TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
BKPM promises to ‘de-bottleneck’ $50b stalled investment projects
Bahlil Lahadalia (JP/Seto Awo)Twenty-four investment projects worth Rp 708 trillion (US$50 billion) are currently stalled due to overlapping regulations and red tape, according to the Investment Coordinating Board (BKPM)
Change Size
Bahlil Lahadalia (JP/Seto Awo)
Twenty-four investment projects worth Rp 708 trillion (US$50 billion) are currently stalled due to overlapping regulations and red tape, according to the Investment Coordinating Board (BKPM).
“Around Rp 700 trillion [in investment] have not been realized because of land, licensing or other issues. There are bottlenecks at both the central and regional government level because of overlapping regulations that need to be synchronized,” BKPM head Bahlil Lahadalia told leaders of regional investment offices from across Indonesia on Monday.
“What they complain about most is permits from technical ministries that they consider complicated,” Bahlil said, summarizing his key takeaway from a meeting with the heads of the Capital Investment and One-Stop Integrated Services Agency (DPMPTSP) in the regions.
There were overly complicated and overlapping regulations in several ministries, including the Environment and Forestry Ministry as well as the Energy and Mineral Resources Ministry, he added.
The government has been striving to attract more investment to the country to spur economic growth, which slowed to its lowest level in more than two years in the third quarter.
Investment growth, which accounted for around a third of the country’s GDP, slumped to 4.21 percent in the third quarter from 6.96 in the same period last year, Statistics Indonesia (BPS) data show.
Representatives of investment offices from across Indonesia agreed that the issues most often were related to multilayered bureaucracy and regulatory overlap. Bahlil promised to start debottlenecking the deeply rooted issues that hindered investment at the regional level.
“Let’s make a simple form. Today we have an online system, but [the form] is still four pages long. Let’s reduce it to just one or two pages,” he said, adding that many procedures would be slashed in the future to simplify investment processes.
Bahlil will focus on four pillars in his debottlenecking effort: assuring investors that Indonesia is attractive for investment, assisting investors in obtaining permits as fast as possible, making Indonesia comfortable and safe to invest in, and ensuring assistance for investors from the licensing process to the start of production.
“We have yet to become an investment haven, it is all going to Vietnam, even though our country accounts for 44 percent of the ASEAN market of 600 million people,” said Bahlil. “This is because [investing in Indonesia] is still difficult, [we are] behind Vietnam in the ease of doing business.”
The United States-China trade war and changing global economic landscape could actually benefit Indonesia to become an emerging investment destination, Bahlil added, reiterating the need to debottleneck investment problems.
As of September, realized investment this year has reached Rp 601.3 trillion, a 12.3 percent increase from the corresponding period of last year, according to the BKPM, with foreign direct investment rising 8.2 percent to Rp 317.8 trillion.
The investment realized from January to September represents 75.9 percent of the BKPM’s full-year target to attract Rp 792 trillion from both domestic and foreign investors.
DPMPTSP West Sumatra head Maswar Dedi said it took a long time to proceed to investment realization, even though it only took minutes for the DPMPTSP to issue a permit. The bottlenecks occurred in other agencies, he said.
“Before issuing a permit we have to wait for procedures conducted by the regional administration work units [SKPD] that handle technical matters; and that takes the longest time,” said Maswar, citing an example of a mining permit.
“Investors need to go through steps at multiple levels through the SKPDs, such as for a location permit, building permit and environmental permit and this must be done at different agencies and SKPDs. It takes up to one year.”
The government has been deliberating an omnibus law on job creation, which may amend more than 70 laws with an emphasis on simplifying business licensing and investment procedures as part of a broader effort to improve competitiveness.
The head of the DPMPTSP on Bintan Island in Riau Islands province, Hasfarizal Handra, admitted there were many bottlenecks in his region, and the regional government could not solve the problem because of limited authority. They needed to wait for the provincial government to move when there was a problem, he added.
Hasfarizal said that there were several regulations that could be simplified.
“For example, in the Special Economic Zone [SEZ] of Bintan there is a list of 14 requirements that need to be met by investors before they bring goods to the area. However, we believe, this could be simplified to only five or six requirements,” he added.
