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New govt to pick up pace on investment procedures
In an impromptu visit to the Investment Coordinating Boardâs (BKPM) Jakarta headquarters on Tuesday, President Joko âJokowiâ Widodo found that the main thing he wanted to fix was the speed of investment procedures
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In an impromptu visit to the Investment Coordinating Board's (BKPM) Jakarta headquarters on Tuesday, President Joko 'Jokowi' Widodo found that the main thing he wanted to fix was the speed of investment procedures.
Jokowi aims to streamline all licensing procedures so that they fall under the authority of one body only, namely the BKPM. Such a system should be in place in the next three to six months, according to the former Jakarta governor.
'We are serious in handling licensing issues. When this has been done, [we] will try [to fix] the system in provinces, regencies and cities,' said Jokowi. 'We want to build a one-stop service for national licensing. So investors do not have to go to ministry one, two, three, and then the BKPM. One place is enough.'
Investment makes up 30 percent of Indonesia's economy and is a 'permanent source of funds to support economic growth', former BKPM chairman Mahendra Siregar said previously. The new chairman of the investment body will be named 'as soon as possible', Jokowi said.
The President's visit to the BKPM office, which was not included on his daily schedule, did not only surprise BKPM staff members but also Jokowi himself, as he found that investors waited days, weeks and even years to get a permit for power-plant investment.
'In the SOP [standard operating procedures], it should be done in three days [...] This cannot be ignored. [Especially for] power plants; they are for the people. Electricity is also for industry, for manufacturers. We want to make a breakthrough to boost investment in power plants,' said Jokowi.
Indonesia, Southeast Asia's top economy, scored 34th in the World Economic Forum's global competitiveness index this year that measures ease of doing business, with bureaucratic red tape and infrastructure shortcomings, including in electricity, being the lagging factors.
The country currently has a one-stop licensing services system in place, but implementation is still considered ineffective because a number of local administrations have yet to handle most of the licenses and still separate submission and processing offices, according to a study by the Center for Public Policy Analysis (CPPA).
With Indonesia's economy slowing to its lowest level in four years in the second quarter, and the export outlook remaining bleak with weak global demand, investment is one component of gross domestic product (GDP) that could be strengthened to attain higher growth.
Total foreign and domestic direct investments in the third quarter of this year reached Rp 119.9 trillion, and Rp 115.2 trillion in the second quarter, boosted by 50 planned smelter projects worth over $30 billion to be realized in the next few years.
The smelter investment was triggered by the previous government's policy that banned exports of raw ore in order to boost downstream industry and add value to Indonesia's exports.
Newly inaugurated Industry Minister Saleh Husin is keen on following on from his predecessor in spurring growth in the downstream industry to allow Indonesia to benefit from its abundant natural resources.
Saleh, a 51-year-old Rote-born businessman, said Tuesday that among his quick wins would be further boosting the development of the industry that brought added value to agricultural commodities and natural resources.
'Building the downstream industry was a program introduced by the previous minister. We aim to speed it up to achieve our goals more quickly,' he told reporters after taking over the post from former industry minister MS Hidayat.
Another top priority for Saleh will be to construct at least 10 industrial estates on islands outside Java, notably in the eastern part of the country, to allow more equal economic distribution and to absorb labor.
'The [manufacturing] industry is still mostly located on Java so it will be necessary to build industrial estates outside Java in order to accelerate growth there,' said Saleh, a 51-year-old politician from the Hanura Party, adding that he would also synergize his plans with those of his predecessor.
The urgency to spread industrial development to the eastern part of the sprawling archipelago of over than 17,000 islands was also a major concern for the previous government. The Industry Ministry has said it plans to build 36 industrial estates outside Java over the next 20 years.
Saleh further said that as job creation was also a key concern, he wanted to put a greater emphasis on the labor-intensive industry, believed to be a key part of reducing unemployment in the nation of more than 250 million inhabitants.
Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulisto, however, warned that apart from further promoting the downstream industry and the labor-intensive industry, another equally important challenge awaited the new industry minister, which was to stimulate the expansion of the import-substitute industry. 'We still import a lot of raw materials to support our industry. We can try to stimulate investments in the sector so that we can cut imports later,' he told The Jakarta Post.
- Esther Samboh contributed to this story
