Nasution informed that the number of procedures required to establish a business has been cut from 94 procedures to 49, while the number of permits has been curbed from nine permits to six. This should manage to drastically cut the time that is required to open a business in Indonesia.

Indonesia's 12th Economic Policy Package:

Indicator Prior to 12th Package After 12th Package
Starting a Business 12 procedures
47 days
Costs at IDR 6.8 - 7.8 million
7 procedures
10 days
Costs at IDR 2.7 million
Construction of Building 17 procedures
210 days
IDR 86 million for 4 permits
14 procedures
52 days
IDR 70 million for 3 permits
Tax Payments 54 payments 10 online payments

Source: Government of Indonesia

Earlier, Indonesian President Joko Widodo said he wants Indonesia to rise in the World Bank's Doing Business ranking from 109th place (2016) to 40th before the end of his term. However, he admits that this is a too ambitious target and therefore softened his previous words. Widodo says he would now be content to see the ranking of Indonesia improve to between 60-70 in the next couple of years. A concern among analysts is that Indonesia's ranking is far below the ranking of its regional peers such as Taiwan (11), Malaysia (18), Japan (34), Thailand (49), Vietnam (90), and the Philippines (103), indicating the country is not as competitive in terms of business.

Doing Business 2016 Ranking:

  1. Singapore  11. Taiwan
  2. New Zealand  18. Malaysia
  3. Denmark  34. Japan
  4. South Korea  49. Thailand
  5. Hong Kong  84. China
  6. United Kingdom  90. Vietnam
  7. United States 103. Philippines
  8. Sweden 109. Indonesia
  9. Finland 127. Cambodia
 10. Sweden

Source: World Bank 'Doing Business 2016'

Ease of Doing Business in Indonesia:

Please note that the 2014 and 2015 rankings are revised rankings

  2014 Rank   2015 Rank
  2016 Rank
 Starting a Business        158        163        173
 Dealing with Construction Permits
       150        110        107
 Getting Electricity
       101         45         46
 Registering Property        112        131        131
 Getting Credit         67         71         70
 Protecting Minority Investors         43         87         88
 Paying Taxes        158        160        148
 Trading Across Borders         61        104        105
 Enforcing Contracts        171        170        170
 Resolving Insolvency         71         73         77

Source: World Bank's Doing Business Reports

Regarding the 12 policy packages, Nasution said their implementation have been completed for 94.5 percent (including the 12th one that was unveiled yesterday). One of the characteristics of Indonesia is that there is a wide discrepancy between government planning and the actual implementation of these plans. As such, Nasution's words provide hope although it will require more (objective) research to assess whether his words are correct.

Nasution added that the government is also preparing two other revision concerning (1) income tax, and (2) land and building rights acquisition duties (BPHTB).

Economic Stimulus Packages of the Indonesian Government:

Package Unveiled Main Points
1st 9 September
• Boost industrial competitiveness through deregulation
• Curtail red tape
• Enhance law enforcement & business certainty
2nd 30 September
• Interest rate tax cuts for exporters
• Speed up investment licensing for investment in industrial estates
• Relaxation import taxes on capital goods in industrial estates & aviation
3rd 7 October
• Cut energy tariffs for labor-intensive industries
4th 15 October
• Fixed formula to determine increases in labor wages
• Soft micro loans for >30 small & medium, export-oriented, labor-intensive businesses
5th 22 October
• Tax incentive for asset revaluation
• Scrap double taxation on real estate investment trusts
• Deregulation in Islamic banking
6th 5 November
• Tax incentives for investment in special economic zones
7th 4 December
• Waive income tax for workers in the nation's labor-intensive industries
• Free leasehold certificates for street vendors operating in 34 state-owned designated areas
8th 21 December
• Scrap income tax for 21 categories of airplane spare parts
• Incentives for the development of oil refineries by the private sector
• One-map policy to harmonize the utilization of land
9th 27 January
• Single billing system for port services conducted by SOEs
• Integrate National Single Window system with 'inaportnet' system
• Mandatory use of Indonesian rupiah for payments related to transportation activities
• Remove price difference between private commercial and state postal services
10th 11 February
• Removing foreign ownership cap on 35 businesses
• Protecting small & medium enterprises as well as cooperatives
11th 29 March
• Lower tax rate on property acquired by local real estate investment trusts
• Harmonization of customs checks at ports (to curtail dwell time)
• Government subsidizes loans for export-oriented small & medium enterprises
• Roadmap for the pharmaceutical industry
12th 28 April
• Enhancing the ease of doing business in Indonesia by cutting procedures, permits and costs


Lex McGuir |

Good heavens! It still looks very involved.