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I ndonesia's economic freedom score is 58.5, making its economy the 100th freest in the 2014 index. Over the 20-year history of the Index, Indonesia has advanced its score by about 4 points. Despite some progress, judicial system remains vulnerable to political interference.
I ndonesia's economic freedom score is 58.5, making its economy the 100th freest in the 2014 index. Over the 20-year history of the Index, Indonesia has advanced its score by about 4 points. Despite some progress, judicial system remains vulnerable to political interference.
I ndonesia's economic freedom score is 58.5, making its economy the 100th freest in the 2014 index. Over the 20-year history of the Index, Indonesia has advanced its score by about 4 points. Despite some progress, judicial system remains vulnerable to political interference.
See page 471 for an explanation of the methodology or visit the Index Web site at heritage.org/index. 2012 data unless otherwise noted. Data compiled as of September 2013. Quick Facts Population: 244.5 million GDP (PPP): $1.2 trillion 6.2% growth in 2012 5-year compound annual growth 5.9% $4,977 per capita Unemployment: 6.2% Ination (CPI): 4.3% FDI Inow: $19.9 billion Public Debt: 24.0% of GDP Economic Freedom Score Least Most free free 50 25 75 0 100 0 20 40 60 80 100 Country Comparisons Freedom Trend Country World Average Regional Average Free Economies 2010 2011 2012 2014 2013 54 55 56 57 58 59 60 58.5 60.3 58.5 84.1 58.5 I ndonesias economic freedom score is 58.5, making its economy the 100th freest in the 2014 Index. Its score is 1.6 points better than last year due to notable improvements in business freedom, investment freedom, and financial free- dom that offset small declines in labor freedom and freedom from corruption. Indonesia is ranked 21st out of 42 countries in the AsiaPacific region, and its overall score is the same as the regional average but below the world average. Over the 20-year history of the Index, Indonesia has advanced its economic freedom score by about 4 points. This modest overall score increase has been relatively broad-based, facili- tated by improvements in six of the 10 economic freedoms including trade freedom, freedom from corruption, and fiscal freedom, each of which gained 10 points or more. Nonetheless, the Indonesian economy continues to be con- sidered mostly unfree due to the lack of progress in other critical areas of economic freedom. Indonesia has lagged in promoting the effective rule of law. The judicial system remains vulnerable to political interference, and property rights are not strongly protected. Despite some progress, lin- gering corruption continues to undermine enforcement of the rule of law and hampers the realization of Indonesias full growth potential. BACKGROUND: Indonesia is the worlds most populous Mus- lim-majority democracy. Since 1998, when long-standing authoritarian ruler General Suharto stepped down, Indone- sias nearly 250 million people have enjoyed a widening range of political freedoms, and participation in the political pro- cess is high. President Susilo Bambang Yudhoyono has tried to address corruption and encourage much-needed foreign investment, but the weak rule of law remains a major impedi- ment to attracting capital. As a member of the G-20 and a driv- ing force within the Association of Southeast Asian Nations, Indonesia plays a growing role at the multilateral level. The increasingly modern and diversified economy has recovered from the global recession. World Rank: 100 Regional Rank: 21 INDONESIA 242 2014 Index of Economic Freedom Property Pights lreedom rom Corruption liscul lreedom Covernment Spending 8usiness lreedom Lubor lreedom Monetury lreedom 1rude lreedom nvestment lreedom linunciul lreedom Business Freedom Labor Freedom Monetary Freedom RCUlATCRY ffICINCY CPN MARkTS Trade Freedom Investment Freedom Financial Freedom CCVRNMNT SIZ Fiscal Freedom Government Spending RUl Cf lAW Property Rights Freedom from Corruption 0 20 40 0 80 00 0 20 40 0 80 00 0 20 40 0 80 00 0 20 40 0 80 00 Country World Average Rank Change 1Year Score RUl Cf lAW CCVRNMNT SIZ RCUlATCRY ffICINCY CPN MARkTS 20.0 +l8.0 +l0.2 +0.l 0.2 l.3 +5.6 +29.8 l0.0 +l0.0 93rd 118th 62nd 13th 139th 146th 78th 102nd 132nd 41st 30.0 28.0 83.4 89.8 54.8 47.8 76.4 74.8 40.0 60.0 0 2.0 0 0.6 4.6 3.0 0.9 0.2 5.0 l0.0 Long-Term Score Change (since 1995) THE TEN ECONOMIC FREEDOMS Corruption remains endemic. In 2013, the chief oil-and-gas regulator was arrested on corrup- tion charges. In 2012, there were several high-profile convictions for bribery and money laun- dering. The judiciary has demonstrated its independence in some cases, but the court system remains plagued by corruption and other weaknesses. Property rights are generally respected, but enforcement is inefficient and uneven. Despite some progress, overall regulatory efficiency is weak. Launching a business takes more than a month on average, and licensing requirements cost slightly less than the level of aver- age annual income. Regulations concerning the creation and termination of employment rela- tionships are relatively costly. In June 2013, the legislature voted to reduce costly government subsidies for gasoline and diesel fuel. Indonesias average tariff rate is only 2.6 percent, but import licensing and quotas further restrict trade. Foreign investment in several sectors of the economy requires government approval. The financial sector remains stable, and a Financial Services Authority has been formed to improve regulatory efficiency. The government has allowed more foreign involve- ment in the financial sector, although limits remain. The top individual income tax rate is 30 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden is 11.8 percent of gross domestic income. Public spending is 19 percent of GDP, and public debt has fallen to 24 percent of gross domestic output. The government has raised subsidized fuel prices to help narrow fiscal shortfalls. INDONESIA ( continued )