The Asia-Pacific region has been ranked the second most complex region for multinationals to comply with corporate regulation and legislation in 2015, according to the TMF Group’s Global Benchmark Complexity Index.

The annual study by the TMF Group, ranking 95 jurisdictions across Europe, the Middle East, Africa, Asia-Pacific and the Americas according to how complex they are to do business in from a regulatory and compliance perspective, finds Indonesia in second place among countries. Two other Asian countries make the top 10 – China (5th) and Thailand (9th) – with Japan, South Korea and Malaysia also in the top 20.

Indonesia has risen seven places this year while retaining its place in the top 10 most challenging countries for three years running. According to the TMF Group, while in recent years the Indonesian government has made significant progress in improving the country’s business environment, the legal system still lags behind its regional peers and suffers from a high level of disjointed government bureaucracy.

The government’s decision in 2015 to reduce the permit to stay for foreigners to six months has had a particularly negative impact on encouraging doing business in the country. It has caused significant disruption for foreign-owned companies and their senior management, forcing them to leave and then re-enter the country to renew their permits, added the TMF Group.

China also rose seven places. According to the TMF Group, the numerous different provinces in China with separate regulatory regimes, combined with the variety of different dialects across the country are some of the elements which have continued to contribute to the jurisdiction’s complexity for business compliance. Chinese authorities have sought to simplify the regulatory framework by combining three of the business licenses into a single one and ensuring that two annual submissions are no longer required.

For Thailand, the unstable political environment, together with its highly bureaucratic government infrastructure, has fueled a complicated and challenging business environment in the country. As the situation shows little sign of abating, TMF’s experts predict that the country’s complexity ranking will not change over the coming year.