Reashot Xigwin
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Linda Yulisman, The Jakarta Post, Jakarta | Headlines | Fri, September 05 2014, 8:33 AM
Headlines News
Doing business in Indonesia has become easier, but corruption remains the major impediment that drags on its economic performance, according to a survey conducted by the Geneva-based business group World Economic Forum (WEF).
Indonesia climbed four notches this year to 34th place out of the 144 countries surveyed for WEF’s global competitiveness index measuring improved ease of doing business.
Regionally, Singapore still continued to stand out compared to its Southeast Asian peers by reserving second place — the position it maintained for a fourth year in a row — just behind Switzerland, said the report.
The 2014-2015 report, which was published on Wednesday, attributed Indonesia’s progress primarily to enhanced infrastructure and connectivity (up five places from last year’s report) and to stronger quality of public and private governance (up 14 places).
The report also pointed out that corruption was still rampant and often involved high-profile figures, although concerted efforts against it had been made in the past years.
In its latest move on Wednesday, the Corruption Eradication Commission (KPK) named Energy and Mineral Resources Minister Jero Wacik a graft suspect, alleging that he had forced his subordinates to collect funds totaling around Rp 9.9 billion (US$841,493) from “illegal sources” within the ministry between 2011 and 2013.
Jero is the third minister in President Susilo Bambang Yudhoyono’s Cabinet to be named a graft suspect, after former youth and sports minister Andi Alfian Mallarangeng and former religious affairs minister Suryadharma Ali.
Indonesian Employers’ Association (Apindo) chairman Sofjan Wanandi said that poor infrastructure — such as the electricity grid and seaports — and bureaucratic red tape still passed high costs onto business players operating in Indonesia, despite the achievements suggested by the report.
“It’s still lower than expected,” he said.
Indonesian Institute of Sciences (LIPI) economist Latif Adam appreciated the progress made by Indonesia in fixing its poor infrastructure and connectivity and reforming its governance both in the public and private sectors. However, he said such an achievement should be viewed in comparison to neighboring countries.
“We are welcoming the establishment of the ASEAN Economic Community [AEC] next year and we’ll compete head-to-head without any borders. All member nations are racing to boost their competitive edge,” he said, referring to rivalry over attracting investment in which the competitiveness of each country matters most.
The AEC is one of the pillars of ASEAN integration, which is set to officially kick off by the end of next year and make the region a single market and production base that would be fully integrated with the global economy.
The report, which was based on a survey of business executives worldwide, also highlighted the issue of labor as a variable that hampered Indonesia from climbing higher in the index.
“The situation of its labor market remains by far the weakest aspect, owing to rigidities in terms of wage setting and hiring and firing procedures,” it said.
Workers’ wages, traditionally a contentious issue, rose by between 7 percent and 30 percent this year after lengthy negotiations between employers and employees.
In response to the report, Finance Minister Chatib Basri said, “We see there has been improvement in the ease of doing business last year but [...] it’s not as fast as we want.”
Chatib said it would be the task of the new government to carry out necessary reforms, to continue focusing on addressing infrastructure and governance issues and to revise the 2003 Labor Law to allow for a more flexible labor market.
Separately, Coordinating Economic Minister Chairul Tanjung said a wage increase was not a major issue, but productivity was “because the cost per unit [of goods produced] is the one that determines whether wages are expensive or not”. (gda)
Indonesia climbs 4 places on infrastructure | The Jakarta Post
Headlines News
Doing business in Indonesia has become easier, but corruption remains the major impediment that drags on its economic performance, according to a survey conducted by the Geneva-based business group World Economic Forum (WEF).
Indonesia climbed four notches this year to 34th place out of the 144 countries surveyed for WEF’s global competitiveness index measuring improved ease of doing business.
Regionally, Singapore still continued to stand out compared to its Southeast Asian peers by reserving second place — the position it maintained for a fourth year in a row — just behind Switzerland, said the report.
The 2014-2015 report, which was published on Wednesday, attributed Indonesia’s progress primarily to enhanced infrastructure and connectivity (up five places from last year’s report) and to stronger quality of public and private governance (up 14 places).
The report also pointed out that corruption was still rampant and often involved high-profile figures, although concerted efforts against it had been made in the past years.
In its latest move on Wednesday, the Corruption Eradication Commission (KPK) named Energy and Mineral Resources Minister Jero Wacik a graft suspect, alleging that he had forced his subordinates to collect funds totaling around Rp 9.9 billion (US$841,493) from “illegal sources” within the ministry between 2011 and 2013.
Jero is the third minister in President Susilo Bambang Yudhoyono’s Cabinet to be named a graft suspect, after former youth and sports minister Andi Alfian Mallarangeng and former religious affairs minister Suryadharma Ali.
Indonesian Employers’ Association (Apindo) chairman Sofjan Wanandi said that poor infrastructure — such as the electricity grid and seaports — and bureaucratic red tape still passed high costs onto business players operating in Indonesia, despite the achievements suggested by the report.
“It’s still lower than expected,” he said.
Indonesian Institute of Sciences (LIPI) economist Latif Adam appreciated the progress made by Indonesia in fixing its poor infrastructure and connectivity and reforming its governance both in the public and private sectors. However, he said such an achievement should be viewed in comparison to neighboring countries.
“We are welcoming the establishment of the ASEAN Economic Community [AEC] next year and we’ll compete head-to-head without any borders. All member nations are racing to boost their competitive edge,” he said, referring to rivalry over attracting investment in which the competitiveness of each country matters most.
The AEC is one of the pillars of ASEAN integration, which is set to officially kick off by the end of next year and make the region a single market and production base that would be fully integrated with the global economy.
The report, which was based on a survey of business executives worldwide, also highlighted the issue of labor as a variable that hampered Indonesia from climbing higher in the index.
“The situation of its labor market remains by far the weakest aspect, owing to rigidities in terms of wage setting and hiring and firing procedures,” it said.
Workers’ wages, traditionally a contentious issue, rose by between 7 percent and 30 percent this year after lengthy negotiations between employers and employees.
In response to the report, Finance Minister Chatib Basri said, “We see there has been improvement in the ease of doing business last year but [...] it’s not as fast as we want.”
Chatib said it would be the task of the new government to carry out necessary reforms, to continue focusing on addressing infrastructure and governance issues and to revise the 2003 Labor Law to allow for a more flexible labor market.
Separately, Coordinating Economic Minister Chairul Tanjung said a wage increase was not a major issue, but productivity was “because the cost per unit [of goods produced] is the one that determines whether wages are expensive or not”. (gda)
Indonesia climbs 4 places on infrastructure | The Jakarta Post
