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Foreign investors demand further economic reforms
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President Joko "Jokowi" Widodo opens the first trading day of 2016 at the Indonesia Stock Exchange in Jakarta on Jan. 4. He is accompanied by Indonesia Stock Exchange (IDX) president director Tito Sulisto (right), OJK comissioner for capital market supervision Nurhaida (second right), OJK chairman Muliaman D Hadad (third right), Jakarta governor Basuki Tjahaja Purnama (third left) and Coordinating Economic Minister Darmin Nasution. (JP/Wienda Parwitasari)
W
hile lauding the government’s 13 economic policy packages, foreign investors say they want to see more changes to smooth business activities.
In a diplomatic and chambers of commerce gathering held by the Foreign Ministry on Tuesday, representatives of foreign business communities and ambassadors said they appreciated ongoing progress, but added that some of the most common problems were still present in the field.
In terms of tax, Japan External Trade Organization (JETRO) president director Daiki Kasugahara pointed to a recent shift in tax procedures that resulted in troubled operations among Japanese firms.
The diplomats and firms’ executives also highlighted issues of different handling mechanisms for imported goods and complicated work permit procedures.
At the moment, Indonesia requires importers to bring in goods that meet local standards, which has resulted in numerous inspections at ports upon arrival, even when the importers are repeat businesspeople and the goods already meet international standards.
The multiple inspections add to the layers of difficulty faced by businesspeople and prolong custom clearance and cargo release at ports, whereas the government aims to reduce dwell time at ports, in accordance with its 13th economic policy package.
Government data shows that dwell time varies from port to port. Tanjung Priok Port, which is the country’s largest port and manages the heaviest flow of goods, has a dwell time of 3.5 days, compared to Singapore’s one day and Malaysia’s three days.
The dwell time is even higher at other ports, with Tanjung Perak Port in East Java reporting 5.2 days and Belawan Port in North Sumatra reporting 4.28 days.
“We believe if Indonesia wants to rely more on international standards, you’ll avoid some troublesome situations where you have to fly in and fly out some of the experts [to assist in] each and every shipment,” said EU Ambassador to Indonesia and Brunei Darussalam Vincent Guerend.
In terms of work permits, UK Ambassador to Indonesia Moazzam Malik highlighted the piles of paperwork needed to renew permits every six months.
Meanwhile, Investment Coordinating Board (BKPM) head Thomas Lembong, who attended the event, acknowledged that tax, the predictability of regulations and work permits were the top three complaints from foreign businesspeople.
Thomas — along with other government officials, such as economic policy effectiveness and acceleration task force deputy chairman Sofjan Wanandi and Communications and Information Minister Rudiantara — assured the businesspeople that their concerns had been taken into account by the government.
The government is currently preparing for the revision of four tax laws to ease tax matters and payment methods, such as the General Taxation Law (KUP).
Rudiantara said that starting next year, incoming goods could meet local standards through a process carried out abroad. “That way, you won’t have to bring your experts to Indonesia anymore.”
Despite the existing problems, the diplomats said they had seen progress as a result of the 13 economic packages.
“Tangibly, I get fewer complaints from my companies, so that’s a sign of improvement. I also see that the goodwill and efforts to resolve the problems are there. I think things are really improving,” said Swedish Ambassador to Indonesia Johanna Brismar Skoog.
