Study shows Indonesia's business climate among the worst in world
Study shows Indonesia's business climate among the worst in world
Dadan Wijaksana, The Jakarta Post, Jakarta
Mr. President, you have a tough job ahead: Indonesia has been
ranked as one of the most difficult places in the world to do
business in, a new report from the World Bank Group finds.
During his election campaign, President Susilo Bambang
Yudhoyono has said improving the business climate in the country
tops his list of priorities.
A better business environment would generate higher economic
growth and eventually reduce unemployment.
The report, in the form of a book titled Doing Business in
2005: Removing Obstacles to Growth -- cosponsored by the World
Bank and its private sector lending arm, the International
Finance Corporation (IFC) -- should help the government decide
what needs to be done.
Part of a series of annual reports investigating regulations
that enhance or impede business activities, it ranks Indonesia
along with Laos, Cambodia and Vietnam in the bottom quartile of
the 145 nations surveyed on the ease of doing business.
Entrepreneurs in those countries found it more difficult to
start, operate, or close a business than in most other East Asian
nations.
At the other end of the scale, seven economies in the East
Asia-Pacific region ranked in the top quartile of the 145-nation
survey; New Zealand, Australia, Singapore, Hong Kong, Thailand,
Taiwan and Malaysia.
"On average, it takes a business six procedures, 8 percent of
income per capita and 27 days to get started in high-income OECD
countries; in East Asian countries, the same process takes 9
procedures, 60 percent of income per capita and 61 days."
However, "Among the worst performers in time of business
registration were Cambodia (94 days), Indonesia (151) and Laos
(198)," the report says.
Indonesia has been relying on domestic consumption to fuel
economic growth as investors remain wary of the country due to
the adverse business climate here. Legal uncertainty, security
issues, and the poor implementation of regional autonomy have
added to the endemic problems of red-tape and corruption -- all
major turn-offs to investors.
The economy is projected to grow by 4.8 percent and 5.4
percent this year and the next, respectively, which would be the
fastest rate since the crisis. However, more foreign investment
would make Indonesia's recovery faster and would soak up
unemployment, easing the burden on the poor who are being hurt
the most by the nation's economic slump.
IFC country manager German A. Vegarra said Susilo and his
Cabinet were sending out strong signals they were committed to
improving the country.
"We are optimistic that if he (Susilo) really does what he
says, I think things will be better. Addressing unemployment is
the key and that's what they have said must be addressed. So far,
I like what I hear.
"Of course, it will take time. But (what) we expect is a lot
of clear directions for improvement," Vegarra said in a recent
interview.
Hans Shrader, the program manager for the IFC Business
Enabling Environment service unit, meanwhile, offered ways to
quickly improve the country's business climate.
He suggested a one-stop shop mechanism, in which municipal
offices processed all the required documentation for businesses
to attain permits or licenses.
"Another aspect is a regulatory impact assessment (of new
laws).
"Before legislation is introduced to parliament, there should
be an assessment as to what the cost of the legislation would be
on businesses, and what its impact on the business environment
would be," Shrader said.