Change and Continuity
AmCham Indonesia’s Year in Review, 2018
By A Lin Neumann, Managing Director
Thursday, December 6, 2018
We came into 2018 thinking this might be a quiet year for our dealings with the Indonesian government. Attention, the thinking went, might be deflected to politics due to the 2018 local elections and ahead of the 2019 presidential elections. But with his first term winding down, President Joko Widodo was in no mood to let the economy suffer or to stop at least trying to reassure investors that Indonesia is open for business. The headwinds were considerable, with consumer confidence down, the rupiah taking a battering largely due to external factors and the country’s current account deficit becoming an object of concern as policymakers toyed with import restrictions and other measures because they had to be seen to be “doing something,” in the words of one senior official.
There were other background worries during the year. Because of Indonesia’s trade surplus with the United States and other trade issues, its ability to take advantage of liberal tariffs under the Generalized System of Preferences (GSP) program with the US came under review by the Office of the US Trade Representative. We are hopeful the review will result in greater openness in the Indonesian market and we believe that Indonesia’s best chance to move the economy toward growth above the 5 percent range will depend on foreign investment.
The messages, however, continue to be mixed. On natural resource policy, the drive to award expiring oil concessions to the national oil company, Pertamina, instead of renewing the contracts of proven foreign operators continued in ways that threaten to put the brakes on billions of dollars of foreign investment. But there were welcome signs of progress on negotiations for the future of Freeport Indonesia’s massive Grasberg mine, which hopefully will be resolved soon.
Some progress nonetheless
On the positive side of the ledger, AmCham Indonesia continued to find the government open to engagement on many issues. We had positive discussions – and results – on the restrictive forced manufacturing clause in Article 20 of the Patent Law, agreeing to a compromise acceptable to the government and our companies. It was the kind of interaction we greatly value as partners with the government of Indonesia for economic progress.
In other areas, the Office of the Vice President was very helpful in moderating the implementation of the 2014 Halal Law, which calls for mandatory and sweeping halal certification for a wide range of food and pharma products. Fortunately, the trend in recent drafts of the implementing legislation, which is to go into effect in October 2019, has been cooperative and the new Halal Certification Body (BPJPH) has been open to productive discussions with industry.
On other issues, such as data localization there was also progress in 2018, although the final regulation has yet to be signed. There was limited progress on foreign worker regulations also but not the sweeping openness we had been told was in the works. We also saw tax incentives expanded and promises of major changes in the Negative Investment List (DNI), but that process also is uncertain.
In other words, our relations with the government are cordial and cooperative, but Indonesia’s broader bureaucracy remains somewhat ambivalent about not just foreign investment but even the private sector altogether. Both Indonesian and foreign companies worry openly that as the state sector grows, opportunities for private sector solutions do not keep pace, despite the fulsome praise given to Indonesia’s vibrant start-up scene and appeals for greater FDI.
AmCham at center stage
2018, however, was undoubtedly a good year for AmCham Indonesia. Our Initiative Indonesia program with the US Chamber of Commerce held another annual US-Indonesia Investment Summit, drawing seven cabinet ministers on the day for serious discussions in the spirit of seeking solutions to regulatory problems. There is no doubt that the Summit is the preeminent bilateral US-Indonesia private sector event year after year and we are deeply grateful for the cooperation and partnership we enjoy with numerous government ministers on that event and other projects. We also held two very well attended investment missions in 2018, an innovation mission and a financial services and fintech mission. With these events now regulars on the AmCham calendar, we are able to build valuable connections with local associations and companies and engage on a meaningful level with various senior officials in the line ministries and agencies.
Next year, the Initiative’s role will be to engage with the new government early in its tenure, a process that we also undertook in 2014 when President Widodo was first sworn in. 2019 will mark the 70th anniversary of US recognition of Indonesia’s independence, which will present us with ample opportunities to celebrate relations between these two great countries.
AmCham Indonesia is also proud of the role we played as the lead organizer of “The Journey Forward,” the business roundtable and gala that took place on the sidelines of the IMF/World Bank meetings in Bali in October. Together with our partners – the US Chamber of Commerce, the US-ASEAN Business Council, the American-Indonesian Chamber of Commerce and the US Indonesia Society – we pulled off a great event on a big stage during one of the largest international gatherings of the year. Indonesia, the host country, did a magnificent job organizing the meetings and we are happy we were able to contribute to its success. With Vice President Jusuf Kalla, Minister of Finance Sri Mulyani Indrawati, Coordinating Minister for Maritime Affairs Luhut Pandjaitan and many others speaking to our companies and sponsors, it was a night to savor after months of hard work.
