Five Investment Issues in Indonesia

Everything which is made by humans is not perfect, includes all policies and regulations formulated by the government. Most of the initiatives make concern among the relevant stakeholders. According to several stakeholders in Panel Discussion on the Latest Government Policies and Obstacles Faced by Businesses, there are five things related to investment that should be taken into account more. These things are:

Firstly, Legal Compliance Expenses. Nowadays, Our country has the highest load interest of any Southeast Asian Nations, and these are believed as a major problem in term of improving the national business competitiveness, and is also seen as a slowing down economic factor.

Secondly, Licensing Procedures. Complicated and time-consuming license-issuance processing greatly diminishes the development of business operations.

Thirdly, Logistics Procedures. Transporting goods between different regions of the country, as well as to and from foreign countries, was a far from an efficient process. Ministry of Trade obliges businesses to first secure a pre-verification report from the port of embarkation and the long-winded procedures involved in this process places an extra burden on businesses. For instance, ships only take three days to arrive in Bangkok from Jakarta, however securing a pre-verification report takes seven days. The obligation to secure a pre-verification report, therefore, results in lengthy dwelling times for ships.

Fourthly, Negative Investment List Revised. The official launch last February of the government’s new negative investment list (DNI), as a part of its Tenth Economic Policy Package, was also a concern for Indonesian businesses. The revised DNI completely opened up some 35 business sectors to foreign direct investment (FDI), including the crumb-rubber industry and the cold-storage industry. The fear is that an influx of foreign commodities could ultimately cause Indonesian businesses to lose access to their own domestic market. The government’s policies contradict one another. One policy intends to improve a particular matter, while another policy allows for FDI. Eventually, our [local businesses’] access to the domestic market will be exhausted due to the influx of cheap goods from foreign countries.

Fifthly, Infrastructure Budget. This is the result of the country’s high unemployment level, as revealed in recent Central Statistic Board (BPS) data. According to this data, Indonesia’s unemployment level, as of March 2016, stood at some 7.02 million people. Inevitably, the construction of infrastructure will provide new employment opportunities and is thus vital. The construction of infrastructure has to be funded via the state budget, of course, however, hopefully, new infrastructure projects may compensate for the loss of employment opportunities across other sectors.


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