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World Bank Programs on Indonesia Private Sector
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Private Sector - Investment Climate Activities
The World Bank’s Private Sector Development team (PSD) has been helping the government improve investment legislation and regulations, with the goal being to simplify investment procedures and remove unnecessary red tape. International best practice has been provided on investment laws and investment regulations, and background studies.
The government has an investment climate policy package covering five broad areas: investment policy, customs, taxation, labor regulation and SME policy. The package has 85 action items with time bound targets, and delegates a minister to be responsible for each action. Through September 2006, 30 of the measures had been completed and 17 were in progress. Important reforms such as the submission of the new investment law to Parliament, cancellation of regional regulations harmful to business activity, and guidelines for the development of one-stop shops by local government, have been carried out under the investment climate reform package. The World Bank supports this package.
At the request of the government, the World Bank has supported the development of a rapid monitoring tool to track changes in the investment climate. The monitoring tool is based on a series of surveys conducted once every six months and follows a small set of business environment indicators, such as the time to clear customs, obtain a tax refund, and obtain business licenses. The monitoring surveys are a multi year effort carried out by the University of Indonesia with technical support from the World Bank and a year of financial support from the Dutch government. The results of the surveys have been presented twice at high level meetings attended by ministers and ambassadors and been influential in influencing reform efforts at the Investment Board, tax department, customs department, Coordinating Ministry for Economy and Ministry of Trade.
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  | - Value Chain Analysis Â
Aware of the benefits of high value-added trade, the World Bank is engaged in value chain analysis of key strategic sectors. The prime objective is the identification of bottlenecks, both internal and external to the companies, which prevent firms from exporting more and more sophisticated products. The main client is the Ministry of Trade of the Government of Indonesia.
Aware of the competitive loss suffered by the shrimp and textile/apparel sectors, the Ministry of Trade (on behalf of the Government of Indonesia) has requested the World Bank and FIAS to assess the main bottlenecks influencing their competitive performance. Policy recommendations are provided on the most salient features with the clear intention to kick-off a private-public sector dialogue on the policy agenda.
| | Trade The World Bank Office in Jakarta has been working actively with counterparts in the Ministry of Trade and National Development Planning Agency (Bappenas). With additional support from the Dutch Trust Fund, the Bank provides input for trade issues based analytical research and best practices in other countries such as: - Trade policy: Work together to develop tools for analyzing the effective rates of protection (ERP) for the case of Indonesia.
- Input to improve performance of key export products. Working together with FIAS, the Bank provided technical assistance on improving the value chain in exports of shrimps and textiles.
- Study on consumers’ shopping behavior and the role of modern and traditional markets: The Bank commissioned studies to look at the shopping behavior of consumers in Indonesia and analyze the impact of supermarkets on the performance of traditional markets.
- Capacity building: Together with the World Bank Institute, the Bank also sponsored several training programs and workshops such as services negotiation (organized jointly with USAID), a trade policy course in Columbia University, and training to use trade database (with WBI).
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