Also in 2018, we took a big step and moved our office to the brand new WeWork facility in the SCBD business district in South Jakarta. A major American company that is helping to redefine how people work worldwide, WeWork is also our latest Platinum member in a partnership we think will have lasting value for both parties. This is more than just a change of address for us. It is a chance to flatten our organizational structure, increase the ability of the staff to interact with more companies and get ourselves more deeply enmeshed in Indonesia’s burgeoning tech and start-up community.
We encourage our members to visit us in WeWork at Revenue Tower, SCBD, where we plan to hold numerous events and take advantage of the synergies WeWork makes possible. I want to personally thank our Board of Governors for their willingness to encourage this change and support our search for new horizons.
The Board also took a major step forward in 2018 by liberalizing and expanding the number of voting members in AmCham in both corporate and individual categories. All corporate members will now have three voting members and all individual members will have voting rights. This is more than just a cosmetic change. It expands the ranks of professionals from all sectors who will be full members and we hope it will be seen as a sign of growth and creativity.
Because of term limits, the President of our Board of Governors, Brian Arnold, who has served in the post for over four years, will be stepping down at the end of 2018. AmCham owes a tremendous debt of gratitude to Brian, who has given generously of his time and talents these last several years. Our close relationship with the US Chamber of Commerce through Initiative Indonesia grew and matured under his leadership. He was a vocal supporter of the Bali gala this year and he drove the reform process that came to fruition in 2017-2018. Brian immediately saw the logic of our office move and the need for new work directions. He also never failed to be there for us when we needed him, whether it was for the routine tasks that are needed to keep the Chamber moving or the many high-profile events at which he represented us, from the 2017 visit of US Vice President Mike Pence to meeting Congressional delegations and engaging with the highest leadership of the Indonesian government.
Brian has also been a steady hand and a unifying influence on the Board, something that is sure to continue as he remains on the Board. He can always be counted on to seek a necessary consensus to move us forward. With a long history of working with AmChams in several countries Brian knows well the AmCham ethos of helping the private sector in myriad ways. Thanks again, Brian.
This year will also mark the departure of Executive Director Sarah Howe, who is ending nine years of service to AmCham. Sarah has been our rock, helping to guide us through a period of continuous growth and occasional turbulence. She has overseen our administrative structures, patiently built an excellent staff, worked tirelessly with numerous committees and sought out new directions for us in areas like HR development, procurement and corporate citizenship. If members had problems or issues, Sarah was the one to sort out the concerns. Through it all, her good humor, patience and fairness have been front and center. To say she will be missed is an understatement, but we wish her well in the future and we know that she will continue to be awesome.
Some of our stalwart Board members and others in the AmCham leadership also departed this year due to career transitions and reassignments. Chuck Taylor, who was managing director of Chevron Indonesia for several years, was an ardent supporter of AmCham through our Platinum program and a great source of insight on doing business here. Dan Wieczynski, who headed ExxonMobil’s Indonesian operations, served on our Board and was a constant source of patient good cheer and helpful insights on business. Gaurav Gupta, most recently in Indonesia as head of Bridgestone and before that General Motors Indonesia, was a Platinum member for two different companies and one of our most loyal supporters. We wish all these top executives well in their future.
Advocacy, communication, engagement
The ground-level work of AmCham is done through our committees, small meetings with the government, private dinners and understanding all manner of regulations. AmCham engaged throughout the year in advocacy with the government on behalf of our companies on various issues.
Our very capable advocacy team, headed by Government Relations Director Yanuar Wibisana, who joined AmCham in 2018, tracks and translates emerging legislation and regulations, strategizes on approaches to regulators and develops ongoing engagement. This is the team that also knows who’s who in the ministries and makes it possible for us to get the meetings we need. I want to express my gratitude to the team – Yanuar, Gilang Ardana, Ellisa Kosadi, Karmila Bain and Peter Lie – all of whom do a great job interacting with our companies and maintaining the working ties we need to government agencies.
I also want to thank the rest of our amazing staff, with particular attention to Tari Sutjiningtyas, my personal assistant, who also takes on numerous other tasks that need to be done, such as coordinating massive events like the Bali Gala.
Finally, a special note of appreciation goes to our Platinum Benefactors – BCA, Bridgestone, Cargill, Chevron, Coca-Cola, ExxonMobil, EY, Freeport, General Motors, Mead Johnson, PwC and our newest member, WeWork. These companies make much of our work possible and without them we would not have the advocacy impact that we have today.
If I have missed anyone or anything, the error is entirely mine and unintentional. Thanks again to the AmCham community and let’s have a terrific 2019.