Introduction
Indonesia is a vast archipelago nation known for its rich culture and natural beauty. It is also an emerging economy with a growing market and business opportunities. Despite its challenges, Indonesia has made significant progress in recent years to improve its ease of doing business ranking. In this article, we will explore the current state of the ease of doing business in Indonesia and highlight some of the steps being taken to improve the business environment.
Starting a Business in Indonesia
Starting a business in Indonesia has become easier in recent years thanks to government efforts to streamline the process. According to the World Bank’s ease of doing business report, Indonesia ranks 73rd out of 190 countries in the starting a business category. The average time to start a business in Indonesia has also decreased from 47 days in 2018 to 25 days in 2020. However, there are still some challenges that businesses face when setting up in Indonesia, including complex regulations and bureaucracy.
Getting Electricity
Getting electricity in Indonesia can be a challenge, especially in rural areas. The country ranks 94th out of 190 countries in the getting electricity category. However, the government has been working to improve access to electricity, with the national electrification rate increasing from 70% in 2015 to 95% in 2021. The government is also investing in renewable energy sources, such as solar and wind power, to reduce reliance on fossil fuels.
Dealing with Construction Permits
Dealing with construction permits in Indonesia can be a time-consuming and complex process. The country ranks 98th out of 190 countries in this category. However, the government has implemented several reforms to simplify the process, including the introduction of an online system for building permit applications. The average time to obtain a building permit has also decreased from 204 days in 2018 to 138 days in 2020.
Getting Credit in Indonesia
Getting credit in Indonesia can be a challenge, especially for small and medium-sized enterprises (SMEs). The country ranks 36th out of 190 countries in the getting credit category. However, the government has been working to improve access to credit for SMEs through initiatives such as the Credit Guarantee Program for SMEs. The government is also encouraging the development of fintech companies to provide alternative sources of financing.
Protecting Minority Investors
Protecting minority investors in Indonesia is a key challenge, with the country ranking 124th out of 190 countries in this category. The government has introduced several reforms to improve investor protection, including the establishment of the Indonesia Stock Exchange and the Financial Services Authority. However, more needs to be done to ensure that minority investors are adequately protected.
Paying Taxes in Indonesia
Paying taxes in Indonesia can be a complex and time-consuming process, with the country ranking 135th out of 190 countries in this category. However, the government has introduced several reforms to simplify the tax system and reduce the burden on businesses. For example, the government has introduced a single identification number for taxpayers and simplified the tax registration process.
Trading Across Borders
Trading across borders in Indonesia can be challenging due to complex regulations and customs procedures. The country ranks 73rd out of 190 countries in this category. The government has been working to simplify the process through initiatives such as the Indonesia National Single Window, which allows businesses to submit import and export documents online. However, more needs to be done to reduce the time and cost of trading across borders.
Enforcing Contracts in Indonesia
Enforcing contracts in Indonesia can be a time-consuming and costly process, with the country ranking 94th out of 190 countries in this category. The government has introduced several reforms to improve the efficiency of the judicial system, including the establishment of commercial courts and the introduction of an online case management system. However, more needs to be done to ensure that contracts are enforced in a timely and efficient manner.
Conclusion
Despite its challenges, Indonesia is making progress in improving its ease of doing business ranking. The government has implemented several reforms to simplify the process of starting and running a business, as well as improving access to financing and energy. However, more needs to be done to ensure that businesses are protected and that regulations are streamlined. For those interested in doing business in Indonesia, it is important to be aware of the challenges and opportunities that exist and to work with a knowledgeable and experienced team.