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As RI's Doing Business ranking stagnates, govt needs to push policy reform: Economists

Indonesia's ranking in the World Bank’s 2020 Ease of Doing Business index has remained stagnant at 73rd out of 190 countries despite the government’s deregulation efforts and policy reform.

Adrian Wail Akhlas and Marchio Irfan Gorbiano (The Jakarta Post)
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Jakarta
Fri, October 25, 2019

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As RI's Doing Business ranking stagnates, govt needs to push policy reform: Economists Great potential: The 2,622-hectare-Special Economic Zone of Arun Lhokseumawe is ready for future investment of US$ 3.8 billion by the year 2027 with an estimated 40,000 new jobs in the fields of oil and gas, petrochemicals, logistics, agro produce and pulp paper. (Courtesy of Pemprov Aceh)

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conomists have called on the government to speed up deregulation and make policy reforms to boost the country’s ease of doing business as President Joko “Jokowi” Widodo’s administration struggles to attract more foreign direct investment to support Indonesia’s sluggish economic growth.

University of Indonesia rector Arie Kuncoro told The Jakarta Post on Thursday that the government would need to develop soft infrastructure by easing the license-procurement process and to speed up deregulation efforts to make doing business in the country faster and easier.

“The government needs to restructure the bureaucracy and regulations to boost efficiency and investments,” said Arie who is also a senior economist, adding that there were several ongoing issues that the government would need to work on, such as labor regulations and the process of starting a business.

“The government should have the courage to change the Labor Law although it will not be easy as there is a complicated situation in which political processes and labor unions are involved,” said Arie, adding that “the setting up of a business takes days to process, this needs to be shortened.”

The country’s ranking in the World Bank’s 2020 Ease of Doing Business (EODB) index has remained stagnant at 73rd out of 190 countries despite the government’s deregulation efforts and policy reform, undermining Jokowi’s target for Indonesia to be ranked 40th next year.

According to the report, released on Thursday by the Washington, DC-based lender, Indonesia scored 69.6 out of 100, an increase of 1.64 points. The increase was slightly higher than last year’s increase of 1.42 points to 67.96.

The World Bank has chosen Jakarta and Surabaya in East Java for the EODB survey as it highlighted the two cities as examples of Indonesia’s reforms regarding starting businesses, paying taxes, trading across borders, improving electricity and enforcing contracts, which are the index’s components.

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