Jakarta, October 26, 2016 – Indonesia carried out a record seven reforms in the past year, to improve the business climate for local entrepreneurs, says the World Bank Group’s latest annual ease of doing business report.
As a result, the country is amongst the top 10 improvers in Doing Business 2017: Equal Opportunity for All, released yesterday. In the global ranking stakes, Indonesia moved up 15 places and is ranked 91 this year.
The business reforms undertaken by Indonesia in the past year covered multiple areas measured by Doing Business: Starting a Business, Getting Electricity, Registering Property, Getting Credit, Paying Taxes, Trading Across Borders and Enforcing Contracts
For example, in both Jakarta and Surabaya, the two cities measured by Doing Business, the process of obtaining an electricity connection for a warehouse was made faster due to an increase in the stock of electrical material supplied by the utility. This allowed for a reduction of time needed by contractors to perform external works. In Surabaya, the utility also streamlined the process for new connection requests, making it easier to get connected to the grid. On average in Indonesia, it now takes only 58 days for a business to get an electricity connection – compared to 79 days last year.
“The Indonesian government has done a lot to enhance the quality of the business environment for the private sector, particularly in the last three years.” said Rodrigo Chaves, World Bank Country Director for Indonesia “It is encouraging to the global business community and local entrepreneurs alike to see the process of conducting business simplified in so many areas.”
A number of the reforms in the past year were aimed at implementing or encouraging the use of online systems. For example, starting a business was made easier due to the online systems becoming functional. It now takes an entrepreneur 25 days to start a business, compared to 48 days previously.
The reliability for registering a property transfer was also strengthened by the digitization of cadastral records and the setting up of a geographic information system. Furthermore, with the introduction of an online system for filing and paying health contributions, it is now easier to pay taxes in Indonesia. This reform has reduced the number of payments needed to pay taxes to 43 per year, from 54 earlier.
Additional reforms include a dedicated procedure for small claims that allows for parties’ self-representation, now making it easier to enforce contracts in Indonesia. Exporting and importing are also easier, thanks to improvements in the customs services and document submission functions of the national single window. Indonesia strengthened access to credit by establishing a modern collateral registry.
However, there are still areas where improvements can be made. Building on the existing reform momentum, there appears to be further potential to simplify procedures as well as reduce the time and costs for starting a business, registering property and contract enforcement,
This year, the report considers gender-related barriers for three sets of indicators: Starting a Business, Registering Property and Enforcing Contracts. In Indonesia, there are no barriers to women entrepreneurs in the areas measured.
Additionally, the Paying Taxes indicator set now includes information on post-filing processes relating to tax audits and tax refunds. Indonesia outperforms other countries in the East Asia and Pacific region on these new measures.
The full report and accompanying datasets are available at https://www.doingbusiness.org/