Doing business in RI remains costly, IFC says<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Indonesia is at risk of falling further behind many of its
\nregional rivals in terms of attracting foreign investment due to
\nthe continuing high cost of doing business here, according to a
\nreport released on Tuesday.<\/p>\n
The report titled Doing Business in 2006: Creating Jobs, co-
\nsponsored by the World Bank and the International Finance
\nCorporation, ranks Indonesia 113th out of 155 countries in terms
\nof doing business, with the top being the best.<\/p>\n
Indonesia lags far behind Vietnam (99), China (91), Malaysia
\n(21), Thailand (20) and Singapore (2). Indonesia finds itself
\nthis year in the third quarter, up from last year's bottom
\nquarter.<\/p>\n
However, the progress has only been made in three areas: the
\nintroduction of a new Bankruptcy Law clarifying the rules for
\ndealing with insolvent businesses and reorganizing viable
\nbusinesses, improved regulations for protecting investors, and
\nreductions in the cost of starting up businesses.<\/p>\n
Other areas, however, remain the same or have even worsened.<\/p>\n
\"In Indonesia, although there is progress and the government
\nunderstands that the issues need to be addressed, the changes are
\nnot happening fast enough. This may be a disincentive for
\ninvestors, since the region is growing and more options are
\navailable for investors to choose a competitive country,\" said
\nIFC Country Manager German Vegarra when launching the report.<\/p>\n
The report traces the difficulties involved in doing business,
\nincluding starting a business, hiring and firing workers, getting
\nloans, paying taxes, contract enforcement, licensing, registering
\nproperty, protecting investors, cross-border trading and, lastly,
\nbankruptcy.<\/p>\n
In terms of starting a business, Indonesia's notoriously
\ncumbersome bureaucracy prolongs the licensing process. It takes
\nan average of 151 days to start a business in Indonesia, compared
\nto 30 days in Malaysia, 33 days in Thailand and 50 days in
\nVietnam. Indonesia is far behind the regional average of 39 days.<\/p>\n
The data employed in the report, however, was collected
\nbetween early 2004 and the beginning of 2005, and thus does not
\nreflect on the performance of President Susilo Bambang Yudhoyono,
\nwho has vowed to cut the number of days needed to start up a
\nbusiness from 151 days to 30.<\/p>\n
Regarding the hiring and firing workers, Indonesia is among
\nthe most business unfriendly countries in the region. It has the
\nhighest cost of firing in the region, equal to 145 weeks' wages,
\ncompared to 90 weeks' wages in China, 65 in Malaysia, 39 in
\nCambodia and 4 in Singapore.<\/p>\n
It takes 42 days to register property in Indonesia, which is
\nrelatively good compared to the rest of the region. However, this
\nfigure represents a worsening compared to the 33 days recorded in
\nthe previous report. Besides, the cost of registering property in
\nIndonesia is the second most expensive in the region, second only
\nto Fiji. To register a title costs 10.95 percent of the
\nproperty's value here.<\/p>\n
Indonesia also has problems with contract enforcement, which
\nneeds 570 days -- that second worst figure in the region after Timor
\nLeste. The cost of enforcing contracts is also high in Indonesia,
\nat 126.5 percent of debt value, compared to 20 percent in
\nMalaysia, 13 percent in Thailand and 9 percent in Singapore.<\/p>\n
In the case of bankruptcy, the recovery rate in Indonesia is
\nstill stuck at 13 cents per dollar, far behind the 19 cents per
\ndollar in Vietnam, 32 cents in China, 39 cents in Malaysia and 91
\ncents in Singapore.<\/p>",
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