Head of BKPM Franky Sibarani (left). Photo by: RES
Indonesia has achieved global recognition by rising up through the ranks in the recently published “2016 Ease of Doing Business” (EODB) survey. According to official results released by the survey’s organizers, the World Bank Group, Indonesia’s advanced 11 spots from 12oth position to 109th, out of the 189 countries that were surveyed.
The consistent implementation and application of EODB initiatives here since 2007 has thus ensured that Indonesia has now successfully secured a position within the top 24 countries whose reformation processes cover three indicators or more.
According to the official survey, Indonesia’s rise through the ranks has been supported by improvements across five main indicators, specifically building-license processing, expansion of the country’s electricity grid, tax-payment mechanisms, access to credit and the enforcement of contracts.
There has also, however, been decline in a number of other areas, including new-business creation, property registration, inter-state trade, investor protection, and the settlement of bankruptcy cases. Franky Sibarani, the Head of the Indonesian Investment Coordinating Board (BKPM), explained that the survey utilizes data that was compiled between 2 June 2014 and 1 June 2015.
“During this period, the World Bank noted improvement across three areas, specifically business creation, access to credit, and tax-payment mechanisms,” asserted Mr. Sibarani during a press conference held at the BKPM’s Jakarta headquarters on 28 October 2015.
According to the survey results, Indonesia’s business-creation indicator declined from 155th position to 173rd. On a more positive note however, the World Bank also noted that the average period as regards being able to start a business here had been dropped from 52.5 days to just 47.8 days. Another notable improvement can be seen in Indonesia’s credit-access indicator, in main due to the contribution of an online fiducia that enables people to search out debtors’ names. Indonesia’s rule-of-law index has also increased from four to five.
Meanwhile, the tax-payment mechanism indicator is also showing major improvement across two areas. Firstly, the electronic payment of social security (BPJS) now combines 12 payments into a single payment, while the number of payment types has been reduced from 65 to 54 articles per annum. And secondly, the processing timeframe has also been reduced, and is down from an average of 253.5 hours to 234 hours per annum. Moreover, the tax rate has also been slashed from 31.4% to 29.7% of profits.
Commenting on this issue, Tamba Hutapea, Deputy at the BKPM’s Capital Investment Planning Division, asserted that Indonesia’s survey ranking can rise even higher. Indeed, several recent improvements were only implemented after the end of the survey period, while other improvements are still to be disseminated properly and effectively.
By way of example, Mr. Hutapea referred to the improvement in service demonstrated by the new One-Stop Integrated Service (PTSP), which is currently available in Jakarta and Surabaya. The PTSP service was only inaugurated after the survey period had already ended and simplifies procedures while shortening the timeframes involved in the processing of Trade Business Licenses and Company Registrations. Business license processing can now be completed in just three days, however this service was only introduced in August 2015, which fell outside the survey period.
“Online General Legal Administration (AHU) now only takes a single day, and comprises of the registration of a company name and the legitimate establishment of the company under that name. Payments for company-name registration as non-tax state income (PNBP) can also now be completed online. However, the requirements have also been increased from ten to 13 documents,” asserted Mr. Hutapea.
Indonesia’s contract-enforcement indicator, which has also risen from 172nd spot to 170th on the EODB survey, represents another excluded indicator. The Supreme Court decision to simplify contract enforcement through small-claims lawsuits was issued on August 2015, and thus also fell outside the survey period.
Furthermore, the BKPM has also noted that at least two indicators were not assessed by the World Bank at all in the 2016 EODB survey. Specifically, the business-creation and contract-enforcement indicators were not looked at at all. One notable improvement in Indonesia as regards the starting of businesses is the ability to register a business name without the need for a notary. Unfortunately though, this new policy has yet to be disseminated properly and is thus still not widely known throughout the business community and, of course, by EODB respondents.
Based on these arguments, Mr. Hutapea is optimistic that Indonesia still has enormous potential to rise even higher in the EODB Survey ranks. Hutapea further affirmed the government’s plan to remain committed to the country’s various EODB programs, so that the next survey results will show Indonesia in an even better light.
