Indonesia: Business environment at a glance
September 25, 2006
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
Related Tags: labour market, business environment, foreign, investment, government, environment
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