Starting a Business in Indonesia? Yogya’s the Place to Be

The Jakarta Globe, Irvan Tisnabudi

Yogyakarta is the easiest city in Indonesia to start a business in, way ahead of Jakarta, which ranked just seventh of 14 Indonesian cities in a new survey.

The study, released on Tuesday by the International Finance Corporation, also revealed that Manado and Makassar would hold their own globally as business-friendly destinations.

“This survey indicates that certain cities have been efficient in helping businesses grow,” said Adam Sack, Indonesia country manager for the IFC, which is part of the World Bank.

The survey measured how long it takes to obtain a construction permit or register a business in various Indonesian cities and compared regulations with 182 other economies worldwide.

Yogyakarta only requires eight procedures to get a building permit, putting the city fifth in the world in that category. Jakarta, on the other hand, is more cumbersome, requiring 14 procedures.

It takes 43 days to get a business permit in Yogyakarta, at a cost of $2,271 — or about 29 percent of the national per capita annual income. The equivalent permit in Jakarta takes 64 days on average but costs less.

In Makassar, the capital of South Sulawesi, it takes only 56 days for businesses to get a construction permit, ranking it ninth globally in that category. In Manado, it takes 12 days for a business to formally register its property, ranking it 24th globally.

In September, Indonesia was ranked 122nd out of 183 countries in an IFC survey on the ease of doing business. Singapore topped the list, Thailand was 12th and Malaysia 23rd.

They city survey was conducted jointly by the IFC and Regional Autonomy Watch, and endorsed by the State Ministry for Administrative Reform.

Sandiaga Uno, chairman of small- and medium-sized enterprises at the Indonesian chamber of commerce, said other factors should be considered in ranking cities. “Even though several cities do well in global rankings on the ease of starting a business and gaining permits, if there was a global list covering ease of acquiring land for businesses, Indonesia would rank very poorly,” he said.