Head of BKPM Franky Sibarani (left). Photo by: RES
Indonesia has achieved global recognition by rising up through the ranks in the recently published “2016 Ease of Doing Business” (EODB) survey. According to official results released by the survey’s organizers, the World Bank Group, Indonesia’s advanced 11 spots from 12oth position to 109th, out of the 189 countries that were surveyed.
The consistent implementation and application of EODB initiatives here since 2007 has thus ensured that Indonesia has now successfully secured a position within the top 24 countries whose reformation processes cover three indicators or more.
According to the official survey, Indonesia’s rise through the ranks has been supported by improvements across five main indicators, specifically building-license processing, expansion of the country’s electricity grid, tax-payment mechanisms, access to credit and the enforcement of contracts.
There has also, however, been decline in a number of other areas, including new-business creation, property registration, inter-state trade, investor protection, and the settlement of bankruptcy cases. Franky Sibarani, the Head of the Indonesian Investment Coordinating Board (BKPM), explained that the survey utilizes data that was compiled between 2 June 2014 and 1 June 2015.
“During this period, the World Bank noted improvement across three areas, specifically business creation, access to credit, and tax-payment mechanisms,” asserted Mr. Sibarani during a press conference held at the BKPM’s Jakarta headquarters on 28 October 2015.
According to the survey results, Indonesia’s business-creation indicator declined from 155th position to 173rd. On a more positive note however, the World Bank also noted that the average period as regards being able to start a business here had been dropped from 52.5 days to just 47.8 days. Another notable improvement can be seen in Indonesia’s credit-access indicator, in main due to the contribution of an online fiducia that enables people to search out debtors’ names. Indonesia’s rule-of-law index has also increased from four to five.
Meanwhile, the tax-payment mechanism indicator is also showing major improvement across two areas. Firstly, the electronic payment of social security (BPJS) now combines 12 payments into a single payment, while the number of payment types has been reduced from 65 to 54 articles per annum. And secondly, the processing timeframe has also been reduced, and is down from an average of 253.5 hours to 234 hours per annum. Moreover, the tax rate has also been slashed from 31.4% to 29.7% of profits.
Commenting on this issue, Tamba Hutapea, Deputy at the BKPM’s Capital Investment Planning Division, asserted that Indonesia’s survey ranking can rise even higher. Indeed, several recent improvements were only implemented after the end of the survey period, while other improvements are still to be disseminated properly and effectively.
By way of example, Mr. Hutapea referred to the improvement in service demonstrated by the new One-Stop Integrated Service (PTSP), which is currently available in Jakarta and Surabaya. The PTSP service was only inaugurated after the survey period had already ended and simplifies procedures while shortening the timeframes involved in the processing of Trade Business Licenses and Company Registrations. Business license processing can now be completed in just three days, however this service was only introduced in August 2015, which fell outside the survey period.
“Online General Legal Administration (AHU) now only takes a single day, and comprises of the registration of a company name and the legitimate establishment of the company under that name. Payments for company-name registration as non-tax state income (PNBP) can also now be completed online. However, the requirements have also been increased from ten to 13 documents,” asserted Mr. Hutapea.
Indonesia’s contract-enforcement indicator, which has also risen from 172nd spot to 170th on the EODB survey, represents another excluded indicator. The Supreme Court decision to simplify contract enforcement through small-claims lawsuits was issued on August 2015, and thus also fell outside the survey period.
Furthermore, the BKPM has also noted that at least two indicators were not assessed by the World Bank at all in the 2016 EODB survey. Specifically, the business-creation and contract-enforcement indicators were not looked at at all. One notable improvement in Indonesia as regards the starting of businesses is the ability to register a business name without the need for a notary. Unfortunately though, this new policy has yet to be disseminated properly and is thus still not widely known throughout the business community and, of course, by EODB respondents.
Based on these arguments, Mr. Hutapea is optimistic that Indonesia still has enormous potential to rise even higher in the EODB Survey ranks. Hutapea further affirmed the government’s plan to remain committed to the country’s various EODB programs, so that the next survey results will show Indonesia in an even better light.