Fitch Ratings revised down Indonesia’ economic growth forecasts from 5.1 percent to 4.8 percent in 2020 amid the COVID-19 outbreak, it said on Thursday (03/19) - Photo: Special

JAKARTA (TheInsiderStories) – Indonesia’ Ease of Doing Businesses (EoDB) stayed at 73 of 190 countries, World Bank reported on Friday (10/25). But, Indonesia recorded an increase on the index from 67.96 last year to 69.6.

The Bank highlighted a number of factors that support the EoDB in the country was the process of starting a business, taxation and cross-border trading activities. Indonesia has become one of the lower middle income category countries that has the most labor regulations, especially regarding recruitment, said the report.

Jakarta is considered to facilitate the process of starting a business by introducing an online platform for business licenses and replacing print certificates with electronic certificates. The agency also highlighted the employment matters.

However, in terms of taxation is deemed easier, because of the online filling system and the introduction of a new system for taxpayers, which applies in Jakarta and Surabaya. In addition, business activities in the two cities have become much easier, after the government introduced an electronic case management system for law enforcement.

“Indonesia makes cross-border trade easier by increasing the online processing of customs declarations. It is applied in Jakarta and Surabaya,” the report stated.

The World Bank also saw that Indonesia has made the most improvements, five of ten sectors, to facilitate business. This number is the second largest globally, equivalent to Myanmar, and is behind China which makes improvements in eight sectors.

One indicator that is considered better in Indonesia is the ease of starting a business. Indonesia made improvements by introducing an Online Single Submission which facilitated the business licenses.

Meanwhile, on the electrification side, Indonesia has increased its electricity supply capacity well. The improvements of the electricity network maintenance system aims to increase the productivity of the business world.

The process of paying taxes is also considered to be getting better with the easier online reporting and tax payment. In terms of trading across borders, Indonesia has made this process easier by improving the online system of declaration of export goods.

Another sector that gets a positive value is law enforcement of agreements. It can be seen from the online case management system for judges.

East Asia Pacific

The World Bank also highlighted economies in the East Asia and Pacific region carried out 33 business-climate-enhancing reforms during the past year, while many economies in the region make doing business easy for small and medium-sized entrepreneurs by global standards, the overall pace of reforms slowed.

The number of reforms in the region fell by ten over the 12-month period to May 1 and reforms were implemented in fewer than half of its economies (12 out of 25). Even so, five East Asia and Pacific economies are among the top 25 global performers, including Singapore (2nd), Hong Kong SAR, China (3rd); Malaysia (12th), Taiwan, China (15th); and Thailand (21st). China is among the top 10 improvers for a second consecutive year.

“The reform impetus in the East Asia and Pacific region continues, with significant improvements made by some economies, such as China. Sustained progress is key to improving the domestic business climate and enabling private enterprises,” said Rita Ramalho, Senior Manager of the World Bank’ Global Indicators Group.

With eight reforms, China improved regulation in most areas measured by doing business and implemented the most reforms in the region. Beijing simplified requirements for low-risk construction and streamlined processes to obtain water and drainage connections, cutting the wait for all required permits by 44 days.

Construction is also now safer due to stricter qualification requirements for professionals in charge of technical inspections. Authorities improved the application process for connecting a new warehouse to the electrical grid and made electricity fees more transparent.

China helped small and medium-sized enterprises access international markets by implementing advance cargo declaration, upgrading port infrastructure, optimizing customs administration, and publishing fee schedules.

Indonesia and Myanmar carried out five reforms each – most involving the use of information and communication technologies. For instance, the country introduced an online filing and payment system for major taxes and an electronic case management system for judges.

Further, authorities enhanced online processing of export customs declarations, reducing border compliance time for exporting by seven hours. While, Myanmar strengthened construction quality control, improved water and sanitation infrastructure and made the building permitting process more efficient, advancing the country to 46th place on the dealing with construction permits indicator.

In addition, Myanmar started publishing performance measurement reports to ease contract enforcement and introduced an online platform for company registration.

With three reforms in the past year, the Philippines continued its reform momentum. Among other changes, the Philippines eliminated the minimum capital requirement for domestic firms. The country also streamlined the process for obtaining an occupancy certificate.

Brunei Darussalam, Lao People’ Democratic Republic, Papua New Guinea and Vietnam each carried out two reforms. Brunei Darussalam started publishing reports measuring the performance of the Bandar Seri Begawan Intermediate Court.

Among other initiatives, Lao PDR made getting electricity easier by deploying an automated Supervisory Control and Data Acquisition system for outage monitoring and service restoration. Vietnam upgraded the information technology infrastructure used by the General Department of Taxation, making the process of paying taxes easier for entrepreneurs.

Overall, the region’ economies focused reform efforts on improvements in the areas of dealing with construction permits and starting a business with seven and five reforms, respectively.

The region’ economies perform well in the areas of getting credit, getting electricity, and dealing with construction permits. Connecting a newly built warehouse to the electrical grid takes 63 days in the region, almost 12 days fewer than the average among OECD high-income economies. Likewise, getting a construction permit in the region takes 20 days fewer than among OECD high-income economies.

At the same time, the region still underperforms in several areas, such as contract enforcement, where there is need for more widespread adoption of international best practices including alternative dispute resolution systems and the creation of specialized commercial courts.

Resolving a commercial dispute through a local first-instance court costs on average 47.2 percent of the claim value, more than twice the average of 21.5 percent among OECD high-income economies.

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