Indonesia’s Business Competitiveness Ranking Improves (Jakarta Globe)

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Oktober 31, 2014
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Indonesia climbed three places to rank 114th in the World Bank’s Doing Business 2015, an annual report that measures business regulations and business competitiveness in 189 economies world-wide.

Classified as a lower-middle-income nation, Indonesia made some particular improvements: on starting business, on improving electricity and reforming corporate taxation.

“Indonesia made starting a business easier by making it possible to issue the approval letter for the deed of establishment electronically,” the report said.

“It made getting electricity in Jakarta easier by eliminating the need for multiple certificates guaranteeing the safety of internal installations. And it lowered labor taxes.”

“However, it also increased costs with the introducing of a security deposit for new connections,” the World Bank report continued.

The report noted the government in the world’s fourth-most populous nation made starting a business easier by allowing the Ministry of Law and Human Rights to electronically issue the approval letter for the deed of company establishment.

This reform applies to both Jakarta and Surabaya, the second-largest city in the country.

The government’s efforts to reduce the tax paid by companies by lessening the employers’ health insurance contribution rate was also appreciated.

However, the are still many factors that continue to constrain Indonesia’s competitiveness.

Trading across borders has became increasingly difficult due to inadequate infrastructure at the country’s busiest port, Tanjung Priok Port in North Jakarta. The report also listed dealing with construction permits, registering property, getting credit, and resolving insolvency as further constraints.

Indonesia ranked higher than its emerging market rivals such as Brazil, which is in 120th place, Argentina, in 124th place, and India, which is in the 142th position.

However, Indonesia is left behind by most neighboring Southeast Asian nations such as Vietnam, which is in 78th place on the list, and Malaysia in 18th place.

Indonesia, Southeast Asia’s largest economy, needs more investment to upgrade its infrastructure and cut down logistics costs, which will ultimately spur the economic growth.

Affected by the slowdown in China, a giant consumer of commodities, Indonesia may only see its economy grow by between 5.0 percent and 5.1 percent in the third quarter of this year, according to estimates by the newly appointed Finance Minister Bambang Brodjonegoro.

Bambang told Reuters that exports from Indonesia had been hit by falling prices.

“The slowdown in China is more significant to us than to the United States,” he said.

The central bank has said it expects growth this year in the range of 5.1 percent to 5.5 percent, with third-quarter growth at 5.2 percent.

Source: Jakarta Globe

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