58747 Indonesia © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 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. 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ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Indonesia. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Indonesia is ranked 121 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Indonesia - Compared to global good practice economy as well as selected economies: Indonesia's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 121 Starting a Business 155 Dealing with Construction Permits 60 Registering Property 98 Getting Credit 116 Protecting Investors 44 Paying Taxes 130 Trading Across Borders 47 Enforcing Contracts 154 Closing a Business 142 2 Summary of Indicators - Indonesia Starting a Business Procedures (number) 9 Time (days) 47 Cost (% of income per capita) 22.3 Min. capital (% of income per capita) 53.1 Dealing with Construction Permits Procedures (number) 14 Time (days) 160 Cost (% of income per capita) 173.3 Registering Property Procedures (number) 6 Time (days) 22 Cost (% of property value) 10.9 Getting Credit Strength of legal rights index (0-10) 3 Depth of credit information index (0-6) 4 Public registry coverage (% of adults) 25.2 Private bureau coverage (% of adults) 0.0 Protecting Investors Extent of disclosure index (0-10) 10 Extent of director liability index (0-10) 5 Ease of shareholder suits index (0-10) 3 Strength of investor protection index (0-10) 6.0 Paying Taxes Payments (number per year) 51 Time (hours per year) 266 Profit tax (%) 26.6 Labor tax and contributions (%) 10.6 Other taxes (%) 0.1 Total tax rate (% profit) 37.3 Trading Across Borders Documents to export (number) 5 Time to export (days) 20 Cost to export (US$ per container) 704 Documents to import (number) 6 Time to import (days) 27 Cost to import (US$ per container) 660 3 Enforcing Contracts Procedures (number) 40 Time (days) 570 Cost (% of claim) 122.7 Closing a Business Recovery rate (cents on the dollar) 13.2 Time (years) 5.5 Cost (% of estate) 18 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.12 0.10 Doing business has become 0.08 easier (DB change score) 0.06 0.04 0.02 Cambodia Indonesia Thailand Lao PDR Malaysia Philippines 6 1. Benchmarking Starting a Business Regulations: Indonesia is ranked 155 overall for Starting a Business. Ranking of Indonesia in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Indonesia compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Indonesia 9 47 22.3 53.1 Comparator Economies Cambodia 9 85 128.3 37.0 Lao PDR 7 100 11.3 0.0 Malaysia 9 17 17.5 0.0 Philippines 15 38 29.7 6.0 Thailand 7 32 5.6 0.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Indonesia Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 159 155 Procedures (number) 12 11 9 9 Time (days) 105 76 60 47 Cost (% of income per capita) 80.0 77.9 26.0 22.3 Min. capital (% of income per capita) 38.4 74.2 59.7 53.1 3. The following graphs illustrate the Starting a Business sub indicators in Indonesia over the past 4 years: 9 Starting a Business Summary - Indonesia This table summarizes the procedures and costs associated with setting up a business in Indonesia. STANDARDIZED COMPANY Legal Form: Perseroan Terbatas (PT) City: Jakarta Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain the standard form of the company deed ; arrange for a notary 4 IDR 200,000 electronically; obtain clearance for the Indonesian company's name at the Ministry of Law and Human Rights. 2 Notarize company documents before a notary public 4 IDR 2,526,816 3 Pay the State Treasury for the non-tax state revenue (PNBP) fees for 1 IDR 200,000 legal services at a bank 4 Apply to the Ministry of Law and Human Rights for approval of the 7 IDR 1,580,000 deed of establishment 5 Apply for the permanent business trading license (Surat Izin Usaha 5 IDR 250,000 Perdagangan, SIUP) 6 * Register with the Ministry of Manpower 14 no charge 7 * Apply for the Workers Social Security Program (Jamsostek Program) 7 no charge 10 8 Obtain a taxpayer registration number (NPWP) and a VAT collector 1 no charge number (NPPKP) 9 Register with the Company Register (Department of Trade) and obtain 15 IDR 500,000 a registration certificate (TDP) * Takes place simultaneously with another procedure. 11 Starting a Business Details - Indonesia Procedure 1 Obtain the standard form of the company deed ; arrange for a notary electronically; obtain clearance for the Indonesian company's name at the Ministry of Law and Human Rights. Time to complete: 4 Cost to complete: IDR 200,000 Comment: The uniqueness of the company name must be checked to ensure that it has not been used by another Indonesian company, to avoid a rejection by the Ministry of Justice and Human Rights of the company's deed of establishment and articles of association. Because the process must be done through a computerized processing system, the reservation and clearance must be done by a notary public (because the new computerized system for nontax state revenue payments may be accessed only by a notary public). The reserved name will be blocked for 60 days. If the founding shareholders are confident that the same name has not been used by another Indonesian company, this procedure is not necessary. Procedure 2 Notarize company documents before a notary public Time to complete: 4 Cost to complete: IDR 2,526,816 Comment: Procedure 3 Pay the State Treasury for the non-tax state revenue (PNBP) fees for legal services at a bank Time to complete: 1 Cost to complete: