Cost of Doing Business

Cost of doing business in Indonesia sources from Ease of Doing Business Report 2019, a study elaborated by the World Bank Group to measure the costs to firms of business regkengulations and their enforcement across 185 economies and selected cities at the subnational and regional level.

To have perspectives on business related regulation and cost upon doing business in Indonesia, please download the “Doing Business 2019: Economy Profile Indonesia” handbook on this link.

Cost of Doing Business in Indonesia – Jakarta 2019

Detail – Starting a Business in Jakarta – Procedure, Time, Cost
No.
Procedure
Time to Complete
Associated Cost
Agency
1 Pay fee for obtaining clearance of company name Less than one day (online procedure) IDR 100,000 Notary
2 Obtain clearance for the company’s name at the Ministry of Law and Human Rights Less than one day (online procedure) Per Regulation No. 8 of 2018 of the Ministry of Law and Human Rights of the Republic of Indonesia, the notary fees for preparation and notarization of company documents are:

IDR 500,000 for companies with a capital of up to IDR 25 million;

IDR 2 million, for companies with a capital of up to 500 million; and

IDR 4 million for companies with a capital up to IDR 1 billion.

Notary
3 Arrange for a notary to obtain the standard form of the company deed and notarize company documents 1 day (simultaneous with previous procedure) Per Regulation No. 8 of 2018 of the Ministry of Law and Human Rights of the Republic of Indonesia, the notary fees for preparation and notarization of company documents are:

IDR 500,000 for companies with a capital of up to IDR 25 million;

IDR 2 million, for companies with a capital of up to 500 million; and

IDR 4 million for companies with a capital up to IDR 1 billion.

Notary
4 Apply to the Ministry of Law and Human Rights for approval of the deed of establishment Less than one day (online procedure) The cost breakdown is as follows (as determined by Regulation No. 8 of 2018 of the Ministry of Law and Human Rights of the Republic of Indonesia):

500,000 IDR for validation of company as legal entity;

430,000 IDR for publication in State Gazette and publication in the Supplement State Gazette.

Ministry of Law and Human Rights
5 Apply for the Certificate of Company Domicile 2 days no charge Municipality
6 Pay the non-tax state revenue (PNBP) Less than one day

(online procedure)

The cost breakdown is as follows (as determined by Regulation No. 8 of 2018 of the Ministry of Law and Human Rights of the Republic of Indonesia):

500,000 IDR for validation of company as legal entity;

430,000 IDR for publication in State Gazette and publication in the Supplement State Gazette.

Notary
7 Apply for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP) and the company registration certificate (Tanda Daftar Perusahaan, TDP) 7 days on average no charge One Stop Integrated Service Body of DKI Jakarta Provincial
8 Register with the Ministry of Manpower 1 day no charge Ministry of Manpower
9 Apply for the Workers Social Security Program (BPJS Ketenagakerjaan) and for the Healthcare Insurance Program (BPJS Kesehatan) 7 days no charge Social Security Administrative Bodies (BPJS Ketenagakerjaan, BPJS Kesehatan)
10 Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP) 1 day (simultaneous with previous

procedure)

no charge Tax Office

             

Details – Dealing with Construction Permits in Jakarta – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
Agency
1 Request and obtain notarized copy of land ownership certificate 1 day IDR 25,000 Notary
2 Request city planning permit (KRK) and approval of the architectural drawing Pengesahan Gambar Perencanaan Arsitektur (formerly known as building site plan – RTLB) from City Planning Office 1 day IDR 1,482,000 Local Administrative Building Office – City Planning Office within the

One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)

3 Receive inspection from City Planning Office 1 days no charge Local Administrative Building Office – City Planning Office within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
4 Obtain KRK and Pengesahan Gambar Perencanaan Arsitektur (formerly

known as RTLB) from City Planning Office

20 days no charge Local Administrative Building Office – City Planning Office within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
5 Request and obtain the preparation of the Environmental Management Plan (UKL) and Environmental Monitoring Plan (UPL) 30 days IDR 15,000,000 External Consultant
6 Request and obtain the approval of the Environmental Management Plan (UKL) and Environmental Monitoring Plan (UPL) 10 days no charge Regional Environmental Control Agency (BPLHD)
7 Request and obtain building construction permit (IMB) 42 days IDR 68,281,500 Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
8 Receive inspection upon completion of foundation 1 day no charge Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
9 Receive inspection upon completion of the structure 1 day no charge Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
10 Receive inspection upon completion of roofing 1 day no charge Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
11 Submit building completion report to Supervision and Control Office 1 day no charge Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
12 Receive final inspection from the Fire Department

