Indonesia Falls Behind ASEAN Countries in Investment Access

TEMPO.CO, Jakarta - Indonesia remains behind some ASEAN countries in allowing easy investment. Based on World Bank's report titled "Doing Business 2015: Going Beyond Efficiency" released on Wednesday, Indonesia sits in the 114th position in terms of investment access, far behind Malaysia at the 18th position and Thailand at the 16th position.

Indonesia even loses to Vietnam (78), the Philippines (95) and Brunei Darussalam (101). Indonesia is only better than Cambodia (135), East Timor (172) and Burma (178).

In response to the report, Lana Sulistianingsih, economist from University of Indonesia, said that the government needed to accelerate bureaucratic reform in business licensing if it wanted to attract foreign investors. "There five factors that cause the difficulty of foreign investment in Indonesia. The most possible to be addressed is of course related to business licensing," she told Tempo yesterday.

Other factors that affects the rankings are corruption, difficult access to financing, inflation and underdeveloped infrastructure. The government must develop infrastructure in all regions so that investors will have interests to invest in other regions.

Another factor the length of licensing process. "No wonder if Indonesia lost to Singapore. Licensing there only takes three days while in Indonesia, it can take up to one month," she said, adding that the eagerness of Joko Widodo-Jusuf Kalla government to ease licensing will certainly attract investors.

Institute for Development of Economics and Finance (Indef) executive director Ahmad Erani Yustika said there are four things that must be considered to attract foreign investors; they are legal certainty, infrastructure, institutional rules and innovation. "These four things must be paid attention to so that business climate can grow," she said, adding that Singapore excels in all those four things.

She further said World Bank's report was reference for improvement. "Those data are for not to be cried about, but for improvement instead," she said.

In the report, Singapore is the most friendly in providing investment climate compared to Asia Pacific countries. The top ten that provides easy business access includes New Zealand, Hong Kong, China, South Korea and Australia.

Rita Ramalho, main author of the report, said since 2005, East Asia and Asia Pacific regions had attempted to realize good global practices. "Consistent policy reforms have increased convenience in doing business in the last one decade and provided more business opportunities for local entrepreneurs," she said.

She continued that local budding entrepreneurs in East Asia and Asia Pacific have been observing improvements in business climate. Last year, countries in these regions conducted 24 reforms in regulations in business policies.

She added that Indonesia was making effort to improve small entrepreneurs’ prospect by reforming three policies in 2013-2014. In Jakarta, process to getting electricity connection has been accelerated by reducing requirements.

AMOS SIMANUNGKALIT | DINI PRAMITA