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Jakarta Post

Editorial: Guard at the investment gate

  • The Jakarta Post

    The Jakarta Post

  /   Wed, November 26, 2014   /  09:03 am

resident Joko '€œJokowi'€ Widodo'€™s appointment of Franky Sibarani, a businessman, as the new chief of the Investment Coordinating Board (BKPM), only reiterates the President'€™s overriding concern with expediting the bureaucracy of investment licensing. Sibarani will be the fourth chairman of the BKPM over the past five years after Mahendra Siregar, Muhammad Chatib Basri, who moved to head the Finance Ministry in September 2013 and Gita Wirjawan from 2009 to 2012 when he was appointed trade minister.

But all the previous chiefs of the BKPM failed to establish a truly one-stop licensing center for investors. They were able to make only small improvements, speeding up the whole licensing process by a matter of days. That was not because of their lack of managerial competence or leadership but due to the acute lack of cooperation from the various technical ministries related to the licensing machinery.

As a businessman and secretary-general of the Indonesian Employers Association, which deals a lot with trade union leaders, Sibarani is well suited to the job because he knows what businesses need and fully appreciates the aspirations of workers.

But even though the BKPM chief is also a member of the Cabinet, Sibarani will not be able to develop a truly one-stop licensing center without a full mandate from the President himself to ensure other related ministries fully cooperate in the operation of the new licensing system.

But we think President Jokowi himself gave the right signal when he chose the BKPM office as the first institution he inspected during an impromptu visit to check for himself how the licensing process runs, and the findings were quite a disappointment. Hence the first test of his performance will be how effectively Sibarani is able to influence the Cabinet, notably the ministers in charge of the various economic subsectors, to fully realize the vital importance of maintaining policy consistency and predictability as one of the keys to attracting direct investment.

Only with such an awareness will the other ministers be able to appreciate the vital importance of a one-stop licensing center at the BKPM.

The fundamental problem is that almost all the biggest barriers to investment '€” poor and inadequate infrastructure, bad public-sector governance and inimical attitudes on the part of many regional administrations toward investors '€” are completely beyond the jurisdiction of the BKPM chief to resolve.

Certainly, next on his priority program is educating regional leaders (governors, regents and mayors) on the paramount importance of investment to create jobs, which in turn generate wages and purchasing power to buy goods and services to oil the wheels of the economy.

Sibarani should continue the campaign his predecessors have made to help regional governments develop a similar one-stop licensing system at regional BKPM offices.

We are glad to note that Jokowi himself, only one month after his inauguration, has twice gathered all provincial governors in Jakarta, enlightening them on the vital role of private investment in reinvigorating the economy.

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