IDR 200,000 Comment: Because the new computerized system for nontax state revenue payments (PNBP)--which has been implemented by the Ministry of Justice and Human Rights--may be accessed only by a notary public, payment for registering or establishing a company is normally easier through the notary. The requirement to pay the non-tax state revenue (PNBP) fee for legal services in relation to the establishment of a PT is obtained from the information stated in the website of the Legal Entity Administration System (known as SABH (Sistem Administrasi Badan Hukum) (www.sisminbakum.go.id), where it is informed that there is a PBNP fee to be paid for the purpose of company establishment in the amount of Rp. 200,000 and to be paid through the Notary. Procedure 4 Apply to the Ministry of Law and Human Rights for approval of the deed of establishment Time to complete: 7 Cost to complete: IDR 1,580,000 Comment: Based on Article 9, 10, 29 and 30 Indonesian Company Law No. 40 year 2007, the application for approval of Ministry of Law and Human Right (the "Ministry of Law") on establishment of company should be be able to file electronically by attaching with the certificate of bank account, copy of the relevant bank transmittal advice, NPWP (Tax Registration Number), Certificate of 12 Company Domicile. the process will be taken as follows: -The application should be filled at the latest 60 days since the date of establishment deed; - Since the application has already fulfilled, the Ministry of Law directly electronically stated no objection on said application. However, if the application is not fulfilled, the Ministry of Law will directly electronically stated his objection on said application. - in 30 days since the date of no objection by Ministry of Law, the applicant should submit the original application and supporting documents; -14 days after fulfillment of above requirements, Ministry of Law will issue the legalisation on the establishment of the company. -Data of company which its establishment has been approved by Ministry of Law i.e name, domicile, object and purpose, period, capital company will be inserted into Company Registry. - The Ministry of Law will announce the establishment of company in Supplement State Gazette (TBNRI) within 14 days of the Ministry's Approval Letter. The cost of this procedure is based on the Schedule to the Government Regulation Number 38 of 2009 concerning Types and Tariffs on Non-Tax State Revenues Applied for in the Department of Law and Human Rights which comes into effect on 28 May 2009. Procedure 5 Apply for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP) Time to complete: 5 Cost to complete: IDR 250,000 Comment: The Surat Izin Usaha Perdagangan (SIUP) constitutes the business license for a non-facility company engaging in trading business. The SIUP contains details about the company activities and the person in charge of the company (normally the President Director). The Ministry of Industry and Trade, which issues the SIUP for a nonfacility company, may require a letter of good conduct from the Indonesian police in support of the person in charge of the company. Normally, the following copy of documents should be attached for the application for a SIUP: - The articles of association (copy). - An attestation of location and address of the company's offices. - Identity card of the company President Director. - Notary deeds After reviewing the application, the Municipality passes it to the technical agency at the regional office for cooperatives for further review- it takes 2 days to get the signature of the head of that office as the authority is not delegated. Once the application is back, the SUIP is provided. Although there is no official charge, there is usually an unofficial administrative fee. Fees depend on negotiation and usually start from IDR 400,000 to 500,000 for a small company, IDR 600,000 to IDR 700,000 for a medium-size company; and IDR 750,000 to IDR 1,000,000 for a large company.the cost is included in procedure 2. Based on Regulation of Ministry of Trading No. 36/M-Dag/PER/9/2007 on Issuing Business Trading License (SIUP), the SIUP will be issued in 3 days since the receiving of completed documents but in practice it takes 3-7 days. Procedure 6 Register with the Ministry of Manpower Time to complete: 14 Cost to complete: no charge Comment: According to Law No. 7/1981, companies with more than 10 workers or a monthly payroll of IDR 1 million must register with the Ministry of Manpower. This procedure can be completed concurrently with other post-registration procedures by filing the manpower compulsory report and company regulations with the Ministry of Manpower. Although there is no official fee, there may an unofficial administrative fee that depends on negotiation and usually starts at IDR 100,000. Procedure 7 Apply for the Workers Social Security Program (Jamsostek Program) 13 Time to complete: 7 Cost to complete: no charge Comment: According to legal provisions on workers' social security (Law No. 3/1992), it is mandatory for every company or individual employing 10 workers or more or generating a monthly payroll of at least IDR 1 million a month to apply for the Workers Social Security Program (Jamsostek), operated by the executing agency. This social security program covers occupational accident security, death security, old age security, and health maintenance. A company or an individual is not obligated to enroll its employees in the social security program if it offers an independent