Improving the Ease of Doing Business in Indonesia: Problems Related to Contract Enforcement in the Court

Abstract

Under the administration of President Joko Widodo, one of the government's priorities in the economic sector is to improve the ranking of the ease-of-doing business index, with the overall aim is to increase foreign investment. This index is a method established by the World Bank to measure the level of easiness of investment in a country. The measurements are conducted by a method consisting of 10 main indicators including two indicators directly related to the judicial process: enforcing contracts and resolving insolvency. On overall measurement, Indonesia currently ranks 91 (from the target of ranking 40) and ranks 166 regarding the enforcing contract indicator. This indicates and gives an impression that the process of enforcing contracts through the courts in Indonesia is still ineffective and inefficient. Consequently, it may contribute to reduced investment, slow growth, and difficult business environment. Through legal normative research, this paper will discuss the problems faced in the process of contract enforcement in the Indonesian courts in the context and scope of the ease-of-doing business index. This paper will also discuss initiatives taken by the Supreme Court to overcome the problems.