 

1 day no charge Fire Department
13 Receive final inspection from the Supervision and Control Office 1 day no charge Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
14 Obtain water and sewerage connection 20 days IDR 30,492,880 PAM Jaya
15 Obtain SLF (certificate of proper functioning) from the Supervision Office 49 days no charge Local Administrative Building Office – Supervision and Control Office (P2B) within the One-Stop Integrated Service Agency (Badan Pelayanan Terpadu Satu Pintu/BPTSP)
16 Register the warehouse with the Regional Tax Services Unit 11 days no charge Regional Tax Services Unit (Unit Pelayanan Pajak Daerah or UPPD) in the relevant Regional Government Office
17 Register the warehouse with the Regional Office of the Ministry of Trade 9 days IDR 100,000 Ministry of Trade (Regional Office)

Details – Getting Electricity in Jakarta – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
Agency
1 Obtain inspection and certificate of operation worthiness (SLO) for the internal wiring installation 7 calendar days IDR 2,205,000 KONSUIL/ PPILN/ JASERINDO
2 Submit connection application to PLN and await approval and estimate 3 calendar days IDR 123,839,292.23 PT Perusahaan Listrik Negara (PLN)
3 Obtain external works from PLN’s contractor 21 calendar days IDR 0 PT Perusahaan Listrik Negara (PLN)
4 Obtain final connection from PLN 3 calendar days IDR 0 PT Perusahaan Listrik Negara (PLN)

 

Details – Registering Property in Jakarta – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
Agency
1 Land certificate examination at the Land Office 3 days IDR 50,000 Land Office
2 Payment of the transfer and acquisition taxes 1 day IDR 182,958,760.17; (2.5% of the property price (Transfer Tax) + 5% of the property price minus Rp. 80,000,000 which is tax-free (Tax on Acquisition of Land and Building)) Bank
3 Execution of sale and purchase of Land Deed by a PPAT official 5 days IDR 24,927,834.69;

(1% of the property value)

Land Deed/PPAT Official
4 Registration of the Land Deed at the local Land Office under the name of the buyer 15 days IDR 2,554,784; (1/1000 of the property value + Rp. 50,000 (administrative fee) + Stamp duty of Rp. 6,000 per document

(2 required))

Land Office
5 Registration of the Land Deed at the Jakarta Regional Government Revenue Office under the name of a buyer 1 day no charge Jakarta Regional Government Revenue Office (“Regional Tax Office”)

Details – Getting Credit – Jakarta
Indicator
Jakarta
East Asia & Pacific
OECD high income
Best Regulatory Performance
Strength of legal rights index (0-12) 6 7.1 6.1 12 (5 Economies)
Depth of credit information index (0-8) 8 4.2 6.7 8 (42 Economies)
Credit registry coverage (% of adults) 58.2 16.9 21.8 100.0 (4 Economies)
Credit bureau coverage (% of adults) 38.1 23.0 65.3 100.0 (25 Economies)
Strength of legal rights index (0-12) 6 7.1 6.1 12 (5 Economies)

Protecting Minority Investor – Jakarta
Indicator
Jakarta
East Asia & Pacific
OECD high income
Best Regulatory Performance
Extent of disclosure index (0-10) 10.0 5.6 6.5 10 (13 Economies)
Extent of director liability index (0-10) 5.0 4.9 5.3 10 (Cambodia)
Ease of shareholder suits index (0-10) 2.0 6.7 7.3 10 (Djibouti)
Extent of shareholder rights index (0-10) 7.0 5.6 6.4 10 (Kazakhstan)
Extent of ownership and control index (0-10) 7.0 4.0 5.4 None in 2017/18
Extent of corporate transparency index (0-10) 7.0 5.3 7.6 10 (6 Economies)

 

Paying Taxes  – Jakarta
Indicator
Jakarta
East Asia & Pacific
OECD high income
Best Regulatory Performance
Payments (number per year) 43 21.2 11.2 3 (Hong Kong SAR, China)
Time (hours per year) 207.5 180.9 159.4 49 (Singapore)
Total tax and contribution rate (% of profit) 30.1 33.5 39.8 26.1% (32 Economies)
Postfiling index (0-100) 68.82 56.42 84.41 None in 2017/18
Payments (number per year) 43 21.2 11.2 3 (Hong Kong SAR, China)

