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Regulatory issues the biggest business barrier in RI: AmCham
All eyes on you: (from left) American Chamber of Commerce (AmCham) Indonesia president Brian Arnold, AmCham programs coordinator Mark Winkle, AmCham governor Douglas Ramage, AmCham communication manager Mary Silaban and AmCham managing director Andrew White talk with The Jakarta Postâs editorial staff at the Postâs office in Palmerah, West Jakarta, on Thursday
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All eyes on you: (from left) American Chamber of Commerce (AmCham) Indonesia president Brian Arnold, AmCham programs coordinator Mark Winkle, AmCham governor Douglas Ramage, AmCham communication manager Mary Silaban and AmCham managing director Andrew White talk with The Jakarta Postâs editorial staff at the Postâs office in Palmerah, West Jakarta, on Thursday. AmCham said the countryâs regulatory environment remained the biggest concern for American companies wanting to invest in Indonesia. (JP/AWO) (from left) American Chamber of Commerce (AmCham) Indonesia president Brian Arnold, AmCham programs coordinator Mark Winkle, AmCham governor Douglas Ramage, AmCham communication manager Mary Silaban and AmCham managing director Andrew White talk with The Jakarta Postâs editorial staff at the Postâs office in Palmerah, West Jakarta, on Thursday. AmCham said the countryâs regulatory environment remained the biggest concern for American companies wanting to invest in Indonesia. (JP/AWO)
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span class="inline inline-none">All eyes on you: (from left) American Chamber of Commerce (AmCham) Indonesia president Brian Arnold, AmCham programs coordinator Mark Winkle, AmCham governor Douglas Ramage, AmCham communication manager Mary Silaban and AmCham managing director Andrew White talk with The Jakarta Post's editorial staff at the Post's office in Palmerah, West Jakarta, on Thursday. AmCham said the country's regulatory environment remained the biggest concern for American companies wanting to invest in Indonesia. (JP/AWO)
Indonesia's regulatory environment is still the biggest impediment for American firms to do business in the country, the American Chamber of Commerce in Indonesia (AmCham) says.
AmCham Indonesia's new president, Brian Arnold, said Thursday that regulatory frameworks were the top issue to be addressed by the government to improve the overall business climate in Southeast Asia's biggest economy.
He cited some restrictions in the newly passed negative investment list (DNI) as barriers to investment in smaller energy projects and distribution services.
'There has been concern over the direction the policy has gone, making it more difficult, less competitive for business,' he said on the sidelines of AmCham's visit to The Jakarta Post office.
Indonesia's revised DNI, which rolled out in May, limits foreign ownership to 49 percent in power plants with a capacity from 1 and 10 megawatts.
In contrast, the previous list did not set an ownership cap as long as foreign firms teamed up with local partners.
It also sets a cap for maximum foreign ownership in the trade services of distribution, warehousing and cold storage at 33 percent.
Formerly, there was no limit for foreign investment in these trade services.
Other major obstacles included lengthy procedures to obtain business permits and a lack of incentives to lure foreign investment, Arnold further said.
The available tax holiday facility should be flexible to be applied in new investment projects other than five sectors set in the rule, he added.
With the current tax holiday facility, investors get five-to-10-year tax breaks for investment in five industrial sectors 'base metal, oil refining, petrochemical, renewable energy and telecommunication equipment ' with minimum investment of Rp 1 trillion (US$83.91 million).
Indonesia will continue to attract foreign investors, including United States firms, due to its market size and proximity to other markets, especially with the establishment of the Southeast Asian single market next year, according to Arnold.
A study jointly conducted by AmCham Indonesia, the US Chamber of Commerce and USAID, at the end of last year revealed that US companies planned an overall investment of $61 billion in Indonesia from last year until 2016 to 2018 whenever the regulatory environment was considered conducive for business.
Douglas Ramage, the governor and chair of the trade and investment committee at AmCham Indonesia, said that so far, the US had been the biggest investor in Indonesia, but the official data issued by the government might undervalue the scale of investment.
'It's because they [Investment Coordinating Board [BKPM] exclude the investment in the sectors where American companies are the biggest spenders, which is oil and gas,' he said.
According to the study, the US firms poured a total of $65 billion from 2004 and 2012, making the country the biggest spender in the sprawling archipelago of more than 17,000 islands.
Contrary to this figure, official data based on inflows of funds recorded by Bank Indonesia (BI) shows that US foreign direct investment (FDI) settled at only $7 billion during the eight-year period, placing the country as the fourth-biggest investor in Indonesia.
Other data released by the BKPM also refers to countries of origin of the funds as FDI sources,
thereby excluding US firms that invest in Indonesia through its subsidiaries in other countries, such as Singapore.
AmCham Indonesia was founded in 1971 and now represents around 600 companies, mostly US companies.
