the Indonesian government appears to reduce the number of days it takes to start a business from 47 days to 10. But experts and analysts remain cautious.
Although it has a burgeoning middle class and by far the largest population in the region - 250 million people spread over more than 17,000 islands - Indonesia economy and small and medium enterprises -Companies (SME) business growth is far behind other countries in South Asia, namely Singapore, Brunei and Malaysia.
The World Bank said GDP per capita trapped approximately US $ 3.492 in 2014. Singapore Indonesia brought the US $ 56,284, while GDP per capita Brunei was clocked at approximately US $ 40,979. Malaysia came behind them, but still miles ahead of Indonesia, to US $ 11,307.
Analysts have long been concerned about the difficulty of doing business in the archipelago. Again, the nation is well below its regional counterparts Thailand, Brunei, and Malaysia, while Singapore is the outlier, ranked as the general easiest place in the world to set up a new company. World Bank Doing Business 2016 report stressed that Indonesia is ranked 108th out of 189 countries for ease of doing business. Namely, that means it's super hard to build a local business.
But that could soon change, as the president recently announced what could be a major overhaul. Jokowi wants to make it easy for anyone to do business in the country. As such, the government seeks to eliminate about 3,000 regional government regulations that made it difficult for companies to set up and begin to function. In ., the packet has 94 procedures cut to 49. The time spent on procedures should increase from 1566 days to 132 days. The costs should also fall by Rp.92.8 million (US $ 7,036) for Rp.72.7 million (US $ 5.440).
"It is a headache to watch the proceedings. But I'm there and done that," said Jokowi , shaking his head in disappointment at a press conference in the State Palace. The news came as the president unveiled entire economic policy of his administration 12 since September.
Jokowi, who used to be a furniture entrepreneur before entering politics, claims to understand the situation that the most local SMEs face today.
For this reason, over the next two years, the government is ambitiously hopes to boost Indonesia 40 number on the World Bank list before the end of his term in 2019.
in Indonesia, all who wanted to start a business was previously required to complete 12 procedures that have an average of 47 days. budding entrepreneurs have also had to bear a cost of about Rp.6.7 million (US $ 500) for Rp.7.8 million (US $ 580). Under new regulations Jokowi, incorporating a new business entity, it would complete seven founders of procedures that take about ten days, and incurring a cost of about Rp.2.7 million (US $ 200).
Previously, if someone wanted to build a place to do business, the process was nightmarish at best. Construction required 17 formal procedures, 210 days and would generally cost Rp.86 million ($ 6,400 US) just to make it legal. Under new regulations Jokowi, the process would be slightly less painful, pointing to 14 procedures, 52 days and having a Rp.70 million price tag (US $ 5.200) per case.
The tax is another important factor. In the past, entrepreneurs have been forced to deal with 52 different taxes that must be paid online. Under the new procedure, the business owners would be required to pay 14 different taxes, all of which can be made online.
In terms of getting electricity connected to his business, Jokowi said he would now take four procedures to subscribe to a new grid and it will take about 25 days to complete. This represents a decrease of five previous procedures over a period of 80 days.
For companies in Indonesia seeking to import and export goods, the President said the government reduces the time in port 4.5 days to a maximum of three days.
"Cross-border trade, which has already been done online, can now be done online with a way to send a notification when the goods are exported and imported. Moreover, there will be a limit to keep the goods at the port for up to three days, "said the president. Overall, the new initiative of the Indonesian government aims to help SMEs to cut red tape that might otherwise prevent them from starting.
Although in theory the content of the stimulus package is good for SMEs, great uncertainty about weaving its effective implementation in Indonesia. The archipelago is notorious for widespread discrepancies between government planning and actual execution.
Enny Sri Hartati, director of the Nation Institute for Development of Economy and Finance, echoed this view in an interview with Indonesia Expat .
"This is a good initiative by the government. I think it will help SMEs and economic growth in Indonesia. But something that becomes my concern is the consistency of the government and how they plan to fully implement these regulations. for example, the first point is to reduce the procedures from December to September, then cutting the time it takes [to incorporate] 47 down to ten days, and finally [lowering] the cost to Rp.2.7 million (US $ 200) when starting a business, "said Hartati. "In real life, will this implementation is compatible or not? It is hard to say."
William Suryawijaya, an investment analyst at financial advisory firm based in Jakarta Asjaya Indosurya Securities accepts a certain extent. He said, "If this new regulation can be done consistently, of course, this will attract investors to do business in Indonesia" It is true that this reform will take time to be fully implemented. ", But at least now we have a guide to where the Indonesian economy will go, "said Suryawijaya Indonesia Expat .
According to Franky Sibarani, chairman of the Investment Coordinating Board in Indonesia, the implementation of the first 11 economic stimulus plans is almost complete . "Some regulations have taken longer to implement, but now we have reached 94 percent [completion]," Sibarani recently told reporters.