Doing Business 2009 Records Positive Reforms in Indonesia on Ease of Doing Business

Jakarta, September 10th, 2008 – The Government of Indonesia has reduced the number of days required to start up a business from 105 days to 76 days as well as the cost and number of procedures.  Additionally borrowers now are able to inspect their credit data at Bank of Indonesia which helps to improve the quality and accuracy of the information financial institutions use in assessing the risk profiles of borrowers. These reforms are among those reported in the Doing Business 2009 Report, the sixth in a series of annual reports published by IFC and the World Bank, which was officially released today in Washington DC.

Doing Business ranks 181 economies based on 10 topics of business regulations that track the time and cost needed by domestic limited liability companies to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business.

Doing Business 2009 recorded 239 reforms in 113 countries, a record breaking number of reforms greater than any other year before. Consequently, the year was significantly more competitive. Indonesia’s improvements in the ease of doing business have therefore not been reflected by a higher Doing Business ranking.

In this year’s report, Indonesia’s rank slipped two positions down from 127 to 129. In the Doing Business 2009 report, Indonesia is considered to be one of the Emerging Market countries in the East Asia Pacific region, together with China, Thailand, the Philippines, and Vietnam.  While Indonesia’s rank is above the Philippines (140) it is well below China (83), Malaysia (20) and Vietnam (92).

Adam Sack, Country Manager of IFC Indonesia said, “We know that the government of Indonesia is committed to improve the business climate.  There is a pipeline of reforms that I am hopeful will positively impact Indonesia’s Doing Business rankings next year.”

China led the region in terms of overall reform by making it easier to obtain credit, pay taxes and enforce contracts. Thailand, Cambodia and Malaysia introduced improvements to make it easier to pay taxes, start a business, trade across borders, and register property.  They also took steps to protect investors, improve bankruptcy procedures, and strengthen the legal rights of creditors and borrowers.  Cambodia’s new secured transactions law made top reformer in easing access to credit.

“Indonesia has made a number of positive improvements to the business climate. However, other economies have reformed faster and deeper.” said Mr. Sack. ”The Indonesian Government needs to accelerate its reform of the investment climate to sustain strong growth rates, to create more jobs and alleviate poverty.”  

World Bank Lead Financial Economist, P. S. Srinivas said “Indonesia is currently experiencing a solid economic growth rate in excess of 6% per year. By maintaining its momentum for reform of the domestic business environment, Indonesia will further enhance growth while at the same time, improving socio-economic sustainability. The World Bank Group will continue to support government led initiatives to improve the domestic private sector development at the national and sub-national level.”

The Doing Business rankings are not intended to measure all aspects of the business environment. They do not measure security, political or macroeconomic stability, investor perception, corruption, labor productivity, the underlying strength of institutions or the quality of infrastructure. Rather, the ten topics aim to measure the regulation and red tape relevant to the life cycle of a domestic small to medium sized firm using standard assumptions for the purpose of international benchmarking.

The Doing Business project is based on the efforts of more than 6,700 local experts—business consultants, lawyers, accountants, and government officials—and leading academics around the world who provided methodological support and review. The data, methodology, and names of contributors are available online at www.doingbusiness.org.

Resources