Addressing the Time and Cost Problems in Doing Business

KOMPAS/PRIYOMBODO

Workers continue construction on property projects on Jl. Sudirman, Jakarta, on Wednesday (23/10/2019). Based on data from the Investment Coordinating Board, the realization of domestic investment in the housing sector, industrial estates and offices from January to June amounted to Rp 7,374 trillion across 738 projects. The realization of foreign investment amounted to US$1.57 billion in 967 projects.

JAKARTA, KOMPAS – Indonesia has been ranked 73rd out of 190 countries in the World Bank’s 2020 Ease of Doing Business Index even though its score increased from 68.2 in 2019 to 69.6 in 2020.

However, Indonesia’s scores in most indicators were lower than the average score of other countries in the Asia Pacific and East regions.

Therefore, the economic team of the new Cabinet, named the Indonesia Onward Cabinet, should be more specific in mapping and overcoming the cost and time problems businesspeople face.

In a teleconference from Kuala Lumpur on Friday, World Bank senior economist Arvind Jain said the government must improve the overall procedures for each indicator. Statistical data related to duration and cost are used as the benchmark.

Kompas/Priyombodo

Workers produce clothing made from batik cloth at 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.

The Ease of Doing Business ranking is assessed based on 10 indicators, namely the process of starting a business, dealing with construction permits, getting electricity, registering a property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

More specifically, the time, costs and procedures for each indicator in Indonesia are generally higher than the Asia Pacific and East average. The process of starting a business in Indonesia, for example, involves 11 procedures, while the regional average is only 6.5 procedures. In addition, Indonesia has 26 types of taxes, while the average in the region is 20.6 types.

Meanwhile, the costs for businesspeople related to the enforcement of agreements or contracts reaches 74 percent of the claim value, far higher than the average of 47.2 percent.

KOMPAS/WAWAN H PRABOWO

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

A senior researcher at the Institute for Development of Economics and Finance (Indef), Enny Sri Hartati, believes there had been a lack of commitment to executing reforms to improve ease of doing business. This is the reason the country’s goal of reaching 40th position in the index has not been achieved.

Read more : Indonesia Is Not Progressive Enough

Amid the risk of a slowdown in the global economy, the majority of countries have improved the ease of doing business to attract investment and increase exports.

Indonesia is ranked 140th out of 190 countries for ease of starting a business. This needs government attention. The ranking shows there are many fundamental obstacles that have yet to be overcome, such as licensing, bureaucratic procedures and public utilities.