12th Economic Policy Package Indonesia: Ease of Doing Business

Nasution informed that the number of procedures required to establish a business has been cut from 94 procedures to 49, while the number of permits has been curbed from nine permits to six. This should manage to drastically cut the time that is required to open a business in Indonesia.

Indonesia's 12th Economic Policy Package:

Indicator	Prior to 12th Package	After 12th Package
Starting a Business	12 procedures 47 days Costs at IDR 6.8 - 7.8 million	7 procedures 10 days Costs at IDR 2.7 million
Construction of Building	17 procedures 210 days IDR 86 million for 4 permits	14 procedures 52 days IDR 70 million for 3 permits
Tax Payments	54 payments	10 online payments

^{Source: Government of Indonesia}

Earlier, Indonesian President Joko Widodo said he wants Indonesia to rise in the World Bank's Doing Business ranking from 109th place (2016) to 40th before the end of his term. However, he admits that this is a too ambitious target and therefore softened his previous words. Widodo says he would now be content to see the ranking of Indonesia improve to between 60-70 in the next couple of years. A concern among analysts is that Indonesia's ranking is far below the ranking of its regional peers such as Taiwan (11), Malaysia (18), Japan (34), Thailand (49), Vietnam (90), and the Philippines (103), indicating the country is not as competitive in terms of business.

Doing Business 2016 Ranking:

1. Singapore	11. Taiwan
2. New Zealand	18. Malaysia
3. Denmark	34. Japan
4. South Korea	49. Thailand
5. Hong Kong	84. China
6. United Kingdom	90. Vietnam
7. United States	103. Philippines
8. Sweden	109. Indonesia
9. Finland	127. Cambodia
10. Sweden

^{Source: World Bank 'Doing Business 2016'}

Ease of Doing Business in Indonesia:

Please note that the 2014 and 2015 rankings are revised rankings

Subject	2014 Rank	2015 Rank	2016 Rank
Starting a Business	158	163	173
Dealing with Construction Permits	150	110	107
Getting Electricity	101	45	46
Registering Property	112	131	131
Getting Credit	67	71	70
Protecting Minority Investors	43	87	88
Paying Taxes	158	160	148
Trading Across Borders	61	104	105
Enforcing Contracts	171	170	170
Resolving Insolvency	71	73	77

^{Source: World Bank's Doing Business Reports}

Regarding the 12 policy packages, Nasution said their implementation have been completed for 94.5 percent (including the 12th one that was unveiled yesterday). One of the characteristics of Indonesia is that there is a wide discrepancy between government planning and the actual implementation of these plans. As such, Nasution's words provide hope although it will require more (objective) research to assess whether his words are correct.

Nasution added that the government is also preparing two other revision concerning (1) income tax, and (2) land and building rights acquisition duties (BPHTB).

Economic Stimulus Packages of the Indonesian Government:

Package	Unveiled	Main Points
1st	9 September 2015	• Boost industrial competitiveness through deregulation • Curtail red tape • Enhance law enforcement & business certainty
2nd	30 September 2015	• Interest rate tax cuts for exporters • Speed up investment licensing for investment in industrial estates • Relaxation import taxes on capital goods in industrial estates & aviation
3rd	7 October 2015	• Cut energy tariffs for labor-intensive industries
4th	15 October 2015	• Fixed formula to determine increases in labor wages • Soft micro loans for >30 small & medium, export-oriented, labor-intensive businesses
5th	22 October 2015	• Tax incentive for asset revaluation • Scrap double taxation on real estate investment trusts • Deregulation in Islamic banking
6th	5 November 2015	• Tax incentives for investment in special economic zones
7th	4 December 2015	• Waive income tax for workers in the nation's labor-intensive industries • Free leasehold certificates for street vendors operating in 34 state-owned designated areas
8th	21 December 2015	• Scrap income tax for 21 categories of airplane spare parts • Incentives for the development of oil refineries by the private sector • One-map policy to harmonize the utilization of land
9th	27 January 2016	• Single billing system for port services conducted by SOEs • Integrate National Single Window system with 'inaportnet' system • Mandatory use of Indonesian rupiah for payments related to transportation activities • Remove price difference between private commercial and state postal services
10th	11 February 2016	• Removing foreign ownership cap on 35 businesses • Protecting small & medium enterprises as well as cooperatives
11th	29 March 2016	• Lower tax rate on property acquired by local real estate investment trusts • Harmonization of customs checks at ports (to curtail dwell time) • Government subsidizes loans for export-oriented small & medium enterprises • Roadmap for the pharmaceutical industry
12th	28 April 2016	• Enhancing the ease of doing business in Indonesia by cutting procedures, permits and costs

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Lex McGuir | 17 May 2016 14:13

Good heavens! It still looks very involved.