Taking Stock of the US-Indonesia Investment Summit
AmCham and the US Chamber celebrate five years of private sector summitry
By A Lin Neumann
Wednesday, November 8, 2017
Five years can be a very long time in the life of an organization and for AmCham Indonesia, the five years since we began issuing our annual Investment Report and holding an annual Investment Summit have been ones of growth and challenge. Occasionally bumpy, the road has been well worth taking – and we believe it has helped cement our advocacy on behalf of American companies in Indonesia.
Along the way, of course, we have had a great partnership with the US Chamber of Commerce, which has blossomed into a year-round engagement and led to events in both Washington and the US. We have also been supported and encouraged by dozens of companies, our Indonesian counterparts in KADIN and APINDO, the US Embassy and the Indonesia Investment Coordinating Board (BKPM).
As I looked around the packed room at the 2017 Investment Summit, held November 1-2 at the Mandarin Oriental Hotel in Jakarta, the atmosphere was both enthusiastic and sobering. It was like a gathering of old and new friends in many ways, but I believe we all know – both the government officials in attendance and the private sector representatives – that there is still a long way to go for Indonesia to realize its full potential.
Many a hurdle to cross
On the company side, we remain challenged by regulatory and legal uncertainty and the need to level the playing field for foreign investors but we also recognize the very real gains toward reform that have been made by the administration of President Joko Widodo since 2014. On the government side, ministers insisted solutions were being found to nagging problems and invited us to join them in ramping up investment from the US.
Companies recognize that Indonesia is one of the great remaining markets in the world and that being here is crucial. But the fight for investment is tough and countries are competing against one another for advantage. At the summit, in both public discussions and smaller private meetings on the sidelines of the event, the mood has warmed over the years. The issues are on the table, the disagreements reasonably clear, the search for solutions underway.
Perhaps, the more relaxed and cooperative mood is simply a testament to the long hours we have spent engaging the government on our issues. For us, one hallmark of the Widodo administration has been its willingness to talk to the private sector and to acknowledge that it cannot get to its ambitious growth targets without substantially increased FDI. The problem is getting there, and that is the point of the exercise.
How did this all start? In 2013, the same year AmCham and the US Chamber were active at the APEC summit in Bali, we issued our first Investment Report, researched by EY and the Paramadina Public Policy Institute, it found that contrary to most previous data, the US was potentially the largest FDI contributor to Indonesia over a nine year period dating to 2004, with $65 billion in FDI. The study, “Partners in Prosperity: US Investment in Indonesia,” changed the discussion on the role of US investment here and also deepened our partnership with BKPM when we launched the report with a mini-summit at its offices headlined by the US Chamber President & CEO Thomas J. Donohue.
The following year, just as President Widodo was coming into office, our Jakarta summit drew seven members of the cabinet for discussions as we broke the ice with the new government in dramatic fashion.
2016 saw the release of another big number in the report “Vital & Growing: Adding up the US-Indonesia Economic Relationship.” That year we found that the economic relationship between the two countries accounts for roughly 10 percent of Indonesian GDP, or roughly $90 billion annually. At our summit last year, we also had a record (for us) eight cabinet ministers in attendance on the day.
And then this year, the summit attracted six ministers for in-depth talks in front of a full house of companies and stakeholders as we released a new report on the country’s economic vision through 2024, “The Big Picture: Indonesia's Partnership with US Investors.” We also tried something new this year, producing a series of video interviews with several ministers and releasing the results at the summit. We also had a fun opening dinner with entertainment from Disney in the form of rising young star Chilla Kiana and the University of Indonesia’s PARAGITA choir.
What is the point?
For AmCham, the reason we embarked on all this summitry and research back in 2013 under the guidance of then Managing Director Andrew White and our Board, was to deepen relationships, get to know the government better and introduce our companies to regulators in a new way. The experiment has, we believe, been worth it. We have opened up avenues of discussion that have led to positive changes in several areas, including the revision of the negative investment list and adjustments to the way local content is calculated in 4G devices.
Have all the changes we recommend been forthcoming? Of course not. But the conversations are taking place continuously now throughout the year in ongoing engagements with regulators in several ministries on a range of issues.
Without a doubt there is a long way to go and it takes a lot more than a feel-good annual moments to push for the kind of structural reforms we think will benefit the Indonesian people in the long run and lead to the prosperity the government seeks.
This past week at the Investment Summit there was a lot of talk about Indonesia becoming one of the largest economies in the world before the middle of the century. We support that vision but we also believe the private sector – and US investors – must continue to play a dynamic and growing role in the Indonesian economy for that to happen. So we say to the government, “Let’s keep talking it over and finding the ways forward together.”