Indonesia Falls in 2019 Ease of Doing Business Ranking
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If President Joko “Jokowi” Widodo wants to see Indonesia join the top 40 countries in the World Bank’s Ease of Doing Business ranking under his watch, he should make sure he wins re-election next year. Indonesia slipped one place to 73rd, behind Greece, the Ukraine and Kyrgyzstan, in the 2019 Ease of Doing Business report, released late on Wednesday. The president has set a target for the country to be in the top 40 by next year, but his second term will be decided in April, while the next report would not be out until next November.
While Indonesia has made considerable progress in reforming the regulatory environment for businesses since Jokowi took office in 2014, Wednesday’s report reveals the stark realities of the country’s limited capacity to continue with these reforms.
The country scored 67.96 out of 100 in the report’s aggregate measurement, up by only 1.46 points from last year. Slovenia, a Central European nation of only 2 million people and a $49 billion economy, sits in the coveted 40th place with an overall score of 75.61.
Indonesia, for one, issued new rules that make starting a business, registering property and obtaining credit, easier for businesses and make it cheaper for them to get electricity. But reform stagnated in areas such as obtaining construction permits, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvencies.
These bottlenecks allow economies like China, Kenya and Kyrgyzstan to overtake Indonesia. China made a leap to 46thplace in this year’s report, from 78th last year. Kenya moved up 19 places to 61st, while Kyrgyzstan went up seven places to 70th.
Still, the report highlights Indonesia’s success in reforming its judiciary system and making the country a case study for others to emulate. The Supreme Court introduced training programs in 2003 for new and experienced judges, as well as special training for judges presiding over more specialized cases, such as those involving commercial or maritime disputes.
“Indonesia’s efforts to train judges following judicial reforms bore positive results through a substantial decrease in court backlogs and insolvency case resolution times,” the World Bank said in the report.
Questions & Answers
Q.What was Indonesia's target ranking in the Ease of Doing Business report?
What was Indonesia's target ranking in the Ease of Doing Business report?
President Jokowi aimed for Indonesia to be in the top 40 countries by next year. However, Indonesia slipped one place to 73rd in the latest report, making this target seem challenging given the current trend.
Q.What specific reforms did Indonesia implement to improve its business environment?
What specific reforms did Indonesia implement to improve its business environment?
Indonesia introduced new rules making it easier to start a business, register property, and obtain credit. These changes also reduced the cost for businesses to get electricity, showing some positive regulatory adjustments.
Q.Which areas of reform still present significant challenges for Indonesia?
Which areas of reform still present significant challenges for Indonesia?
Reform stagnated in several critical areas, including obtaining construction permits, protecting minority investors, and paying taxes. Issues with trading across borders, enforcing contracts, and resolving insolvencies also remain bottlenecks.
Q.How did judicial reforms contribute to Indonesia's performance?
How did judicial reforms contribute to Indonesia's performance?
The Supreme Court's training programs for judges, including specialised courses, led to positive results. The World Bank noted a substantial decrease in court backlogs and improved insolvency case resolution times due to these efforts.
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