Indonesia Unfriendly to Business: World Bank

Jakarta Globe & Bloomberg | November 04, 2010

Jakarta. Indonesia has been hammered in a World Bank report ranking countries with the most business-friendly regulations.

The World Bank's International Finance Corporation
has ranked Indonesia 121 out of 183 countries with the
most business-friendly regulations. (Antara Photo)

In terms of overall ease of doing business, the International Finance Corporation ranked Indonesia 121 out of 183 countries, sandwiched between the small Pacific Island of Palau in 120th place and Uganda.

Malaysia, in comparison, was ranked well about its neighbor in 21st position, though ahead of the Philippines in 148th.

In terms of starting a business, Indonesia was ranked 155 out of the 183 countries, dealing with construction permits (60), registering property (98), getting credit (116), protecting investors (44), paying taxes (130), trading across borders (47), enforcing contracts (154) and closing a business (142).

Singapore, which is in the running to be the world’s fastest-growing economy this year, is listed as the most business friendly, ahead of the special administrative region of Hong Kong, New Zealand, the United Kingdom, the United States, Denmark, Canada, Norway, Ireland and Australia.

The city-state, where a company can be started in three days and where some women are taxed less on their personal income than men, topped the bank’s “Doing Business” report for the fifth year in a row.

The study also showed that East Asia and Pacific nations such as Vietnam were among countries that took the most steps to make it easier for local companies to operate.

Countries deemed the easiest to do business often have electronic procedures, as in the UK where commercial court filing can now be done online, according to the report.

The report, which helps private investors decide where to direct funds by looking at the ease of doing business for domestic companies of small and medium size, showed some emerging economies losing ground, with Brazil slipping to 127 from 124 and Russia sinking to 123 from 116.

China, which was 79 this year versus 78 a year ago, is still among the countries that have improved the most over the past five years, Neil Gregory, one of the report’s authors, told Bloomberg.

The world’s second-largest economy introduced 14 policy changes, such as the introduction of a credit registry that now has 64 percent of adults covered, according to the report.

Of the 183 countries in the report, Chad was in last place. The Central African Republic was next and Burundi was third to the last. Afghanistan slipped to 167, from 165, and Iraq was just above Afghanistan.

East Asia and Pacific nations were for the first time in the report’s eight-year history among the most “active” in taking business-friendly measures, according to the report.

“Emerging-market economies such as Indonesia, Malaysia and Vietnam took the lead, easing start-up, permitting and property registration for small and medium-size firms and improving credit information sharing,” it said.

The report rates countries on rules that affect starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. It reviews regulations on employing workers and the availability of reliable electricity connections, though they are not criteria for the ranking.

In other highlights, Kazakhstan took top honors for the most-improved business environment in 2009/10 and the report notes that about 85 percent of the world’s economies have made it easier for entrepreneurs to operate in the past five years.