Money talks: Indonesian Investment Coordinating Board chairman Gita Wirjawan (second right) addresses a seminar at the World Bank headquarters in Washington, DC on Tuesday. Gita updated a World Bank panel of experts on the latest situation on Indonesia’s economic reforms, including in the areas of investment. JP/Riyadi Suparno
The Investment Coordinating Board (BKPM) has regained some of its past role in the areas of investment licensing, amendments to the negative list and preparation of the country’s investment road map.
Speaking at the International Monetary Fund headquarters and earlier at the World Bank on Tuesday, BKPM chairman Gita Wirjawan said he would do whatever it takes to make investment more welcome in the country, including pleading with other ministries to hand over licensing powers to BKPM.
“One time, I was asked to wait by one of the ministers, and I waited for one and a half hours. And I dared to wait. I took a completely private sector approach. I was not there for my ego. I was there for his signature,” Gita said.
In the end, he added, he got signatures from 15 ministers, who relegated their powers to BKPM.
With this new licensing power, BKPM could serve as a “one stop shop” for both foreign and domestic investors who want to invest in the real sector, [including manufacturing] and SMEs, leaving aside banking, oil and gas.
Under the one stop shop service, BKPM could process investment licensing as fast as in five hours and in seven days at the slowest. It aims eventually to be able to complete the process within one hour.
Gita said BKPM had also taken over responsibility for drafting amendments to the negative investment list from the Trade Ministry.
The negative list has drawn protests from investors by limiting investment opportunities. He said a new negative list would be ready in the next few months.
In addition, BKPM is also tasked to draft the investment road map that would chart the ways and means to transform Indonesia’s natural resource-based economy, towards the ultimate aim of achieving a knowledge-based economy.
The road map would include steps to increase capacity building to help build infrastructure, including improving regulatory frameworks.
Once infrastructure is much improved, then Indonesia should be able to kick off a major process of industrialization, which would need among other things to be backed by comprehensive fiscal policies, including possible tax holidays for high priority sectors.
“After all of these stages, we would start positioning Indonesia as one of the world’s knowledge-based economies, on a par with other developed countries in the region,” Gita said.
With BKPM assuming all these functions, it is no longer simply a promotional agency but is developing a policy focus, serving as a “kitchen” for policy making and implementation to help improve the investment climate, Gita added.
Gita noted however that the new powers bestowed upon BKPM were still far from what BKPM did during its glory days in the early 1980s, when the board was involved not only in licensing but also in making fiscal concessions like tax holidays.
What’s more important, Gita said, was to change the bureaucratic culture at BKPM towards one of serving the needs of investors, to help achieve the investment target of US$200 billion in five years.
“With the right tweaking, we should be able to achieve these numbers,” he said.