employee social security program with benefits comparable or better than those offered by the Package of Basic Health Maintenance Security (according to Government Regulation No. 14/1993, as amended by Government Regulation No. 28 /2002). Procedure 8 Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP) Time to complete: 1 Cost to complete: no charge Comment: Regulation of Directorate General of Taxation No. 44/PJ/2008 which comes into effect on 20 October 2008 concerning Procedures of Application of Taxpayer Registration and/or Taxable Enterpreneur Number, Amendment of Data and Transfer of Taxpayer and/or Taxable Enterpreneur aimed to incease the service to the taxpayer. The regulation states that within 1 year as of the issuance of NPWP, the relevant Tax Office will conduct field confirmation regarding the correct data/identity of the taxpayer a. The person/entity can apply for NPWP in the relevant tax office where the company is located or can apply it online through http://www.pajak.go.id, choose e-registration to make account as a taxpayer and then follow the procedures therein, by filling the form and attaching copies of deed of establishment and its amendment if any, identity card/KTP of one of active Director, statement letter regarding confirmation on place of business from one of the active Director (form is provided), POA and identity card/KTP of the authorizee. The NPWP card and Registered Statement Letter is obtained within 1 calendar day upon the completeness of the required document without and fee, charge and/or retribution. Procedure 9 Register with the Company Register (Department of Trade) and obtain a registration certificate (TDP) Time to complete: 15 Cost to complete: IDR 500,000 Comment: Under Regulation of the Minister of Trade of the Republic of Indonesia Number 37/M-DAG/PER/9/ 2007 concerning Operation of Company Registration Certificate (Tanda Daftar Perusahaan/TDP) which came into effect on 4 September 2007 ("Regulation No.37 on TDP"), no official fee is charged for the application in obtaining new TDP and official fee is charged for the purpose of renewal of TDP and time is subject to the completeness of the required documents. Although there is no official fee, there may be an unofficial administrative fee. The amount varies based on negotiation. Although the typical cost is about IDR 500,000, if a firm is located in a village in Southern Jakarta, for example, the registration fee might be cheaper (about IDF 100,000). 14 15 1. Benchmarking Dealing with Construction Permits Regulations: Indonesia is ranked 60 overall for Dealing with Construction Permits. Ranking of Indonesia in Dealing with Construction Permits - Compared to good practice and selected economies: 16 The following table shows Dealing with Construction Permits data for Indonesia compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Indonesia 14 160 173.3 Comparator Economies Cambodia 23 709 54.2 Lao PDR 24 172 131.3 Malaysia 25 261 7.9 Philippines 26 169 778.5 Thailand 11 156 9.5 17 2. Historical data: Dealing with Construction Permits in Indonesia Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 60 60 Procedures (number) 14 14 14 14 Time (days) 160 160 160 160 Cost (% of income per capita) 313.5 242.0 194.8 173.3 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Indonesia over the past 4 years: 18 Dealing with Construction Permits in Indonesia The table below summarizes the procedures, time, and costs to build a warehouse in Indonesia. BUILDING A WAREHOUSE City: Jakarta Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request Pre-approval letter from Zoning Department 1 day IDR 1,482,000 2 Receive inspection from Zoning Department 1 day no charge 3 Obtain Pre-approval letter from Zoning Department 20 days no charge 4 * Request and obtain notarized copy of Land Ownership certificate 1 day IDR 25,000 5 Request and obtain the preparation of the Environmental Management 8 days IDR 15,000,000 Plan (UKL) and Environmental Monitoring Plan (UPL) 6 Request and obtain the approval for the Environmental Management Plan 10 days no charge (UKL) and Environmental Monitoring Plan (UPL) 7 Request and obtain building construction permit (IMB) 21 days IDR 9,104,200 8 Request and obtain the building completion and compliance minutes 28 days IDR 62,500 19 9 Obtain building usage permit (IPB) 49 days no charge 10 Register with land and building tax office 11 days no charge 11 Register the warehouse with the regional office of the ministry of industry 9 days IDR 100,000 and trade 12 * Obtain electricity connection 8 days IDR 12,500,000 13 * Obtain water and sewerage connection 8 days IDR 2,000,000 14 * Obtain phone connection 4 days IDR 500,000 * Takes place simultaneously with another procedure. 