Improvement of the Ease of Doing Business in

Improvement of the Ease of Doing Business in Indonesia

Improvement of Doing Bussiness Target of DB 2017; Presiden is looking the country to achieve 40 th position • • • Doing Business 2017 Comparison of Doing Business Regulation in 190 countries on 10 indicators performed by IFC/World Bank (Starting A Business, Dealing with Construction Permit, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading Across Borders, Enforcing Contract, and Resolving Ensolvency). DB 2017 Report Indonesia is Top Reformer country based on improvement made in 7 indicators of Ease of Doing Business (starting a business, getting electricity, registering property, getting credit, paying taxes, trading across borders and enforcing contracts). From 190 countries surveyed, 139 countries made improvements to all indicators. Indonesia’s ranking jumped 15 places to 91 th position from 109 th in the previous DB 2016 (or 106 after data adjustment). ü Target Doing Business 2018 35 th position on Government Work Plan (RKP) 01

Doing Business 2017 Indonesia's Position on 10 Indicators DB 2017 DB 2016 91 106 15 Starting a Business 151 167 16 Dealing with Construction Permits 116 113 3 Getting Electricity 49 61 12 Registering Property 118 123 Getting Credit 62 Protecting Minority Investors Indikator Perubahan Ranking Eo. DB 2017 GNI per Capita (USD) SINGAPORE (2) 52, 090 AUSTRALIA (15) 60, 070 5 MALAYSIA (23) 10, 570 70 8 THAILAND (46) 5, 620 70 69 1 CHINA (78) 7, 820 Paying Taxes 104 115 11 INDONESIA (91) 3, 440 Trading Across Borders 108 113 5 Enforcing Contract 166 171 5 PHILIPPINES (99) 3, 540 Resolving Insolvency 76 74 2 INDIA (130) 1, 590 02

World Bank Ease of Doing Business 2017 10 13 Indicator 37 91 st Deregulation Ministry/Institution and Local Government + TOP REFORMER COUNTRY Improvement from 106 th position at Doing Business 2016 Ranking at EODB 2017 COUNTRY RANK Indonesia 91 Singapore 2 Malaysia 23 Improvement of Eo. DB 91 114 109 120 129 2013 2014 2015 2016 2017 Thailand 46 Brunei 72 Vietnam 82 Philippines 99 1 Starting a Business √ 2 Dealing with Construction Permit 3 Registering Property √ 4 Getting Electricity √ 5 Paying Taxes √ 6 Trading Across Borders √ 7 Getting Credit √ 8 Protecting Minority Investor 9 Enforcing Contract √ 10 Resolving Insolvency 03

Eo. DB Rank per Indicator Indonesia Eo. DB Rank 2016 Recalculation 1 2017 106 91 1 Starting a Business 167 151 2 Dealing with Construction Permit 113 116 3 Registering Property 123 118 4 Getting Electricity 61 49 5 Paying Taxes 115 104 6 Getting Credit 70 62 7 Protecting Minority Investor 69 70 8 Trading Across Borders 113 108 9 Enforcing Contract 171 166 Resolving Insolvency 74 76 10 TOP REFORMER EODB 2017 1. Minimum Capital shall be paid in accordance with the agreement of related parties. 2. Reduces time and cost of getting power connections. 3. Cadastral data digitization and utilization of GIS system. 4. Facilitate credit access through the registration of modern collaterals. 5. Paying taxes via online. 6. Facilitate export and import through improvement of customs and registration service (Exported Goods Declaration and Imported Goods Declaration). 7. The existence of a simple lawsuit procedure in a commercial court. 1 Recalculation Factor: 1) The existence of the addition of gender components on the indicators of Starting a Business, Registering Property, and Enforcing Contract; 2) Methodology change through the addition of postfilling process in Paying Taxes indicator; 3) There are data corrections for indicators of Construction Permits, Getting Electricity, Registering Property, Protecting A significant reform is urgently needed Minority Investors, and Trading Across Borders. 04

