Business players, economists and observers welcomed the government’s sweeping regulatory reforms to liberalize the economy and stoke growth. However, many have said they would maintain caution as to whether the programs can be consistently delivered.

“Resolution of investor deterrents and the desired inflows' impact on these efforts will depend upon consistent implementation,” said Chris Wren, executive director of the British Chamber of Commerce (Britcham) in Indonesia.

President Joko “Jokowi” Widodo’s administration is fleshing out rules for Indonesia’s sweeping regulatory reforms to lure investments, stoke sluggish economic growth and create jobs amid global economic uncertainties.

The new regulations would open up sectors previously closed to foreign investors by revising the negative investment list, streamlining all business licenses under the Investment Coordinating Board (BKPM) and relaxing taxes for corporate income, expatriates and dividends, among other things.

More efforts in deregulation include revoking at least 40 ministerial regulations and relaxing building permits (IMB) and Environmental Impact Analysis (Amdal) requirements.

Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani said getting every single stakeholder involved in business licensing on board with the BKPM’s new authority would be a big challenge.

In the case of the online single submission (OSS) system, which is supposed to streamline business licenses, not all regions are integrated with the network, he added, pointing to Jakarta as an example as it had its own business licensing system.

“If [central and regional governments] can be synchronized, it would be good. But the problem is a classic one: […] coordination," Hariyadi said. "Otherwise, it’s all just empty talk."

Jokowi aims to address the sporadic authority to issue different types of licensing to different line ministries by issuing Presidential Instruction No. 7/2019 on ease of doing business. The rule gives the BKPM authority to take over licensing works currently scattered around ministries and government bodies.

Jakarta-based think tank Regional Autonomy Watch (KPPOD) said that such efforts “without deregulation, would be no use” because there are plenty other regulations that say otherwise and that mandate line ministries’ licensing power.

“What would be more useful is if [streamlined licensing] is followed by rationalization of the number and types of business licenses to a more proportional figure,” said KPPOD executive director Robert Na Endi Jaweng. “The omnibus law would offer an opportunity.”

The government has been drafting details of at least three omnibus laws on job creation, small and medium enterprises (SMEs) and taxation. The omnibus law on job creation will amend articles in more than 70 existing laws with the aim to remove barriers that deter investments.

This includes a plan to scrap the list of sectors restricted for foreign investors, called the negative investment list (DNI), and replace it with a positive investment list on priority sectors for foreign investors. Presidential Regulation (Perpres) No. 44/2016 on the DNI will be revised in January 2020, said Coordinating Economic Minister Airlangga Hartarto.

A full investment ban would only apply to six sectors, namely gambling and casinos, endangered plants and animals (CITES), cannabis cultivation, natural corals, mercury-based alkali metal and chemical weaponry.

The Indonesian Chamber of Commerce and Industry (Kadin) deputy chairwoman for international relations, Shinta Kamdani, emphasized the need for the government to consistently implement its structural reform initiatives to welcome more investments to the country.

“We have to recover the market’s trust in the government’s intention to implement positive policies and improve the business climate and legal certainties,” Shinta said. "If few regulations are executed well in the field, foreign and domestic investors will see [that Indonesia] does not have legal certainty."

Meanwhile, Finance Minister Sri Mulyani Indrawati suggested there would be a separate omnibus law on taxation on top of the omnibus law on jobs creation handled by the Office of the Coordinating Economic Minister.

The omnibus law on taxation would relax income tax for Indonesian and foreign expatriates, eliminate the dividends tax, slash corporate income tax and introduce a new digital economy tax.