20 Dealing with Construction Permits Details - Indonesia Procedure 1 Request Pre-approval letter from Zoning Department Time to complete: 1 day Cost to complete: IDR 1,482,000 Agency: Local Administrative Building Office - Zoning Office Comment: The total cost to obtain Pre-approval letter is IDR 1,482,000 according to Article 123 of the Regional Regulation No. 1 Year 2006. The following is the detailed calculation: - Land measurement (based on the land certificate, namely 500-1,000 m2) a retribution of IDR 750,000 - Print out of the map (scale of 1:10000), a retribution of IDR 1,000/copy x 12 copies or a total of IDR 12,000 - KRK for plans to use of a land for warehouse construction (Karya pergudangan/Kpg) for a land area of up to 1,000 m2 is subject to a fee of IDR 40,000.00 - RTLB for plans to build warehouse construction is subject to a fee of Rp. 40,000.00/ 100 m2 of floor surface, so the total fee for the RTLB: IDR 40,000.00 x 13 (based on a 1,300.6 m2 floor surface) = IDR 520,000.00 - Land marking for city planning implementation purposes (pematokan penerapan rencana kota) is subject to a fee of IDR 80,000 x 2 (because the building exceeds 1,000 m2), or a total of IDR 160,000 Procedure 2 Receive inspection from Zoning Department Time to complete: 1 day Cost to complete: no charge Agency: Local Administrative Building Office - Zoning Office Comment: Zoning Office inspects the site to confirm that application submitted by the builder meets the requirements Procedure 3 Obtain Pre-approval letter from Zoning Department Time to complete: 20 days Cost to complete: no charge Agency: Local Administrative Building Office - Zoning Office Comment: After the inspection, the application its forwarded to different offices within the Zoning Office for approval. The location officer, the roads officer and the architectural officer approve the application. When internal procedure it's completed, builder it's notified (by phone, mail or electronically) and can pick up the Pre-approval letter. The recommendation letter includes the documents listed in procedure 1. Procedure 4 Request and obtain notarized copy of Land Ownership certificate Time to complete: 1 day Cost to complete: IDR 25,000 21 Agency: Notary Comment: Builder needs to notarize a copy of the Land Ownership certificate before applying for the building permit. Procedure 5 Request and obtain the preparation of the Environmental Management Plan (UKL) and Environmental Monitoring Plan (UPL) Time to complete: 8 days Cost to complete: IDR 15,000,000 Agency: Zoning and Road Construction Division Comment: BuildCo hires an external consultant that will prepare the Environmental Management Plan (UKL) and Environmental Monitoring Plan (UPL). When this is ready BuildCo will submit the documents to the Local Environmental Management Agency (BPLHD) for the Province of DKI Jakarta for approval. Procedure 6 Request and obtain the approval for the Environmental Management Plan (UKL) and Environmental Monitoring Plan (UPL) Time to complete: 10 days Cost to complete: no charge Agency: Regional Environmental Control Agency (BPLHD) Comment: The legal basis for this procedure is: - Decree of the Governor of the Province of DKI Jakarta No. 76 Year 2000, Article 2 paragraph (2) b - Regulation of the Head of the Local Building Supervision and Control (P2B) Office No. 21 Year 2009, Annex I point I.b Procedure 7 Request and obtain building construction permit (IMB) Time to complete: 21 days Cost to complete: IDR 9,104,200 Agency: Local Administrative Building Office - Permit Office Comment: When applicant has the complete set of documents (see below) and application is submitted, the Permit Office will conduct an inspection. Given that the plot where the warehouse will be built is empty, no representative from BuildCo needs to be present. Officials from the Permit Office will only verify that the plot is vacant. The legal basis for this procedure is: - Decree of the Governor of the Province of DKI Jakarta No. 76 Year 2000, Article 2 paragraph (2) b - Regulation of the Head of the Local Building Supervision and Control (P2B) Office No. 21 Year 2009, Annex I point I.b - The legal basis for the time to complete this step in 14 days working days (21 calendar days) is the Regulation of the Governor of DKI Jakarta Number 85 of 2006, article 11 paragraph - According to the Regional Regulation of the Province of DKI Jakarta Number 1 Year 2006 concerning Regional Retribution, the formula to calculate the fee for this permit is IDR 7,000 per square meter. Since the warehouse considered in the case study has an area of 1,300.6 square meters the cost then will be 7,000 * 1,300.6 = IDR 9,104,200. 22 The supporting documents required are: - Photocopy of the ID Card - Photocopy of the Land Certificate (notarized) - KRK and RTLB from City Planning Office from the Local City Zoning Office (included in Pre-approval letter) - As Built Drawing (Architecture; Construction, and Installation) for the Warehouse Construction to be built - Photocopy of the license to operate as a Building Planner - Statement of uncontested ownership of the land for which IMB is applied - Company's Deed of Establishment - Completed Application Form - Receipt of UKL-UPL or UKL-UPL Recommendation from the BPLHD Procedure 8 Request and obtain the building completion and compliance minutes Time to complete: 28 days Cost to complete: IDR 62,500 Agency: Land and Building Tax Office Comment: The construction completion and compliance report is a prerequisite for obtaining a usage permit. The party issuing the official report on the completion of the construction and compliance with the building permit is the Supervising Director, who can be an individual, a group of experts, or an entity appointed by the project owner to supervise the construction work. The individual or group of experts must be independent of BuildCo and cannot be its employees. Procedure 9 Obtain building usage permit (IPB) Time to complete: 49 days Cost to complete: no charge Agency: City Planning Office Comment: BuildCo must submit the following documents to the City Planning Office: The supporting documents required are: - Building drawings - Copy of the IMB - Warehouse Construction Completion Report from the Supervising Directors/Consultant appointed by BuildCo - An official report from the Supervising Director comprising (Minutes of completion of the warehouse construction and compliance): -- A copy of the letter of appointment of the contractor and Supervising Director and the Coordinator of the Supervising Director. -- A copy of the TDR of the contractor and work permit of the Supervising Director. -- A report on construction stages from the Supervising Director. -- A statement from the Coordinator of the Supervising Director that the warehouse has been completed in accordance with the building permit (IMB). The legal basis for this procedure is: - Decree of the Governor of the Province of DKI Jakarta No. 76 Year 2000, Article 9 paragraph (4) b - Regulation of the Head of the Local Building Supervision and Control Office No. 21 Year 2009, Annex I point II.b Procedure 10 Register with land and building tax office 23 Time to complete: 11 days Cost to complete: no charge Agency: Land and Building Tax Office Comment: After the warehouse is built BuildCo needs to update its records at the Land and Building Tax Office. Even if this update is supposed to be done automatically, many builders do it personally to avoid delays. This is critical when builder wants to sell or obtain a loan with the property. Procedure 11 Register the warehouse with the regional office of the ministry of industry and trade Time to complete: 9 days Cost to complete: IDR 100,000 Agency: Ministry of Industry and Trade (Regional Office) Comment: The company must submit the following documents: a copy of the trade business license; a copy of company registration code; a copy of the owner's or shareholders' identity card(s); a copy of the taxpayer number; a copy of warehouse lease agreement (if the warehouse is leased); a copy of the building permit (IMB); a copy of the map of the warehouse. Warehouses in a privately owned port, warehouses in a bonded zone, and warehouses adjacent to the plant are exempted from the registration requirement. Under the new government, the Ministry of Industry and Trade has been divided into the Ministry of Industry and the Ministry of Trade. The warehouse registration is conducted with the regional office of the Ministry of Trade. Procedure 12 Obtain electricity connection Time to complete: 8 days Cost to complete: IDR 12,500,000 Agency: Perusahaan Listrik Negara, PT Comment: The company notifies the industrial manager that the warehouse is ready for utility hook-ups. Procedure 13 Obtain water and sewerage connection Time to complete: 8 days Cost to complete: IDR 2,000,000 Agency: PAM Jaya Comment: The company notifies the industrial manager that the warehouse is ready for utility hook-ups. Procedure 14 Obtain phone connection Time to complete: 4 days 24 Cost to complete: IDR 500,000 Agency: PT. Telekomunikasi Indonesia Tbk (Telkom) Comment: The company notifies the industrial manager that the warehouse is ready for utility hook-ups. 25 26 1. Benchmarking Registering Property Regulations: Indonesia is ranked 98 overall for Registering Property. Ranking of Indonesia in Registering Property - Compared to good practice and selected economies: 27 The following table shows Registering Property data for Indonesia compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Indonesia 6 22 10.9 Comparator Economies Cambodia 7 56 4.3 Lao PDR 9 135 4.1 Malaysia 5 56 2.5 Philippines 8 33 4.3 Thailand 2 2 4.3 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 28 2. Historical data: Registering Property in Indonesia Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 94 98 Procedures (number) 6 6 6 6 Time (days) 39 39 22 22 Cost (% of property value) 10.5 10.7 10.7 10.9 3. The following graphs illustrate the Registering Property sub indicators in Indonesia over the past 4 years: 29 Registering Property in Indonesia This topic examines the steps, time, and cost involved in registering property in Indonesia. STANDARDIZED PROPERTY Property Value: 1,176,610,733.54 City: Jakarta Registration Requirements: No: Procedure Time to complete Cost to complete 1 Land certificate examination at the Land Office 1 day Rp. 50,000 2 * Seller pays transfer tax at a bank 1 day (simultaneous 5% of property price with procedure 3) (Transfer Tax) 3 * Buyer pays Tax on Acquisition on Land and Building 1 day (simultaneous 5% of (property price minus with procedure 2) Rp. 60,000,000 which is tax-free) (Tax on Acquisition of Land and Building) 4 Execution of sale and purchase of Land Deed by a 3 days 1% of the property value PPAT official 5 Registration of the Land Deed at the local Land 15 days 1/1000 of the property value Office under the name of the buyer + Rs. 50,000 (administrative fee) + Stamp duty of Rp. 6,000 per document (2 required) 30 6 Registration of the Land Deed at the Tax on Land and 1 day no cost Building Office (PBB) under the name of the buyer * Takes place simultaneously with another procedure. 