Linking Business Environment Reform with Gender and Inclusion: A Study of Business Licensing Reform in Indonesia

Abstract

Business environment reform (BER) targets inadequate business regulations. It is intended to remove constraints to business investment, enabling growth and job creation, and create opportunities for international business to contribute to and benefit from this growth. However, there is a lack of detailed knowledge of the impact of BER on gender and inclusion (G&I). While a review of existing literature suggests that in general, there is no direct link between BER and G&I, indirect links are likely through the influence of BER on firm performance. Outcomes will be influenced by the differential ways in which women-led firms experience the business environment when compared to their male counterparts, with disparities based on how they are treated under the law, as well as structural and sociocultural factors. The fact that in many countries, female-led firms are fewer and smaller than those of their male counterparts, and may operate in different sectors, also affects these dynamics. This research offers new insights through an in-depth analysis of the impact of the Pelayanan Terpadu Satu Pintu (PTSP) or one-stop shop business licensing reform in 2009 on firm performance in Indonesia, and how these impacts vary based on the gender of firm leadership. The results find that on average, firms benefited from improved business performance (sales), as a direct or indirect effect of this reform, as well as an increase in the number of medium and large-scale firms. Outside Jakarta (Bali, Banten, Lampung), women-led firms experienced a small but significant benefit relative to male-led firms, related to both sales and the number of medium and large-scale firms they run. In Jakarta, women-led firms continued to lag behind men and there were no significant effects on employment, and this held across province and gender. These findings are based on an analysis of the PTSP reform using data from the World Bank Enterprise Survey (WBES), a survey of small, medium and large firms (i.e. with more than four employees) which took place in Indonesia between 2009 and 2015.