Recently the BBC wrote that Indonesia is a good country for entrepreneurs. As an Indonesian, I found the article hard to believe, primarily from the viewpoint of a technology entrepreneur.
Why? One reason is high tax rate. The last time I check the corporate tax rate is about 20%, income tax about 15% and value-added tax about another 15%. Of course Indonesia also uses progressive income and corporate tax schemes thus these rates are only ballpark figures. But you get the idea. Not only the official tax is rather high, there are also various kinds of bribes and kickbacks that you inevitably have to fork out when dealing with government bodies. What’s worse, I’ve heard from my colleagues that you also need to give kickbacks even when you’re doing business in the private sector.
All that taxes in return for parliament members that are either too busy backstabbing each other, playing Tetris, or watch porn on the job. Instead of progressing the nation, grow our economy, and stop selling out our rainforests.
Another reason is the lack of any legal certainty. The courts decisions still lean toward the favors of those who can dispense more money. In kickbacks of course. Hint: just look at the case of Ariel. Why do you think he got jail time? Because one husband of the many ladies who went with him is a powerful tycoon. To protect the guilty (and to protect myself) I wont tell you which one.
Yet another reason is the lack of buying power and brain drain. These two factors feed off each other and causes a downward spiral. That is, because salaries are low encourages people with technical skills to go outside the country to find jobs, which causes technology industry to suffer and pay even less, which exacerbate the problem. Salaries of good software engineers barely reaches $900/month gross whereas a Big Mac costs about $4. As you can see, things are also expensive over there but people haven’t got much to buy stuff with. That’s one of the reasons why selling consumer software doesn’t really work there.
On the other hand, its possible that BBC was being just another corporate click whore. They found a potentially controversial survey result and brought it up to get clicks from skeptics. Whether the survey was fair and accurate was not important since the BBC has enough clout to be believable by outsiders and the common crowd.
Another lesson learned saying that you shouldn’t immediately believe something is true just because a big media company reports it and says its true. There could be hidden hands at work behind the scenes with their own vested interests.