31 Registering Property Details - Indonesia Procedure 1 Land certificate examination at the Land Office Time to complete: 1 day Cost to complete: Rp. 50,000 Agency: Land Office Comment: A land certificate examination is carried out by a Land Deed Official. If the land book concerned is available at the Land Office, it usually takes a few hours to 1 day. However, sometimes the land book is unavailable, misplaced or being used by another division of the Land Office, so then the examination process will be pending and it usually takes a few days to obtain the information from the Land Office. The land title search would also involve a check at the local city planning office located at the local government office to determine the intended use of the said plot of land, whether for residences, industry or green belt. No written statement is given, but a note made on the certificate saying 'Has been examined and according to the Land Registry/Land Book at the Land Office, dated_______, time ________' and initialled by the officer at the Land Office. Procedure 2 Seller pays transfer tax at a bank Time to complete: 1 day (simultaneous with procedure 3) Cost to complete: 5% of property price (Transfer Tax) Agency: Bank Comment: The seller must pay the Transfer Tax prior to the execution of the transfer deed. The tax on Transfer of Land and Building (Transfer Tax) in the amount of 5% which is calculated on the sale or transfer value. In case the sale value is lower than the Sales Value of the Tax Object ("NJOP"), then the NJOP price will be used. But the sale value is higher than the NJOP, then the sale value will be used. The Transfer Tax is paid to a Bank Persepsi - bank appointed by the Ministry of Finance to accept tax payments. Tax to local government are paid at the Local Government Bank (Bank Badan Usaha Milik Daerah) and/or other private commercial bank (Article 4.2 of Law No. 7/1983, amended by Law No. 10/1994 and Law 17/2000 concerning Income Tax) and Parts 2.1 and 5.1 of the Director General of Taxation Circular No. SE-04/P.J.33/1996 dated August 26, 1996. Procedure 3 Buyer pays Tax on Acquisition on Land and Building Time to complete: 1 day (simultaneous with procedure 2) Cost to complete: 5% of (property price minus Rp. 60,000,000 which is tax-free) (Tax on Acquisition of Land and Building) Agency: Bank Comment: The buyer pays the Tax on Acquisition of Land and Building (BPHTB) in the amount of 5% of the sale value or transfer value. The BPHTB Formula: The buyer pays the BPHTB in the amount of 5% x (Sale value or Transfer value or Nilai Perolehan Obyek Pajak or NPOP ­ Non-Taxable Sale Value or Nilai 32 Perolehan Obyek Pajak Tidak Kena Pajak or NPOPTKP which is determined regionally, maximum is up to Rp. 60,000,000.) (According to Article 7 of Law No. 20/2000, concerning the amendment of law No. 21/1997 concerning the Tax on Acquisition of Land and Building). In Jakarta, the NPOPTKP is Rp. 60,000,000. This tax is paid at a Bank Persepsi, appointed by the State Treasury to accept tax payments, or at a post office where the land is located. Procedure 4 Execution of sale and purchase of Land Deed by a PPAT official Time to complete: 3 days Cost to complete: 1% of the property value Agency: Land Deed/PPAT Official Comment: The execution of the sale and purchase of Land Deed is made before Land Officials (who are often public notaries as well) appointed by the Head of the National Land Office (PPAT) or a local Head of a District (Camat PPAT), after the taxes in procedures 3 and 4 have been paid. For convenience, those payments are usually made by the notary three days before the execution of the sale-purchase deed. The documentation shall include: -Original land certificate -Evidence of the latest payment of Tax on Land and Building (PBB). Every year, the local PBB Tax Office issues a tax assessment to land owners. By custom, the buyer usually wants to obtain the original of the payment of PBB for the past three years and utility bills for the last three months--though in practice the office will check the last 10 years. The Land Deed Officer drawing up the sale and purchase deed will only need to see the most recent PBB while the Land Office will need a copy of the most recent PBB for registering the land into the name of the new owner. -Evidence of payment of Tax on Transfer of Land and Building (Transfer Tax) (obtained in Procedure 2) -Evidence of payment of the Tax on Acquisition of Land and Building (BPHTB) (obtained in Procedure 3) -Evidence of deed of Company Establishment which was already authorized by the Ministry of Justice -Company Tax-Registration Numbers (NPWP) of the seller and the purchaser (obtained in Procedure 4) -Deed of Establishment and its amendments of both the seller and purchaser; -Corporate approvals of the seller to dispose of the land and the purchaser to acquire the land as required in the Articles of Association of both the seller and purchaser -Advise Planning from the City Administration Institution -Permit for Building Establishment Procedure 5 Registration of the Land Deed at the local Land Office under the name of the buyer Time to complete: 15 days Cost to complete: 1/1000 of the property value + Rs. 50,000 (administrative fee) + Stamp duty of Rp. 6,000 per document (2 required) Agency: Land Office Comment: Registration of the Land Deed at the local Land Office to have the purchaser's name registered and recorded in the land certificate. At the latest of 7 (seven) days as of the signing date of the sale and purchase of Land Deed, the notary submits such deed including its supporting documents to the Land Office, but in 33 practice the wait is much longer because of the backlog. (Article 40 sub 1 of Government Regulation No. 24/1997 concerning the Land Registration.) In theory, the registration process should be completed within the 5 days statutory time limit. The Land Office crosses out the name of the previous owner and inserts the name of the buyer, stamps and signs it. Procedure 6 Registration of the Land Deed at the Tax on Land and Building Office (PBB) under the name of the buyer Time to complete: 1 day Cost to complete: no cost Agency: Land and Building Tax Office (PBB) Comment: In connection to the registration of the Land Deed at the Tax on Land and Building Office, the change of ownership must be registered with the Tax Office. The taxpayer should report manually to the Tax Office with regard to the transfer of land title. 