Indonesia: Business environment at a glance

Indonesia: Business environment at a glance. Check it out:

(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2006-07: The government tries to reduce the corporate cost base by simplifying bureaucratic procedures and tackling corruption. Policies to support small and medium-sized enterprises are enacted.

2008-10: Less state regulation in the energy and services sectors will create a more favourable environment for privateenterprise.

Policy towards foreign investment

2006-07: Government efforts to encourage foreign investment are stepped up; tax incentives in key sectors are likely to be offered, and procedures simplified. Attempts at judicial reform begin in earnest.

2008-10: Liberalisation in the utilities sectors (including power) will provide attractive opportunities for foreign investors.

Foreign trade and exchange controls

2006-07: Some restrictions on importsprimarily of agricultural goodsremain in place, but, barring a crisis, capital controls will not be contemplated.

2008-10: Liberal foreign-exchange policies will remain in force, and the trade regime will be deregulated further.

Taxes

2006-07: The government proposes an overhaul of the tax schedule, which will attempt to lower the corporate tax burden, reduce tax evasion and increase coverage.

2008-10: Efforts to improve tax collection and coverage will continue.

Financing

2006-07: The high level of foreign participation in the banking sector encourages competition, modernisation and a more transparent operating regime.

2008-10: Improvements in the health of the corporate sector will encourage banks to increase lending to companies.

The labour market

2006-07: Despite attempts at reform, the labour market is likely to remain relatively inflexible.

2008-10: Skill shortages in the labour market will become a problem as Indonesia seeks to move into higher value addedindustries.

Infrastructure

2006-07: The government has pledged to prioritise infrastructure development. Incentives are offered to encourage private-sector investment.

2008-10: The gradual improvement of the business environment will prompt a modest recovery in investment in infrastructure, particularly in the potentially more profitable areas, such as telecommunications.

Copyright 2006 Economist Intelligence Unit

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September 26, 2006 12:36 AM

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