Indonesia Is Not Progressive Enough

Indonesia\'s ranking in the 2020 Ease of Doing Business index remains at 73rd place. The new economic team of the Indonesia Onward Cabinet should be able make a major change to further improve the country’s ranking.

KOMPAS/PRIYOMBODO

Workers produce clothing made from batik cloth in the micro small and medium enterprise (SME) Dewi Sambi in Larangan, Tangerang city, Banten, Saturday (14/9/2019). Dewi Sambi is capable of producing up to 1,000 pieces of various types of batik clothing, which is sold to the Singapore and Malaysia markets.

JAKARTA, KOMPAS – Starting a business should be easier now with the introduction on an online platform to obtain a business license. With the digital platform, hard copies can be replaced with electronic documents.

In Surabaya, East Java, getting electricity is easier due to the improvement of the reliability of power supply thanks to the enhanced maintenance of electricity grids and obtaining new electricity connections.

Paying taxes in Indonesia is easier now with the use of an online filing and payment system for major taxes.

An improvement in a number of indicators in doing business in Indonesia was described in the 2020 Ease of Doing Business index issued by the World Bank on Thursday. There were 12 indicators that were assessed.

Indonesia’s ranking was stagnant because Indonesia was not progressive enough in improving the ease of doing business in the country.

Agustinus Prasetyantoko, the rector of Atma Jaya Catholic University, Jakarta, believes Indonesia’s ranking was stagnant because Indonesia was not progressive enough in improving the ease of doing business in the country.

Indonesia also made progress in cross border trading thanks to an improvement in the online processing of export customs declarations.

KOMPAS/P RADITYA MAHENDRA YASA

Workers assemble a steel frame for an extra high-voltage power line in Boja district, Kendal regency, Central Java, Wednesday (23/10/2019). Their work is high risk, which is why safety equipment is important for workers on the tower.

In the World Bank’s Ease of Doing Business Index, Indonesia ranked 73rd out of 190 countries with a score of 69.6. The ranking did not change from the position in the 2019 Ease of Doing Business Index released in 2018.

Indonesia\'s score increased from 67.96 last year. Nevertheless, the ranking did not change and remained stagnant at 73rd, far below the 40th position targeted by President Joko “Jokowi” Widodo next year,

New Zealand ranked first, followed by Singapore and Hong Kong, respectively, in second and third place in the 2020 Ease of Doing Business Index.

In early October, the Economic Forum (WEF) released the 2019 Global Competitiveness Report 4.0. Indonesia’s ranking dropped five spots to 50th out of 141 countries. In the 2018 Global Competitiveness, Indonesia ranked 45th out of 140 countries.

A number of fields should be addressed to encourage ease of doing business, including licensing.

In the 2019 Global Competitiveness Report 4.0, Vietnam was named the country with the most significant improvements. Its rank jumped 10 spots.

The rector of the University of Indonesia, Ari Kuncoro, believes that a number of fields should be addressed to encourage ease of doing business, including licensing.

In addition, cross border trading can be made easier by improving efficiency in port services, customs and warehousing logistics. Port efficiency can be improved, among others, by providing a railway service to deliver goods to and from ships.

KOMPAS/PRIYOMBODO

Container trucks drive from Tanjung Priok Port in North Jakarta on Saturday (28/9/2019). The uncertainty of the global economy due to the United States trade war with China has led to a decline in export-import performance. Based on data from Statistics Indonesia (BPS), Indonesia\'s exports in August 2019 reached US$14.28 billion, down 7.60 percent compared to exports in July 2019. Likewise, if compared to August 2018 it decreased 9.99 percent.

"Changes from one mode of transportation to another must be more efficient. It is important to think about optimizing logistics transportation by railroad," he said in Jakarta.

Economic team

Prasetyantoko said the new economic team needed to accelerate efforts to improve the ease of doing business.

President Jokowi, said Prasetyantoko, had mentioned the need to issue an omnibus law on job creation and empowerment of micro, small and medium businesses. The plan should be realized so that its impact can be felt by businesses.

In addition, there are 16 economic policy packages that have not been fully implemented. Institutional rules must be strengthened so that policies can be adopted by relevant ministries and institutions.

"Important works ahead include the urgency to strengthen the institution so that 16 policy packages and the omnibus law can be well implemented," he said.

Separately, Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani said score increases had been achieved by other countries. All countries are competing to increase their scores. In the midst of increasingly fierce competition, the government needs to revise regulations that are hampering efforts to improve the ease of doing business.

"The government needs to focus on implementing regulations that encourage business growth,"

For an example, he said, the Online Single Submission (OSS)-based license requires a worthiness certificate. However, as the cost is still too high, the licensing process remains slow as it cannot be implemented fully.

KOMPAS/WAWAN H PRABOWO

Workers produce shoes in a factory in Cikupa, Tangerang, Banten, Tuesday (30/4/2019).

"The government needs to focus on implementing regulations that encourage business growth," he said.

He added that the government had realized there were overlapping rules and would implement an omnibus law scheme, among others, to improve the ease of doing business.

Separately, the executive director of Apindo, Danang Girindrawardhana, said Indonesia’s ranking in the Ease of Doing Business Index showed no improvement after rising for the past several years.

Indonesia’s ranking jumped to 91st place in the Ease of Doing Business Index in 2017 from 106th position in the previous year. A year later, Indonesia’s ranking significantly to rank 72nd.

Danang said, despite the increase in ranking, the contribution of the manufacturing sector in the economy continued to decline. "Job openings are not as expected," he said.

KOMPAS/WAWAN H PRABOWO

An officer explains the online single submission (OSS) service to customers on 14 Jan. 2019 at the One-Stop Integrated Service (PTSP) of the Investment Coordinating Board (BKPM) in Jakarta. President Joko Widodo wants to ensure that the OSS system runs smoothly to provide fast online business licensing services. The government transferred the OSS service from the Office of the Coordinating Economic Minister to the BKPM on 2 Jan. 2019.

Based on data from the Investment Coordinating Board (BKPM), investment realization in Indonesia reached Rp 195.1 trillion in the first quarter of 2019 and Rp 200.5 trillion in the second quarter. The investment realization absorbed 235,401 workers in first quarter and 255,314 workers in the second quarter, this year.

According to Danang, there was an increase in the indexes on paper, but in reality, the macroeconomic condition showed no significant improvement. The reform and economic policy and the simplification of licensing did not really affect growth in the real economy.

There is no need to change too many regulations. The important thing is to comply with the regulations that have been made.

Seeing the complexities of the regulatory process in the administration of President Jokowi in the 2014-2019 period, Danang hopes that the 2019-2024 period is focused on the implementation of policies that have been issued but have not been realized.

"There is no need to change too many regulations. The important thing is to comply with the regulations that have been made, "he stressed.

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