34 35 1. Benchmarking Getting Credit Regulations: Indonesia is ranked 116 overall for Getting Credit. Ranking of Indonesia in Getting Credit - Compared to good practice and selected economies: 36 The following table shows Getting Credit data for Indonesia compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Indonesia 3 4 25.2 0.0 Comparator Economies Cambodia 8 0 0.0 0.0 Lao PDR 4 0 0.0 0.0 Malaysia 10 6 62.0 100.0 Philippines 3 3 0.0 7.4 Thailand 4 5 0.0 35.7 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 37 2. Historical data: Getting Credit in Indonesia Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 109 116 Strength of legal rights index (0-10) 3 3 3 3 Depth of credit information index (0-6) 3 4 4 4 Private bureau coverage (% of adults) 0.2 0.0 0.0 0.0 Public registry coverage (% of adults) 20.5 26.1 22.0 25.2 3. The following graphs illustrate the Getting Credit sub indicators in Indonesia over the past 4 years: 38 Getting Credit in Indonesia The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Indonesia. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 4 bureau registry Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative data distributed? No Yes 1 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? No No 0 Is data on all loans below 1% of income per capita distributed? No Yes 1 Is it guaranteed by law that borrowers can inspect their data in the No Yes 1 largest credit registry? Coverage 0.0 25.2 Number of individuals 0 41,748,300 Number of firms 0 325,195 39 Strength of legal rights index (0-10) 3 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the No grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? No 40 41 1. Benchmarking Protecting Investors Regulations: Indonesia is ranked 44 overall for Protecting Investors. Ranking of Indonesia in Protecting Investors - Compared to good practice and selected economies: 42 The following table shows Protecting Investors data for Indonesia compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Indonesia 6.0 Comparator Economies Cambodia 5.3 Lao PDR 1.7 Malaysia 8.7 Philippines 4.0 Thailand 7.7 43 2. Historical data: Protecting Investors in Indonesia Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 41 44 Strength of investor protection index (0-10) 5.7 5.7 6.0 6.0 3. The following graph illustrates the Protecting Investors index in Indonesia compared to best practice and selected Economies: 9.7 8.7 7.7 6.0 5.3 4.0 1.7 nd sia ia nd a es R la ys di ne PD n ai a a bo pi al do Th al p o Ze am M In ili La Ph C ew N Note: The higher the score, the greater the investor protection. 44 Protecting Investors in Indonesia The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Indonesia. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 10 3 What corporate body provides legally sufficient approval for the transaction? 2 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 2 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 1 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 5 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 2 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 45 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 3 0 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 1 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 1 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 0 Whether the level of proof required for civil suits is lower than that of criminal cases? 1 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 6.0 46 47 1. Benchmarking Paying Taxes Regulations: Indonesia is ranked 130 overall for Paying Taxes. Ranking of Indonesia in Paying Taxes - Compared to good practice and selected economies: 48 The following table shows Paying Taxes data for Indonesia compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Indonesia 51 266 37.3 Comparator Economies Cambodia 39 173 22.5 Lao PDR 34 362 33.7 Malaysia 12 145 33.7 Philippines 47 195 45.8 Thailand 23 264 37.4 * The following economies are also good practice economies for : Payments (number per year): Qatar 49 2. Historical data: Paying Taxes in Indonesia Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 125 130 Total tax rate (% profit) 37.3 37.3 37.6 37.3 Payments (number per year) 51 51 51 51 Time (hours per year) 266 266 266 266 3. The following graphs illustrate the Paying Taxes sub indicators in Indonesia over the past 4 years: 50 Paying Taxes in Indonesia The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Indonesia, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Value added tax (VAT) 12 81 10.0% value added Stamp duty 1 fixed fee (Rp 0.00 6,000) Property tax 1 1.0% property 0.10 value Tax on interest 0 withheld 20.0% interest 0.50 income Social security 12 97 4.0% gross salaries 4.50 contributions Health Insurance 12 6.0% gross salaries 6.10 contributions Corporate income tax 13 88 28.0% taxable profit 26.60 Totals 51 266 37.3 51 52 1. Benchmarking Trading Across Borders Regulations: Indonesia is ranked 47 overall for Trading Across Borders. Ranking of Indonesia in Trading Across Borders - Compared to good practice and selected economies: 53 The following table shows Trading Across Borders data for Indonesia compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Indonesia 