Wed, 16 Dec 2009
Indonesia cities ranking Doing Business in Indonesia 2010 compares business regulations across 14 Indonesian cities. The report focuses on local and national regulations that affect 3 stages in the life of a small to midsize domestic firm: starting a business, dealing with construction permits, and registering property. The report shows that differences in local regulations and in the enforcement of national-level regulations can enhance or constrain local business activity. The report suggests that cities in Indonesia can learn from each other and adopt good practices that are already working within the country.

For the first time, Doing Business goes beyond Jakarta to compare cities within Indonesia and identify opportunities for collaboration between national and local governments to cut red tape and reduce the cost of doing business. Although there are differences in the number of procedures, time, and cost to do business in Indonesia, the report finds that some cities already perform up to international standards. Effective coordination between zoning and building authorities puts Yogyakarta in the top 10 globally on the number of procedures for dealing with construction permits. In Manado, transferring a property title takes the same time as in the United States and puts the city into position 24 worldwide.

Main findings:

* Yogyakarta and Bandung lead the overall ranking on the three indicators measured in the report. Starting a business and dealing with construction permits are easiest in Yogyakarta. Registering property is easiest in Bandung - and most difficult in Balikpapan. Start-up procedures are most cumbersome in Manado. Obtaining construction permits is most difficult in Surabaya.

* Completing business registration is faster and easier where business licenses administered by local governments are consolidated at one-stop shops. If Semarang followed the example of Palangka Raya and Yogyakarta and consolidated all local permits, it could speed up the business licensing process by 3 weeks and reduce the number of visits the entrepreneur needs to make by 2. Businesses across Indonesia face higher costs to start a business than competitors in the region. Notary fees account for half of the total cost in the 14 cities surveyed.

* When comparing the regulatory framework for construction permits across Indonesia, most differences are encountered in the pre-construction stage. To apply for a building permit in Banda Aceh, Jakarta or Semarang, separate location and zoning clearances are needed. Conversely, in Yogyakarta, these clearances are obtained through an internal and coordinated process among zoning and building authorities. This city has only 3 pre-construction procedures compared with 7 in Jakarta, Palangka Raya and Surabaya and 9 in Banda Aceh.

* While an entrepreneur in Surakarta has to wait almost 2 months to transfer a property title, he or she can do it in less than 2 weeks in Manado. The local branch of the National Land Agency office (Badan Pertanahan Nasional- BPN) in Manado, which registers the land deed under the name of the new owner, performs its duties more efficiently than its neighbors. At 10.8% of the property value, the average cost to register property compares poorly with Indonesia’s neighbors- 3.9% on average in East Asia and the Pacific.



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