Indonesia continued to climb sharply in the World Bank's Doing Business Index. In the 2018 edition, which was released at the end of October 2017, Indonesia ranks 72nd, jumping 19 positions from being 91st in last year's ranking. The World Bank praised Indonesia and labelled it as the country that made the biggest improvements in business regulations among Asia Pacific nations since 2005.
Over the past four years, when Indonesia was under the leadership of Indonesian President Joko Widodo, Indonesia climbed in the World Bank's Doing Business ranking from number 114 in 2014, to number 109 in 2015, 91st in 2016, to 72nd in the 2017 edition. This positive development is primarily attributed to the Indonesian government's efforts to implement reforms in order to improve the business and investment climate, hence attract more private investment. Indeed, over the same period, both domestic and foreign investment has risen accordingly.
The World Bank noted in a press release that Indonesia made significant progress in several areas and is among the world's top ten reformers, with 39 reforms related to the indicators that are included in the Doing Business ranking over the past 15 years. More than half of these reforms were implemented in the last four years. Meanwhile, for a second consecutive year, Indonesia carried out seven reforms, the highest single-year count for the country.
Rodrigo A. Chaves, Country Director for Indonesia, said Indonesia has accelerated the pace of reforms in recent years and its efforts are paying back. Continuation of the reform momentum, and a widening of the reform effort to include openness and competition reforms, is key to further stimulate the country's private sector.
The World Bank report mentioned several important reforms that were implemented over the past year:
- Starting a business was made less costly due to a reduction in business start-up fees to 10.9 percent of income per capita, from 19.4 percent previously.
- Getting electricity was made less costly by reducing connection and internal wiring certification fees. The cost to obtain an electricity connection is now 276 percent of income per capita, down from 357 percent last year.
- Access to credit was improved with the establishment of a new credit bureau.
- Trading across borders was facilitated by improving an electronic billing system for tax, customs and excise as well as non-tax revenue. As a result, the time for obtaining, preparing, processing, presenting and submitting documents when importing decreased from 133 hours to 119 hours.
- Registering property was made less costly by a reduction of transfer tax, reducing the total cost from 10.8 percent to 8.3 percent of the property value.
- Minority shareholder rights were strengthened by increasing minority shareholder rights, their role in major corporate decisions, and enhancing corporate transparency.
Meanwhile, the Indonesian government remains eager to further improve its investment and business climate. Therefore, it will establish several task forces - through a Presidential Regulation - for the acceleration of the ease of doing business in Indonesia. These task forces will specifically aim to ease the licensing process.
Earlier President Joko Widodo has said his target for Indonesia's ranking in the World Bank's Doing Business index is number 40, implying the country is still in need of serious reforms to make the investment climate more attractive.
Doing Business 2018 Ranking:
|1. New Zealand|
|4. South Korea|
|5. Hong Kong|
|6. United States|
|7. United Kingdom|
Source: World Bank 'Doing Business 2018'
Ease of Doing Business Ranking in Indonesia:
Please note that the 2014-2017 rankings are revised rankings
|Starting a Business||158||163||167||151||144|
| Dealing with Construction Permits
| Getting Electricity
|Protecting Minority Investors||43||87||69||70||43|
|Trading Across Borders||61||104||113||108||112|
Source: World Bank's Doing Business Reports