5 20 704 6 27 660 Comparator Economies Cambodia 10 22 732 10 26 872 Lao PDR 9 48 1860 10 50 2040 Malaysia 7 18 450 7 14 450 Philippines 8 15 675 8 14 730 Thailand 4 14 625 3 13 795 * The following economies are also good practice economies for : Time to export (days): Estonia 54 2. Historical data: Trading Across Borders in Indonesia Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 49 47 Cost to export (US$ per container) 667 704 704 704 Cost to import (US$ per container) 623 660 660 660 Documents to export (number) 5 5 5 5 Documents to import (number) 6 6 6 6 Time to export (days) 21 21 21 20 Time to import (days) 27 27 27 27 3. The following graphs illustrate the Trading Across Borders sub indicators in Indonesia over the past 4 years: 55 56 Trading Across Borders in Indonesia These tables list the procedures necessary to import and export a standardized cargo of goods in Indonesia. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 14 210 Customs clearance and technical control 1 169 Ports and terminal handling 2 165 Inland transportation and handling 3 160 Totals 20 704 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 15 210 Customs clearance and technical control 4 125 Ports and terminal handling 6 165 Inland transportation and handling 2 160 Totals 27 660 57 Documents for Export and Import Export Memorandum of Understanding Packing list Bill of lading Commercial invoice Customs export declaration Import Commercial invoice Customs import declaration Packing list Terminal handling receipts Bill of lading Cargo release order 58 59 1. Benchmarking Enforcing Contracts Regulations: Indonesia is ranked 154 overall for Enforcing Contracts. Ranking of Indonesia in Enforcing Contracts - Compared to good practice and selected economies: 60 The following table shows Enforcing Contracts data for Indonesia compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Indonesia 40 570 122.7 Comparator Economies Cambodia 44 401 102.7 Lao PDR 42 443 31.6 Malaysia 30 585 27.5 Philippines 37 842 26.0 Thailand 36 479 12.3 61 2. Historical data: Enforcing Contracts in Indonesia Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 153 154 Procedures (number) 40 40 40 40 Time (days) 570 570 570 570 Cost (% of claim) 122.7 122.7 122.7 122.7 3. The following graphs illustrate the Enforcing Contracts sub indicators in Indonesia over the past 4 years: 62 Enforcing Contracts in Indonesia This topic looks at the efficiency of contract enforcement in Indonesia. Nature of Procedure (2010) Indicator Procedures (number) 40 Time (days) 570 Filing and service 170.0 Trial and judgment 220.0 Enforcement of judgment 180.0 Cost (% of claim)* 122.70 Attorney cost (% of claim) 111.3 Court cost (% of claim) 3.1 Enforcement Cost (% of claim) 8.3 63 Court information: Jakarta District Court ("Hukum Acara Perdata") * Claim assumed to be equivalent to 200% of income per capita. 64 65 1. Benchmarking Closing Business Regulations: Indonesia is ranked 142 overall for Closing a Business. Ranking of Indonesia in Closing Business - Compared to good practice and selected economies: 66 The following table shows Closing Business data for Indonesia compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Indonesia 13.2 5.5 18 Comparator Economies Cambodia 0.0 no practice no practice Lao PDR 0.0 no practice no practice Malaysia 39.8 2.3 15 Philippines 4.5 5.7 38 Thailand 43.5 2.7 36 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 67 2. Historical data: Closing Business in Indonesia Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 141 142 Time (years) 5.5 5.5 5.5 5.5 Cost (% of estate) 18 18 18 18 Recovery rate (cents on the dollar) 12.6 13.7 13.7 13.2 3. The following graphs illustrate the Closing Business sub indicators in Indonesia over the past 4 years: 68 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 69 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cambodia Cambodia eliminated preshipment inspections, reducing the time and number of documents required for importing and exporting. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Indonesia Indonesia eased business start-up by reducing the cost for company name clearance and reservation and the time required to reserve the name and approve the deed of incorporation. Indonesia reduced its corporate income tax rate. Indonesia reduced the time to export by launching a single-window service. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Lao PDR Lao PDR replaced the business turnover tax with a new value added tax. Malaysia Malaysia eased business start-up by introducing more online services. Malaysia's introduction of online stamping reduced the time and cost to transfer property. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Philippines The Philippines eased business startup by setting up a one-stop shop at the municipal level. The Philippines made construction permitting more cumbersome through updated electricity connection costs. The Philippines reduced the time and cost to trade by improving its electronic customs systems, adding such functions as electronic payments and online submission of declarations. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. 70 Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. Thailand Thailand made registering property more costly by repealing a 2-year temporary tax reduction for property transfers. Thailand temporarily lowered taxes on business by reducing its specific business tax for 12 months. Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 71 72