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East Asia & the Pacific

Smaller Cities Top Doing Business Survey in Indonesia


Where is the easiest place to do business in Indonesia?

Contrary to what you may expect, it’s not Indonesia's biggest cities, such as Jakarta. It’s easiest to do business in Yogyakarta, a city of about 430,000 people in central Java, according to this year's IFC-World Bank Doing Business in Indonesia report.

Starting a business is fastest in Gorontalo in northern Sulawesi and Palangka Raya, the capital of Central Kalimantan province in Borneo: just 27 days, compared to 45 days in Jakarta. Both cities have populations of less than 200,000.

“Businesses do not take place only in the biggest cities, and our studies have found that the quality of business environment in a country can vary from place to place,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis of the World Bank during the report's launch this month. “The aim of the subnational studies is to look at the quality of business regulations in smaller cities, and provide a learning opportunity for local governments to improve their business regulations.”

This is the second subnational report of the Doing Business series in Indonesia. All 14 cities measured by the first report in 2010 have improved business registration processes over the last two years, encouraging more businesses to join the formal economy and help create jobs.

Not surprisingly, the report found that business registration is fastest where the process is consolidated. For example, the waiting time for entrepreneurs to get a license in Semarang has been cut by three weeks after the government streamlined local licensing requirements and improved efficiency at its one-stop shop.

The report found that it is most difficult to start a business in Manado and register property in Batam. Dealing with construction permits is most burdensome in Jakarta and no building permit for commercial warehouses has been issued in Gorontalo.

“We hope that the peer-to-peer learning opportunity presented by the report will help encourage wider and deeper reforms,” said Azwar Abubakar, Indonesia's State Minister for Administrative Reforms.

The report covers Balikpapan, Banda Aceh, Bandung, Denpasar, Jakarta, Makassar, Manado, Palangka Raya, Palembang, Pekanbaru, Semarang, Surabaya, Surakarta, and Yogyakarta and began monitoring six new cities this year: Batam, Gorontalo, Jambi, Mataram, Medan, and Pontianak.

Read the full report

Read more on Doing Business in Indonesia on the World Bank Private Sector Development blog.



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