Survey of recent developments

Click to increase image sizeClick to decrease image size

Notes

¹At the start of the year the parliament identified 55 laws to receive priority; to date none has been passed.

²Because the second 2005 budget revision and the 2006 budget presented in table 3 pre-date the October domestic fuel price increase, the fuel subsidy estimates shown will be revised downwards substantially.

³The Supreme Audit Agency (BPK) found that at least one-eighth of last year's Rp 80.42 trillion ($7.9 billion) fuel subsidy was lost to smuggling (JP, 11/10/2005).

⁴This is significantly higher than in the non-SME sector: total credit extended by commercial banks rose by just 29% during the same period.

⁵The World Bank's Doing Business survey estimates that it takes 151 days on average to establish a business (World Bank 2005a). The difference between this and the LPEM survey lies in the methodology. While the Doing Business figure is based on conservative measures by lawyers in Jakarta, the LPEM figure is based on a survey of notaries. The difference suggests that such data should be interpreted with extreme caution.

⁶The time needed to obtain local permits varies between 16 (work safety permit) and 43 (environment permit) days. Firms could spend up to 180 days if they obtained local permits sequentially.

⁷Current business registration procedures are governed mainly by the Company Law of 1995 and the Business Registration Law of 1982, and various decrees on their implementation.

⁸McLeod (2005: 145–6) highlights government pricing policy as the core explanation for the lack of private sector interest. Unless prices are raised to profitable levels, private investors will not be interested to participate in infrastructure.

⁹Road Law 38/2004 (and regulation 15/2005), Water Resources Law 7/2004 (and regulation 16/2005) and laws on maritime, railway, aviation and road transport are being drafted.

¹⁰The survey reports a decline in corruption from 10.8% in 2001 to 6.4% recently. Even though these results need to be treated with considerable caution because of differences in sample characteristics, further research by LPEM in collaboration with the National Bureau of Economic Research (NBER) using more comparable samples has confirmed the downward trend.

¹¹Indonesia's score increased from 1.9 in 2001 to 2.2 in 2005; <http://www.ICGG.org>.

¹²Transport prices increased by 23.8% and food prices by 28.2% in the first eight months of 2005.

¹³Of these 6,000 are temporary and 4,000 permanent (BRR and World Bank 2005).

¹⁴Donors under the Multi Donor Trust Fund (MDTF) agreed to finance the issuing of land titles, but regulations to endorse this ‘free’ issue of titles had yet to be issued by the Ministry of Finance at the time of writing.