01 Starting a Business BEFORE AFTER • COMPANY NAME CHECKING AND BOOKING • DONE VIA AHU ONLINE BY NOTARY AND PUBLIC • AUTHORIZED CAPITAL DEPOSITED • IN ACCORDANCE TO THE AGREEMENT OF RELATED PARTIES • COMPANY NAME BOOKING IDR 200, 000 • IN ACCORDANCE TO THE AGREEMENT OF RELATED PARTIES • COMPANY NAME BOOKING IDR 100, 000 • LEGALIZATION OF THE LEGAL ENTITY IDR 1, 000 • LEGALIZATION OF THE LEGAL ENTITY IDR 600, 000 • COMPANY ESTABLISHMENT COST NOTARY FEES 1. 5% from Deed of Establishment (IDR 6, 495, 000) GOVERNMENT FEES IDR 580, 000 • REGISTRATION OF NATIONAL HEALTH CARE SECURITY • REGISTRATION OF NATIONAL SOCIAL SECURITY • LOOK AFTER THE LETTER OF BUSINESS PERMIT & COMPANY REGISTRATION • REGISTRATION OF EMPLOYEE AT DEPARTMENT OF MANPOWER • SURVEY RESULT OF EODB BEST PRACTICE Netherland (22) NOTARY FEES IDR 4, 000 GOVERNMENT FEES IDR 400, 000 • 7 DAYS • 2 SEPARATED PROCEDURE • DONE VIA ONLINE IN 1 FORM AND WEBSITE • MERGED INTO 1 PROCEDURE AT OSS CENTER • 1 SEPARATED PROCEDURE • MERGED INTO 1 PROCEDURE TOGETHER WITH LETTER OF BUSINESS PERMIT & COMPANY REGISTRATION AT OSS CENTER • 11 PROCEDURES • 5 PROCEDURES • 24. 9 DAYS • 7 DAYS • IDR 2, 780, 000 (19. 4% from income per capita) • IDR 1, 950, 000 (13. 6% from income per capita) and Does not Require Minimum investation Procedure: 4 Time: 4 hari Cost: 4. 5 % income per capita 05

02 Dealing with Construction Permit SIMPLE COMMERCIAL BUILDING / WAREHOUSING 2 FLOOR WITH BUILDING 1, 300 M 2 BEFORE 17 Procedures 200 Days 6 PROCEDURE Procedures TIME IDR 115, 381, 380 (5% from warehouse value) BEST PRACTICE Vietnam (24) AFTER COST 49 Days 81, 240, 630 IDR Maximum (3. 75% from warehouse value) Reduction of Building Permit (IMB) Retribution Fee for MSMEs with a maximum area of < 1, 300 m 2 of 50% Procedure: 10 Time: 166 days Cost: 0. 8% building warehouse value 06

03 Registering Property BEST PRACTICE On Cost* BEFORE 5 Procedures Georgia (3): 0 % New Zealand (1): 0. 1 % Singapore (19): 2. 9 % Vietnam (59) 0. 6 % AFTER 4 * From Property Value Procedures Indonesia 8. 3% 28 Working Days 5% Income Tax RP Rank: 118 Income Tax: 2. 5% Land Building Transfer Duty (BPHTB): 5% Administration: 0. 8% 5. 5 Working Days 2. 5% Income Tax *Income Tax 1% applicable for Simple House or Flats BPHTB < 5% NEEDS TO BE LOWERED Land Building Transfer Duty 07

04 Getting Electricity BEFORE (49) AFTER (9) Procedure 4. 8 3 Installation Time 57. 7 days 25 days Installation Fee IDR 775 / VA (Pre-Paid) IDR 775 / VA (Installation Fee* to be installed 12/24 months together with monthly electricity bill) Inspection and Compliance Certificate (SLO) Fee IDR 17. 5 / VA IDR 15 / VA Total Cost 357% from income per capita 53. 71% from income per capita** BEST PRACTICE Brunei (21) Procedure: 4 Time: 35 days Cost: 54. 2% from income per capita *Total Installation Fee: Installation Fee + Deposit Charges IDR 165/VA + Stamp duty. ** Assuming the WB DB team calculates the cost of IDR 0 included in the electricity bill for 12 or 24 months. 08

05 Paying Taxes INDONESIA OFFLINE SYSTEM Payments (number per year): 43 Time (hours per year): 221 Total tax rate (% of profit): 30. 6% Postfiling Index (0 -100): 76. 5 ONLINE SYSTEM 54 10 PROCEDURES Payments (number per year): 10 Time (hours per year): 221 Total tax rate (% of profit): 30. 6% Postfiling Index (0 -100): 76. 5 BEFORE AFTER TOTAL PROCEDURES BEST PRACTICE Korea (23) Payments (number per year) : 12 Time (hours per year) : 188 Total tax rate (% of profit) : 33. 1% Postfiling Index (0 -100) : 92. 58 BEFORE AFTER COMPANY INCOME TAX 13 2 SOCIAL SECURITY CONTRIBUTION 1 1 CORPORATE GUARANTEE 12 1 PROPERTY/CAPITAL GAIN TAX 1 1 PROPERTY TAX 1 1 VEHICLE REGISTRATION TAX 1 1 BIAYA MATERAI 1 1 EMPLOYMENT INCOME TAX 1 1 CONTRIBUTION 09

