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NEWS UPDATES Asean Affairs  6 November 2010

Indonesia falls in Ease of Business ranking

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Indonesia's efforts to improve its business climate and attract more investment may seem to be in top gear, but neighboring countries are sprinting past, a World Bank-endorsed study shows.

The Doing Business 2011 list, released by the International Finance Corporation, a private investment arm of the Washington-based World Bank, showed that Indonesia ranked 121st out of 183 countries in terms of overall ease of doing business, six places lower than last year.

Singapore tops the list, while Thailand is 19th, Malaysia 21st, Vietnam 78th and Brunei 112th. Behind Indonesia were Cambodia, the Philippines and Laos.

The study, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 183 economies, showed that countries in East Asia and the Pacific were among those that took the most steps to make it easier for local companies to operate.

Indonesia, Southeast Asia's largest economy, ranked 155th in the subcategory of starting a business, 60th for dealing with construction permits, 98th for registering property, 116th for getting loans, 44th for protecting investors, 130th for paying taxes, 47th for trading across borders, 154th for enforcing contracts and 142nd for closing a business.

Indonesia moved up the rankings only in starting a business and trading across borders.

Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), said the drop in overall ranking was inevitable because other countries kept making big improvements while Indonesia still had a lot of "homework" to do.

"Indonesian bureaucrats complicate business in this country, not only in the capital but also in the regions," he said.

"In addition, legal certainty is still weak." Takashi Nakayama, president director of the Japan External Trade Organization in Indonesia, said tax issues were a key factor that hampered investment in Indonesia and illustrated the legal uncertainties that many companies face here.

The World Bank nonetheless praised the country's single-window system for cutting the red tape involved in selling Indonesian products overseas.

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