World Bank: Indonesia has terrible business climate

LATEST NEWS
October 24, 2004

Indonesian President Susilo Bambang Yudhoyono campaigned on a platform of improving his nation's business climate. Good idea. The World Bank says Indonesia's current business climate is one of the worst in the world.

An unflinching column in the nation's largest newspaper lays out the bad news. The Jakarta Post says the World Bank ranks Indonesia along with Laos, Cambodia and Vietnam in the bottom quartile of 145 nations surveyed.

"Entrepreneurs in those countries found it more difficult to start, operate, or close a business than in most other East Asian nations," the newspaper said. "Seven economies in the East Asia-Pacific region ranked in the top quartile... New Zealand, Australia, Singapore, Hong Kong, Thailand, Taiwan and Malaysia."

In East Asia, on average, it takes an entrepreneur nine prosecures, 60 percent of income per capita and 61 days to found a business. In Indonesia it takes an average 151 days to get started. The World Bank has often noted that Indonesia has a messy legal system that makes it difficult for companies to know for sure where they stand. Even if they are meticulous about having all the necessary approvals, they face corruption. With so many friendlier nations nearby, investors usually decide to skip Indonesia and invest someplace else, though Indonesia is the world's fourth most populous nation.

Interestingly, what the World Bank suggests is something akin to what the City and County of Honolulu is currently setting up for development permits: one-stop shopping where a single office facilitates all the necessary approvals.


(c) 2004 American City Business Journals Inc.
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