Cumbersome bureaucracy undermines competitiveness

Cumbersome bureaucracy undermines competitiveness

Tony Hotland, The Jakarta Post, Jakarta

Indonesia's global competitiveness has improved over the past
year, and yet it is battered by an inefficient bureaucracy,
inconsistent policies and corruption, according to the World
Economic Forum (WEF).

The forum's latest global competitiveness report, released
here on Thursday, shows that Indonesia ranks 69th out of 104
countries surveyed this year in terms of growth competitiveness
and 44th out of 103 in terms of business competitiveness.

This is an improvement from last year, when Indonesia's growth
competitiveness ranked 72nd and business competitiveness 60th,
and also marks the first improvement recorded since Indonesia
joined the WEF in 1996.

The WEF is an independent, international organization that
groups together corporate leaders and provides a platform for
addressing global issues.

Tulus Tambunan, head of research at the Indonesian Chamber of
Commerce and Industry (Kadin), said a quick assessment of the
report showed that the considerably better security condition and
higher growth rate contributed to Indonesia's improved standing.

The Growth Competitiveness Index examines three macro factors
critical to economic growth: quality of macroeconomic
environment, public institutions and technological development.

Meanwhile, the complementary Business Competitiveness Index
evaluates two areas critical to the business climate: the
sophistication of the operating practices of companies and the
quality of the business environment in each country.

Aside from the inefficient bureaucracy, inconsistent policies
and corruption that top the list of most problematic factors, the
WEF report also pointed to inadequate infrastructure, tax rates,
tax regulations, access to financing, restrictive labor
regulations, crime and theft, government instability and poor
work ethics as inhibitive for doing business in Indonesia.

Tulus said the report only confirmed the conditions that had
shackled businesses here.

The cumbersome bureaucracy, for example, provide a loophole
for charging foreign and domestic investors illegal fees, which
could comprise 25 percent to 30 percent of production costs.

Inconsistent policies have also cost local and foreign
businesses alike, with overlapping regulations making it
difficult for businesses to make long-term plans and strategies,
Tulus said.

"For businessmen here, these problems are the main factors
that have bogged them down, and the government must resolve these
issues quickly," he said.

While it has shown initial improvement, Indonesia still has a
long way to go before it can vie with other Asian countries in
terms of growth competitiveness. Neighboring Singapore, for
example, ranks 7th, Malaysia at 31st, Thailand at 34th, China at
46th and India at 55th.

In terms of business competitiveness, Indonesia lags far
behind Singapore, ranked 10th, followed by Hong Kong at 11th,
Malaysia at 23rd, India at 30th and Thailand at 37th.

The world's top five in growth competitiveness are Finland,
the United States, Sweden, Taiwan and Denmark, while leading in
business competitiveness are the United States, Finland, Germany,
Sweden and Switzerland.

Competitiveness Ranking

Growth Business

1. Finland 1. U.S.

2. U.S. 2. Finland

3. Sweden 3. Germany

4. Taiwan 4. Sweden

5. Denmark 5. Switzerland

6. Norway 6. U.K.

7. Singapore 7. Denmark

8. Switzerland 8. Japan

9. Japan 9. Netherlands

10. Iceland 10. Singapore

21. Hong Kong 11. Hong Kong

29. Korea 23. Malaysia

31. Malaysia 24. Korea

34. Thailand 30. India

46. China 37. Thailand

55. India 44. Indonesia

69. Indonesia 70. Philippines

76. Philippines 79. Vietnam

102. Bangladesh 95. Bangladesh

104. Chad 103. Angola

Source: WEF Global Competitiveness Report