Talking Investment for 2018

Regulatory inconsistency and legal certainty among shared concerns raised with the Office of the Vice President

By Christ Ponderosa
Monday, January 29, 2018

A lack of regulatory consistency and legal certainty were among the central issues in the Economic Brief 2018, where more than 30 representatives from various embassies, business chambers and trade organizations in Jakarta shared their feedback regarding investment bottlenecks in Indonesia.

The gathering, which took place on January 12, was hosted by the Office of the Vice President as a platform for foreign investment stakeholders to share their views on what Indonesia should do to foster greater investment.

Sofjan Wanandi, Head of the Vice President’s Expert Team, opened the discussion by emphasizing the government’s disappointment over the 5.05 per cent growth rate despite the improvement of Indonesia’s Ease of Doing Businessranking from 91 to 72 last year. Indonesia’s currency and inflation rate have been stable in the past few years, and the country has seen a continued decrease in income inequality, the poverty rate and unemployment.

He also said that there was increased banking liquidity coupled with a stable budget deficit of 2 per cent last year. Government spending was channeled mainly into infrastructure projects and social programs, including education and health programs. With the upcoming regional and national elections, however, he acknowledged the importance of addressing stakeholders’ concerns on the impact political stability may have on Indonesia’s economic outlook.

Wijayanto Samirin, Special Staff to the Vice President on Economy and Finance, told stakeholders of the government’s commitment to ensuring political stability throughout the political years of 2018 and 2019.

According to stakeholders, the lack of regulatory consistency and legal certainty not only add to the operational burden of companies, but can also cause dire consequences. One foreign chamber representative also noted that investors feel more welcome in Vietnam due to practicality and legal certainty. Stakeholders suggested that simplifying investment procedures and increasing inter-agency coordination could foster investment.

Stakeholders also spoke of the need for greater private involvement in public consultation and dialogue in the drafting of regulations, particularly noting the importance for the pharmaceuticals industry. On the Negative Investment List (DNI), it was emphasized that a minimal investment threshold negatively affects the services sector in particular.

Other concerns voiced included protectionist tendencies and political stability during the election years, trade barriers, bureaucratic red tape, corruption and the dominance of state-owned companies in many sectors The Halal Law was specifically mentioned by multiple stakeholders during the meeting, citing the global supply chain as a factor that makes the regulation very hard and costly to implement.

Wanandi encouraged those present to be patient, as it takes time to ensure legal certainty and regulatory consistency. He also said that there have been many public consultations and dialogues involving the private sector conducted through the Indonesian Chamber of Commerce and Industry (KADIN) and the Indonesian Employers Association (APINDO).

At the end of the meeting, Wanandi invited all stakeholders to submit a brief write-up of their priority concerns and feedback regarding investing in Indonesia. AmCham submitted its concerns in writing to the Vice President’s office following the meeting.

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