Aditya Suharmoko, Jakarta – Despite progress in certain areas, Indonesia overall is worse off now than the year before when it comes to doing business, a survey revealed Wednesday.

The 2009 Doing Business Report showed the time needed to set up a business here had been cut from 105 days to 76 days.

However, the report – issued by the World Bank and its private arm, the International Finance Corporation (IFC) – ranked the country 129th out of 181 countries surveyed, down from last year's ranking of 127.

That leaves Indonesia far below many of its regional peers; Vietnam was ranked 92nd, Brunei Darussalam 88th, Malaysia 20th and Thailand 13th, with Singapore topping the list as the most attractive place to do business. Even Papua New Guinea fared better, coming in at 95.

IFC analyst Fararatri Widyadari said at a press conference the ranking decline was mainly due to a new policy that raised the minimum initial capital for companies planning to invest here to Rp 12.5 million (US$1,358) from Rp 5 million. "This caused the country to rank low in the report. Other countries no longer apply such policies," Fararatri said.

The report said Indonesia had yet to make significant improvements in terms of construction permits, employment, property registration, investor protection, tax payment, trade, contract enforcement and business closure.

It cited the fact that it still took 39 days to register enterprise properties, and five and a half years to close a business.

Of all the countries surveyed, Azerbaijan was the top reformer, jumping from 97th place to 33rd, thanks to significant policy reforms for starting a business, employing workers, registering property, getting credit, protecting investors, paying taxes and enforcing contracts.

With other countries moving faster in almost all reform areas, Indonesia must work harder to create a good business climate and boost its economy, the IFC said.

"There has been a positive change in Indonesian business policy. But the country should do more in some sectors to make it a much more promising business environment," Fararatri said.

Sofjan Wanandi, chairman of the Indonesian Employers' Association (Apindo), said Indonesia's ranking had dropped because all neighboring countries had improved their investment climates faster than Indonesia had done.

"We are running in spot while other countries improve," Sofjan said, adding inconsistent government policies were to blame for the poor rating. "Businesses cannot make long-term plans if the government keeps changing its policies."

Fararatri said the government could help by simplifying administrative procedures and allowing online registrations. "The government can limit the time needed to issue enterprise permits and employers' registration letters, for instance," she said. (ewd)