Taxes by Type
Answer
Profit Tax (% of profit) 18.1
Labor Tax and Contributions (% of profiit) 11.6
Other Taxes (% of profit) 0.4

 

Figure – Paying Taxes in Jakarta and comparator economies – Measure of Quality

Trading Across Borders  – Jakarta
Indicator
Jakarta
East Asia & Pacific
OECD high income
Best Regulatory Performance
Time to export: Border compliance (hours) 48 54.7 12.5 1 (19 Economies)
Cost to export: Border compliance (USD) 250 382.2 139.1 0 (19 Economies)
Time to export: Documentary compliance (hours) 60 57.6 2.4 1 (26 Economies)
Cost to export: Documentary compliance (USD) 130 109.4 35.2 0 (20 Economies)
Time to import: Border compliance (hours) 80 69.2 8.5 0 (25 Economies)
Cost to import: Border compliance (USD) 384 415.8 100.2 0 (28 Economies)
Time to import: Documentary compliance (hours) 106 57.0 3.4 1 (30 Economies)
Cost to import: Documentary compliance (USD) 160 109.5 24.9 0 (30 Economies)

Enforcing Contracts  – Jakarta
Indicator
Jakarta
East Asia & Pacific
OECD high income
Best Regulatory Performance
Time (days) 390 581.1 582.4 None in 2017/18
Cost (% of claim value) 74.0 47.2 21.2 None in 2017/18
Quality of judicial processes index (0-18) 8.0 7.9 11.5 None in 2017/18

Resolving Insolvency  – Jakarta
Indicator
Jakarta
East Asia & Pacific
OECD high income
Best Regulatory Performance
Recovery rate (cents on the dollar) 64.8 35.5 70.5 None in 2017/18
Time (years) 1.1 2.6 1.7 0.4 (Ireland)
Cost (% of estate) 22.0 20.6 9.3 1.0 (Norway)
Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. ..
Strength of insolvency framework index (0-16) 10.5 6.8 11.9 None in 2017/18

DB 2019 Resolving Insolvency Score

Labor Market Regulation  – Jakarta
Hiring
Answer
Fixed-term contracts prohibited for permanent tasks? Yes
Maximum length of a single fixed-term contract (months) 24.0
Maximum length of fixed-term contracts, including renewals (months) 36.0
Minimum wage applicable to the worker assumed in the case study (US$/month) 259.0
Ratio of minimum wage to value added per worker 0.6
Maximum length of probationary period (months) 3.0
 

Working hours

Standard Workday 8.0
Maximum number of working days per week 6.0
Premium for night work (% of hourly pay) 0.0
Premium for work on weekly rest day (% of hourly pay) 0.0
Premium for overtime work (% of hourly pay) 75.0
Restrictions on night work? No
Whether non-pregnant and non-nursing women can work the same night hours as men Yes
Restrictions on weekly holiday? No
Restrictions on overtime work? No
Paid annual leave for a worker with 1 year of tenure (working days) 12.0
Paid annual leave for a worker with 5 years of tenure (working days) 12.0
Paid annual leave for worker with 10 years of tenure (working days) 12.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 12.0
 

Redundancy Rules

Dismissal due to redundancy allowed by law? Yes
Third-party notification if one worker is dismissed? Yes
Third-party approval if one worker is dismissed? Yes
Third-party notification if nine workers is dismissed? Yes
Third-party approval if nine workers is dismissed? Yes
Retraining or reassignment obligation before redundancy? Yes
Priority rules for redundancies? No
Priority rules for reemployment? No
 

Redundancy Cost

Notice period for redundancy dismissal for a worker with 1 year of tenure 0.0
Notice period for redundancy dismissal for a worker with 5 years of tenure 0.0
Notice period for redundancy dismissal for a worker with 10 years of tenure 0.0
Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 0.0
Severance pay for redundancy dismissal for a worker with 1 year of tenure 17.3
Severance pay for redundancy dismissal for a worker with 5 years of tenure 60.7
Severance pay for redundancy dismissal for a worker with 10 years of tenure 95.3
Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 57.8
 

Job Quality

Equal remuneration for work of equal value? No
Gender non-discrimination in hiring? No
Paid or unpaid maternity leave mandated by law? Yes
Minimum length of maternity leave (calendar days)? 90.0
Receive 100% of wages on maternity leave? Yes
Five fully paid days of sick leave a year? Yes
Unemployment protection after one year of employment? No
Minimum contribution period for unemployment protection (months)? n.a
 

 

Source: The World bank (EODB Report 2019)