Literature Study, the researcher collects data from the literature, laws and regulations,
norms, and theories related to researched problem.
C. Analysis
I. Terms and Procedures Mechanism of Applying for Permits, Especially in the Industrial
Sector
Public services basically cover aspects of the life of the wider community. In the life of
the state, the government has the function of serving the public, in the form of regulating
and issuing permits in order to meet the needs of the community in all fields. Public
services that must be provided by the government in terms of issuing permits include
administrative services.
The licensing process is an internal process carried out by the apparatus/officers. In
general, the permit application must follow certain procedures determined by the
government, as the permit giver and the permit applicant must also meet certain
requirements that are determined unilaterally by the government or the permit giver. The
licensing procedures and requirements vary depending on the type of permit, the purpose
of the permit, and the licensing agency. The essence of licensing regulation and
deregulation is the procedure for licensing procedures whose contents must meet values
including being simple, clear, not involving many parties, minimizing physical contact
Page 3 of 16
