Contact:
Jakarta
Puni Ayu Indrayanto
Tel: +62-21 52993001
Email: pindrayanto@ifc.org
Randy Salim
Tel : +62 – 21 52993000
Email : rsalim1@worldbank.com Hong Kong
Andrew Mak
Tel: 852 9277 0706
Email: amak@ifc.org Washington DC
Mohamad Al Arief
Tel : +1 – 202 -4585964
Email : malarief@worldbank.org
Jakarta, 26 September 2007 – Indonesia has implemented a number of significant reforms - second only to China – in 2007, but is still ranked below all major economies in the region on the ease of doing business, except Philippines. “Doing Business 2008”, an annual global survey of the regulatory environment for business across 178 countries, was released today in Jakarta by the World Bank and the IFC.
The report recognizes the progress made by the country in simplifying the process of obtaining construction licenses, improving investor protection and credit information managed by the Bank of Indonesia. These measures helped raise Indonesia’s ranking from 135 last year to 123 this year. On the down side, the number of days for starting a business increased from 97 to 105 and the labor laws were seen as less conducive to creating a competitive business environment, indicating there is still room for improvement.. “Indonesia is growing briskly at more than 6 per cent a year with its present business environment which is placed in the bottom third of the Doing Business index,” said Joachim von Amsberg, Country Director, World Bank, Indonesia. “Imagine the dynamic development that would be unleashed and the many additional jobs that would be created if reforms push Indonesia into the top third of the rankings instead. Indonesia would indeed receive many benefits from streamlining procedures to create a business friendly environment.” Among the indicators that Indonesia could improve is the ease of starting a business, which requires one of the highest minimum capital outlays in the region. At 38.44 per cent this is much higher than Malaysia (0.01 per cent) while Vietnam, Thailand, Malaysian and Singapore, have completely abolished this threshold. In terms of aggregate ranking, Indonesia remains behind other Asian economies. Besides China, Vietnam and India, Indonesia will need to catch up with Malaysia that now ranks 24, Thailand (15), Hong kong (4), and Singapore (1). In East Asia alone, Indonesia only surpasses the Philippines (133), Cambodia (145), Laos (164) and Timor Leste (168). “Indonesia is being recognized as one of the fastest reformers in emerging markets along with China, Egypt, India, Turkey and Vietnam,´ said IFC Country Manager for Indonesia Adam Sack. “However, the problem is many competitor countries are making progress as well, which raises the bar for everyone Hans Shrader, Acting Head of Advisory Services IFC Indonesia, acknowledged that the Indonesian Government has taken significant steps in improving the business enabling environment: “Reform is a dynamic process that requires refinement and close monitoring. The best reformers ensure that the country’s reform agenda is actively implemented, deals with setbacks along the way, and continuously improves upon milestones already achieved at the national and sub national level.” “Indonesia would gain most by focusing on areas where it has performed relatively weakly compared to its neighboring countries,” said P.S. Srinivas, Lead Financial Economist, World Bank, Indonesia. “Regulatory and administrative reform require sustained commitment and the will drive the reform process in consultation with key stakeholders from the private sector and civil society to help overcome resistance and remove obstacles to reform,” he added. Worldwide, the top 25 countries in the rankings are, in order, Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia, and Austria. Globally, the East Asia and Pacific ranks second-to-last on the pace of business reform compared to countries in Eastern Europe and Central Asia which dominate the top 10 list of reformers in the ease of doing business. Other notable reforms in East Asia and the Pacific Fiji introduced judicial reforms to improve court efficiency. Lao PDR implemented border cooperation agreements that will help speed trade and eased licensing requirements for new businesses. Malaysia streamlined business start-up, reduced corporate income taxes, and simplified online tax filing. Mongolia put in place new laws for corporate income, value-added, and personal income taxes, introducing a new flat tax for individual income. It also reduced the top marginal rate for corporate income tax from 30 to 25 percent. Thailand introduced an electronic one-stop shop for traders, cutting the time to import and export by five days. Vietnam made it easier for businesses to access credit by allowing general description of assets and obligations in collateral agreements as well as the use of future assets to secure debt. It adopted a new securities law that establishes a securities exchange and trading center. And it strengthened investor protections through a new enterprise law. The law requires that investors be involved in major company actions, increases disclosure for related-party transactions, and introduces fiduciary duties for company directors.
The Doing Business project is based on the efforts of more than 5,000 local experts and he rankings are based on 10 indicators of business regulation.The data, methodology, and the names of contributors are publicly available online at www.doingbusiness.org. |
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