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US, EU chambers slam Indonesia’s unfavorable business climate
The EU and US are eager to get their companies to shift their focus from China to alternative emerging markets, particularly in ASEAN, but say regulatory uncertainty in Indonesia threatens FDI opportunities.
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Construction cranes operate near skyscrapers at a business district in Jakarta on Nov. 13, 2024. (AFP/Bay Ismoyo)
F
oreign chambers representing European and American businesses have voiced concerns over Indonesia’s business and investment climate in newly published reports, pointing to lingering regulatory obstacles and red tape as risks to the country’s appeal for foreign direct investment.
Weeks after a change of government in Jakarta, the reports from the EU and US business communities criticize an ongoing lack of transparency and predictability, resulting in uncertainty that not only drives up firms’ operational costs but also disrupts supply chains.
In its position paper released on Monday, the European Business Chamber of Commerce in Indonesia (EuroCham) highlighted how policy flip-flops had disrupted participation of Indonesia-based businesses in global value chains (GVC), with unpredictability in import licensing and quotas posing challenges, particularly when it comes to securing raw materials.
“Businesses demand regulatory certainty and consistency,” Carsten Sorensen, head of trade and economic affairs at the EU Delegation to Indonesia and Brunei Darussalam, said during the report’s launch on Monday. “Predictability is a strongpoint for investors.”
The American Chamber of Commerce in Indonesia (AmCham) flagged similar frustrations in its report published on Nov. 26, explaining that regulatory hurdles posed significant risks for foreign investors, particularly those aiming for long-term operations.
“There are indeed numerous long-running challenges in our bilateral trading relationship,” John Goyer, executive director for Southeast Asia at the US Chamber of Commerce, said on Nov. 26, citing local content requirements, import licensing restrictions and “abrupt, non-transparent policy changes” as key issues.
These, he added, often “combine with overlapping or conflicting regulations,” impacting US investment and shaping negative perceptions of Indonesia's market.
