Doing business in the Indonesia 2010 : comparing regulation in 14 cities and 183 economies

 COMPARING REGULATION IN 14 CITIES AND 183 ECONOMIES 65007  COMPARING REGULATION IN 14 CITIES AND 183 ECONOMIES A COPUBLICATION OF THE WORLD BANK AND THE INTERNATIONAL FINANCE CORPORATION ©2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved 1 2 3 4 5 09 08 07 06 A copublication of the World Bank and the International Finance Corporation This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www. copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Doing Business in Indonesia 2010 and other subnational and regional Doing Business studies can be downloaded at no charge at http:// subnational.doingbusiness.org. Additional copies of the Doing Business global reports, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004: Understanding Regulations, may be purchased at www.doingbusiness.org. About the Investment Climate Advisory Services of the World Bank Group The Investment Climate Advisory Services of the World Bank Group helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over fifteen donor partners working through the multi-donor FIAS platform.  Contents Doing Business in Indonesia 2010 is the with construction permits and register- About Doing Business and first country-specific subnational report ing property. These indicators have been Doing Business in Indonesia 1 of the Doing Business series in Indonesia selected because they cover areas of local Overview 7 and the third in East Asia, following the jurisdiction or practice. The data in Doing Starting a business 13 reports on China and the Philippines. Business in Indonesia 2010 are current as Dealing with construction permits 18 It measures business regulations and of August 2009. Registering property 22 their enforcement in 14 Indonesian cit- The indicators are used to analyze ies: Balikpapan, Banda Aceh, Bandung, economic outcomes and identify which re- Denpasar, Jakarta, Makassar, Manado, forms have worked, where and why. Other Data notes 27 Palangka Raya, Palembang, Pekanbaru, areas important to business—such as a City tables 31 Semarang, Surabaya, Surakarta and Yo- country’s proximity to large markets, the Doing Business indicators 34 gyakarta. The cities can be compared quality of infrastructure services (other List of procedures 36 against each other, and with economies than services related to trading across Starting a business 36 worldwide. borders), the security of property from Comparisons with other economies theft and looting, the transparency of gov- Dealing with construction permits 55 are based on the indicators in Doing Busi- ernment procurement, macroeconomic Registering property 67 ness 2010: Reforming Through Difficult conditions or the underlying strength of Acknowledgments 79 Times, the seventh in a series of annual re- institutions—are not directly studied by ports published by the World Bank and the Doing Business. To make the data compa- International Finance Corporation. The rable across localities, the indicators refer indicators in Doing Business in Indonesia to a specific type of business—generally 2010 are also comparable with the data in a small or medium-size limited liability other subnational Doing Business reports. company. All Doing Business data and reports are This project is endorsed by the Gov- available at http://subnational.doingbusi- ernment of Indonesia through the Minis- ness.org and at www.doingbusiness.org. try for Administrative Reforms (Menpan) Doing Business investigates the reg- and it is the result of cooperation between ulations that enhance business activity the International Finance Corporation and and those that constrain it. Regulations the Regional Autonomy Watch (Komite Pe- affecting 3 stages of the life of a busi- mantauan Pelaksanaan Otonomi Daerah, ness are measured at the subnational level KPPOD). in Indonesia: starting a business, dealing  1 About Doing The global financial crisis has re- newed interest in good rules and regu- WHAT DOING BUSINESS IN INDONESIA 2010 COVERS Business and lation. In times of recession, effective business regulation and institutions can Doing Business in Indonesia 2010 pro- Doing Business support economic adjustment. Easy vides a quantitative measure of the na- entry and exit of firms, and flexibility tional and local regulations for starting a in Indonesia in redeploying resources, make it easier business, dealing with construction per- to stop doing things for which demand mits and registering property—as they has weakened and to start doing new apply to domestic small and medium- things. Clarification of property rights size enterprises. and strengthening of market infrastruc- A fundamental premise of Doing ture (such as credit information and Business is that economic activity re- collateral systems) can contribute to con- quires good rules. These include rules fidence as investors and entrepreneurs that establish and clarify property rights look to rebuild. and reduce the costs of resolving disputes, Until very recently, however, there rules that increase the predictability of In 1664, William Petty, an adviser to were no globally available indicator sets economic interactions and rules that England’s Charles II, compiled the first for monitoring such microeconomic fac- provide contractual partners with core known national accounts. He made 4 tors and analyzing their relevance. The protections against abuse. The objective entries. On the expense side, “food, hous- first efforts, in the 1980s, drew on per- is: regulations designed to be efficient, to ing, clothes and all other necessaries