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Rejuvenating Indonesia’s investment climate amid global crises
Amid an increasingly dynamic global situation, the Indonesian government has noted the important contribution of investment toward the country’s economy,
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(The Jakarta Post)
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mid an increasingly dynamic global situation, the Indonesian government has noted the important contribution of investment toward the country’s economy, in particular its commitment to improve competitiveness and investment climate for both local and foreign investment through the Job Creation Law, as ratified in 2020 under President Joko “Jokowi” Widodo’s administration.
According to data published by the Investment Ministry Coordinating Board (BKPM), an investment of US$2.45 to $2.47 trillion is needed for the 2020-2024 period to achieve the economic-growth rate of 6 percent.
January through September 2022 saw domestic direct investment of Rp 413.1 trillion, while the same period saw foreign direct investment of Rp 479.3 trillion.
Under the new Job Creation Law, widely known as “the Omnibus Law”, the Indonesian government opened the majority of the economic sector to 100 percent foreign investment. Consisting of 186 articles, the Omnibus Law summarizes 77 laws which are divided into 11 clusters, including ease of doing business and improving the investment ecosystem and business activities.
The law was passed to achieve the goal of stimulating domestic and foreign investment to transform the country’s economic sphere, opening up opportunities for multinational companies. The government has offered enticements, including more-accessible methods for obtaining licenses for foreign workers and several fiscal incentives, along with deductible taxes.
The Asian Development Outlook (ADO) 2022 revealed that investment is benefiting from expanding demand based on Indonesia’s increasing consumer spending and manufacturing.
However, the onslaught of political tensions rising in Europe and Asia has the potential to hinder foreign direct investment, while government regulations at regional levels remain as a distinct challenge because of the many procedures and requirements that are time-consuming and costly even under the new law.
The war in Ukraine in particular has wide-ranging ramifications throughout the global community. The Spring 2022 Deloitte European Chief Financial Officers Survey reported very high levels of uncertainty among CFOs, higher than at any time since the inception of the survey in 2015.
On the consumer side, the geopolitical situation has caused a global cost-of-living crisis as sanctions and disruptions continue to batter trade and energy supplies. With prices for essential items rising, many have been forced to cut down on their spending,
In particular, issues such as high inflation, low growth as well as supply chain disruptions caused by the scarcity and rising cost of raw materials, commodities, energy and transport are among the most pressing concerns from the industry, which has just been reeling from the effects of the COVID-19 pandemic.
At the same time, Indonesia has posted another solid GDP reading, which was up 5.72 percent year-on-year (yoy) in the third quarter as reported by Statistics Indonesia (BPS). The figure exceeds the 5.44 percent yoy growth rate recorded in the second quarter and 5.01 percent yoy logged in the first.
Amid global economic concerns, Indonesia’s national economy is benefiting this year from relaxed pandemic restrictions at home as well as higher prices for key export commodities in global markets. With Indonesia’s dream of joining the top-five economies with a per-capita income of $23,000 by 2045, a conducive investment climate is vital to the national workforce so as to reduce the rate of unemployment, strengthen economic growth and increase productivity.
With this in mind, The Jakarta Post collaborated with the Investment Ministry Coordinating Board (BKPM) which aims to highlight Indonesian perspectives toward the global financial state of affairs, especially in regards to Indonesia’s investment climate and economic-recovery efforts through the upcoming Jakpost Spotlight #13: Expanding investment amid geopolitical conflicts.
To be held on Nov. 21, the thirteenth edition of Jakpost Spotlight aims to discuss relevant topics with some of the most-influential figures and key decision makers in Indonesia in a talk-show format.
Deputy Minister for Investment Planning Indra Darmawan and Bank Mandiri chief economist Andry Asmoro will be on-hand to exchange their views and opinions on Indonesia’s economic forecast, including the importance of investments for the economic climate, the evolution of regulations in encouraging more investments, challenges in attracting domestic and foreign investors as well as Indonesia’s economic outlook for 2023 in regards to the government’s investment targets.
To register for the webinar for free, visit http://bit.ly/Spotlight-13
