T

he Investment Coordinating Board (BKPM) is to revoke thousands of investment permits granted to foreign and local investors who fail to spend money on various projects totaling trillions of rupiah.

Such a move was aimed at encouraging investors to strengthen their commitment in doing business in the country.

The permits to be revoked are 7,811 investment licenses worth Rp 584.9 trillion (US$43.8 billion) that were granted to foreign and domestic investors between 2000 and 2006. After several years, the investors did not follow through on their investment plans.

The total figure consists of 6,351 foreign direct investment projects worth Rp 279 trillion and 1,460 domestic ones amounting to Rp 305.9 trillion, BKPM data shows.

'€œInvestors who own the total 7,811 licenses have never applied for permit extension, nor reported their investment activities to the board for years,'€ BKPM deputy head for investment monitoring and implementation Azhar Lubis said in a press conference on Tuesday.

The permits, called '€œprincipal permits,'€ serve as an initial step for investors before pouring direct investment in Indonesia.

Normally, investors would start their business in the country several years after they secure the principle permit.

BKPM head Franky Sibarani said the agency decided to revoke the permits because the investors did not report the progress of their business realization after 10 years. According to him, the board will be proactively '€œfiltering prospective investors in the future.'€

The agency also revoked some of the permits because a number of investors suddenly provided reports on their progress or changes of shareholders in their companies after years of silence.

To make it worse, those investors did not apply for new principal permits, Franky added.

'€œWe want to ensure that direct investment coming to Indonesia is of good quality. This is important because the government already offers simplified procedures, such as one-stop service for permits and tax incentives,'€ Franky said.

Franky said that the board would revoke the licenses shortly after they had met their expiration dates '€” usually 2-5 years or more after the issuance date '€” if the investors did not report any progress of their project realizations. '€œInvestors whose permits were canceled should either apply for extension permits or new ones,'€ Franky said.

According to BKPM data, foreign investors with the biggest investment value whose licenses were to be revoked came from Malaysia with $4.1 billion, Singapore with $2.9 billion, Hong Kong and China with $2.4 billion and Japan with $2.4 billion.

Meanwhile, South Korea topped the list of foreign investors who had the most licenses to be revoked with 1,226 permits.

As for domestic investors, Azhar said that the board would hand over the revocation of their permits to local administrations.

Based on sectors, the projects with the biggest value of investment whose permits were to be revoked were in basic chemical manufacturing.

Greater Jakarta was home to the largest number of revoked licenses, followed by West Java, Bali, Riau Islands and Banten, according to BKPM data.

In March, the BKPM revoked 6,541 permits, issued between 2007 and 2012, worth $23 billion.

The board hopes to attract at least Rp 3.5 quadrillion of realized investments in five-years time, with Rp 519.5 trillion expected in this year alone. As of June, the country had attracted almost $150 billion of potential foreign and domestic investment, according to BKPM'€™s data.