Business plays an important role in improving a country’s economy, including Indonesia. It provides goods, services, and even job opportunities. But it takes high ease of doing business in a country so that people can do their business with more ease to move around. Ease of doing business refers to an index to measure regulations that affect businesses and investments.
So, as the index is higher, the ease of doing business Indonesia will increase too. To give you a glimpse about the ease of doing business in Indonesia, here are several important facts you need to know. These are important facts for investors.
Why invest in Indonesia?
Indonesia is your investment destination. Abundant natural resources, a young and technically trained work force and a large and growing domestic market, combined with an improving investment climate and a higher global profile, are just a few of Indonesia’s salient strengths.
As the fourth biggest population in the world, more than 53% of the people live in urban areas with a modern lifestyle and increasing purchasing power. Demographically speaking, Indonesia is a place of many talents in southeast Asia.
The other reason why investors should invest in Indonesia is the significantly increased demographic bonuses. The demographic bonus is a condition where the productive age is more than the non-productive population in Indonesia.
Recently, a business model that is growing in Indonesia is not limited to contracts or consignment manufacturing plans. Instead, development has been focused on a capital-intensive business model that does not rely solely on Indonesian labor in some industries such as consumer goods, cosmetics, automotive, components and many more.
Indonesia’s ranks spiked
Today many plans involve joint ventures with local representation in Indonesia in making business decisions such as investments, determining target markets, making capital expenditures, financing, and many more.
Among 190 economies in the ease of doing business, Indonesia ranks in the 73rd place. Indonesia is contentiously trying to attract foreign investors to come and invest in the country by improving the Ease of Doing Business (EODB) rank. One of the main focuses for this year improvement is to cut the procedures of Starting a Business, one of the EODB indicators.
Based on World Bank Ease of Doing Business (EoDB) 2020, Indonesia ranks 73rd out of 190 countries surveyed. Some indicators that Indonesia’s still has large room for improvement include Starting a Business, Construction Permit, Property Registration, Cross-Border Trade, and Law Enforcement of Contracts.
Based on the official report, Indonesia scores 67.96 out of 100. The country experiences an increase of 1.42 point, but the increase is lower than last year when the score increases 2.25 points to 66.54.
Benefits of investing in Indonesia
Indonesia seems to be doing well in several other indicators such as starting businesses (from 144 to 134), registering property (from 106 to 100), and attaining credit (from 55 to 44).
Even though the ease of doing business Indonesia has jumped down to 73rd from 72nd place, that doesn’t mean the country’s doing worse than before. Indonesia has made progress in several sectors. Since Joko Widodo became a president in 2014, the regulatory environment for businesses in Indonesia has improved significantly.
Several signs of progress have been made to improve the ease of doing business in the country. For instance, Indonesia issues new regulations that make obtaining credit and starting a business easier for businesses. The regulation also allows people to get electricity at a cheaper price and register a property for their businesses. Moreover, Indonesia has also successfully reformed its judiciary system which results in a decrease in court backlogs and insolvency case resolution times.
Indonesia is playing a more dominant role in global affairs. It is Southeast Asia’s only member of the G-20 and currently the president of the G-20. Indonesia is also an active voice for developing world’s concerns.
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Indonesia's economic conditions better than average
Challenges in investing in Indonesia
Indonesian Government and Bureaucracy systems and regulations are still considered as the most complicated among other countries. It is very likely for investors to face some hurdles and obstacles in doing business and invest in Indonesia. The important investment process like Company registration, Work permit, are still facing many difficulties and far from easy.
The government through the investment coordinating board already make commitments and renew policies to reform their bureaucracy to ease the investment flow and process.
Companies that can improve efficiency can quickly outperform the competition here. investors are advised to check the latest “Negative Investment Lists” published by BKPM (Investment Coordinating Board). These lists regularly change and specify in detail the degree of foreign ownership permitted and whether these must be done in partnership with local companies and more. There’s still a chance for Indonesia to improve its rank in the ease of doing business. Let’s hope there will be more regulations that support businesses so that the ease of doing business Indonesia will increase. In the meantime, just keep doing what you do best, which is to grow your business and invest in Indonesia.
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