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US firms seek better business climate
A United States business delegation has lodged a number of complaints over some key problems affecting its Indonesian operations with the government as it seeks a more conducive investment climate
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United States business delegation has lodged a number of complaints over some key problems affecting its Indonesian operations with the government as it seeks a more conducive investment climate.
Grouped under the US-ASEAN Business Council, delegates of more than 40 firms from the US, one of Indonesia’s major foreign investors, voiced their concerns about obligatory halal certification for medicines, certainty of raw material supply and sugar auctions, among other issues, when meeting Industry Minister Airlangga Hartarto at his office on Thursday.
Among the firms were Caterpillar, Cargill, Coca Cola, General Electric and GlaxoSmithKline (GSK).
The delegates pointed out that the Halal Certification Body (BPJPH) established recently by the Religious Affairs Ministry lengthened the drug-registration process and therefore, pushed up costs.
“The halal-certification process can take two years and the cost is higher than the potential sales so it’s not sustainable,” Prelia H. Moenandar, communications and government affairs director of PT Glaxo Wellcome Indonesia, the local arm of pharmaceutical firm GSK, told The Jakarta Post after the meeting.
GSK’s local presence in the shape of local factories that produce Panadol, among other products, and various vaccines, has been in operation for more than a decade.
A fast medicine-registration process is necessary to meet rising public demand for drugs, particularly since the National Health Insurance (JKN) scheme started a few years ago.
The US was the fifth-biggest foreign investor in Indonesia in the first half of this year, pouring in US$968.8 million, according to Investment Coordinating Board (BKPM) data. Last year, it funneled $1.1 billion, up 23.1 percent from 2015.
Other firms, carbonated drink producer Coca Cola and starch and sweetener maker Cargill, raised objections to the plan to introduce sugar auctions, and restrict imports of raw materials amid a shortage of supply in the domestic market, respectively.
The president of the ASEAN Business Unit of Coca Cola, Iain McLaughlin, said that sugar auctions, set to replace the direct business-to-business trading system at present, could prolong the trading process.
The Trade Ministry plans to introduce the new arrangement that requires food and beverage manufacturers to buy sugar from refiners through auctions in October. This aims to avert any leakage of industrial sugar into the market catering to household consumption and allow small and medium enterprises (SMEs) to buy sugar at fair prices.
In response to these complaints, Airlangga said he would bring the issues to the relevant ministries.
On the halal-certification issue, he acknowledged that the policy ran contrary to the government’s effort to improve public health and discussions were underway to modify the 2014 Halal Certification Law to shorten the registration process for products, including medicines.
“The main problem is that our [Halal Certification] Law requires every product to be halal certified, whereas, there should be different standards for different types of products. Not all products should follow such a lengthy process,” he told reporters after the meeting.
The Industry Ministry already advised the Trade Ministry to apply a price-based tariff instead of quotas to curb imports, Airlangga further said. It also opposed the plan on sugar auctions and instead suggested that state-owned logistics firm Bulog could help provide affordable sugar to SMEs, he added.
