T

he confidence of British firms in the Indonesian economy has dropped but still positive overall, according to a survey released by a commerce group on Thursday.

Business confidence among British firms in Indonesia fell 23 percentage points to 60 percent this year, from 83 percent last year, a result attributed to macro-economic and political conditions, the survey showed.

'€œThe outlook remains positive for regulatory and legal environments. However, the concern for Britcham is the decline of confidence in the political environment, fiscal policy and investment climate,'€ said Haslam Preeston, the chairman of the British Chamber of Commerce in Indonesia (Britcham), which carried out the survey.

In line with the shrinking business confidence, British firms are also more cautious about business conditions and the ease of doing business as reflected by the scores measuring the two indicators, which fell 23 percentage points to 66 percent and by 15 percentage points to 50 percent, respectively.

The business group, whose presence in Indonesia has spanned over 30 years, surveyed 100 firms registered as its members. The firms work in a wide array of sectors such as oil and gas, manufacturing, mining, retail and consumer goods, real estate and services.

The oil and gas sector recorded the lowest level of confidence with 33 percent followed by mining with 22 percent, while the sectors that scored the highest were retail and consumer goods with 72 percent and machinery and construction with 67 percent.

'€œThe regulatory uncertainty would be the key driver behind that. Regulatory uncertainty really affects the whole nature of the oil and gas sector, while export taxes have a similar affect on the mining sector. These factors cause less confidence in business,'€ Preeston said.

However, the sentiment could strengthen in the months ahead as the economy improved and despite the smaller level of confidence, British firms remain broadly confident in doing business in Indonesia, he added.

The survey proposed some main recommendations for the country'€™s policy makers, particularly to adopt a business-friendly approach to the development of new laws and regulations, streamline and simplify government services and execute key infrastructure projects to solve current bottlenecks.

Collectively, British firms are one of the top five foreign investors in Indonesia. Last year, investment by British firms totaled US$934.4 million in 97 projects, according to Investment Coordinating Board (BKPM) statistics. From January to September this year, the figure stood at $982.9 million in 178 projects.

In response to the survey, BKPM chief Mahendra Siregar, who took part in the survey'€™s release, acknowledged the hurdles faced by British firms in conducting business in Indonesia, saying that the problems also rang true for other foreign investors.

'€œWe understand all the concerns that businesspeople have raised, particularly pertaining to bureaucratic reforms, infrastructure, improvement in investment climate and so on, and we have already prepared concrete measures to address these issues,'€ he said.

Mahendra added that the government would do its best to implement a few measures suggested by Britcham in a bid to regain business confidence among British firms in the future.