06 Getting Credit Financial Service Authority (OJK) has issued licenses to private credit bureaus in indonesia: • PT Kredit Biro Indonesia Jaya • PT Pefindo Biro Kredit (soft launching operating 27 March 2017) IMPACT Enhance national competitiveness through providing credit information access for the financial service industry actors BEST PRACTICE Malaysia (20) Strength of legal rights index (0 -12): 7 Depth of credit information index (0 -8): 8 Credit registry coverage (% of adults): 62. 4% Credit bureau coverage (% of adults): 76. 4% BEFORE AFTER FIDUSIA ONLINE SYSTEM IMPACT: DATABASE NOT YET DEVELOPED TO SEARCH BASED ON DEBTOR NAME, OBJECT TYPE, AND CERTIFICATE NUMBER. SEARCHING FUNCTION ARE ALLOWED TO BE ACCESSED ONLY BY NOTARY. THE COST IS IDR 50. 000 (DETERMINED BY THE GOVERNMENT REGULATION NO. 10/2015). FIDUSIA DATA IMPROVEMENT ACCORDING TO DEED DONE MANUALLY BY THE OFFICER DURING 2 WEEKS. ENHANCED FIDUSIA ONLINE CAPABILITY IMPACT: DATABASE COULD BE FOUND BASED ON DEBTOR NAME, OBJECT TYPE, AND CERTIVICATE NUMBER. SEARCHING FUNCTION ARE ACCESSIBLE FOR PUBLIC NOT ONLY BY NOTARY. THE COST IS IDR 50. 000 (DETERMINED BY THE GOVERNMENT REGULATION NO. 10/2015) FIDUSIA DATA IMPROVEMENT ACCORDING TO DEED DONE ONLINE AND REALTIME. 10

07 Protecting Minority Investor Adding Point BEST PRACTICE SHAREHOLDER RIGHTS CORPORATE TRANSPARENCY SHAREHOLDER S ACTION India (13) Extent of disclosure index (0 -10): 7 Extent of director liability index (0 -10): 6 Ease of shareholder suits index (0 -10): 7 Extent of shareholder rights index (0 -10): 10 Extent of ownership and control index (0 -10): 8 Extent of corporate transparency index (0 -10): 6 ACCESS TO EVIDENCE OWNERSHIP AND CONTROLLER INDONESIA GENDER DIVERSITY PUU No. 40/2007 POJK No. 33 Year New Assessment Index in EODB 2018 2014 on Board of Directors and Board of Commissioners of Issuers or Public Companies BEFORE ACCESS TO EVIDENCE New Policies for Shareholder Rights and Corporate Tranparency Index Financial Service Authority (OJK) publishes two new regulations: • POJK No. 10/POJK. 04/2017 Year 2017 about POJK Revision No. 32/POJK. 04/2014 on Plans and Implementation of GMS of PT (limited liability company) which gives 2 points “YES” on Shareholders Right Index (8/10). • POJK No. 11 Year 2017 on Ownership report or any change of share ownership of PT which gives 1 point “YES” on Corporate Tranparency Index (6/10). Extent of disclosure index (0 -10) : 10 Extent of director liability index (0 -10) : 5 Ease of shareholder suits index (0 -10) : 2 Extent of shareholder rights index (0 -10) : 6 Extent of ownership and control index (0 -10) : 6 Extent of corporate transparency index (0 -10) : 5 AFTER Extent of disclosure index (0 -10) : 10 Extent of director liability index (0 -10) : 5 Ease of shareholder suits index (0 -10) : 2 Extent of shareholder rights index (0 -10) : 8 Extent of ownership and control index (0 -10) : 6 Extent of corporate transparency index (0 -10) : 6 11

08 Trading Across Borders BEFORE AFTER 3 days 0, 5 days Separated Online (MPN G 2/State Acceptance Module 2 nd Generation) INSW and integrated Different number identity/one by one Single Identity Number Inaportnet integrated with INSW Manual E-Billing CHANGES Delivery Order Online Payment of Taxation and PNBP under the Ministry of Finance Exit/Entry Permit Customs Registration Docked and Sailed Ship THC/Terminal Handling Charge Payment BEST PRACTICE Norwegia (22) Border Compliance Time to export (hours): 2 Cost to export (USD): 125 Time to import (hours): 2 Cost to import (USD): 125 Documentary Compliance Time to export (hours): 2 Cost to export (USD): 0 Time to import (hours): 2 Cost to import (USD): 0 12

09 Resolving Insolvency 13

10 Enforcing Contract 14

Jl. Jend. Gatot Subroto 44, Jakarta 12190 P. O. Box 3186, Indonesia P. +62 21 5252 008 (Hunting) 0807 100 2576 (Contact Center) F. +62 21 5252 008