AmCham Update Vol. 4 #10

Record FDI, Ending Pandemic Status? Omnibus Glitch, Jokowi Takes ASEAN Chair

Jan 30, 2023

Mineral Processing Boosted FDI to New High

Indonesia’s foreign direct investment grew by 44.2 percent year-on-year in 2022 to a record $45.6 billion, underpinned by inflows to the metal ($11 billion) and mining ($5.1 billion) sectors.

Combined domestic and foreign investment in 2022 was Rp 1,207 trillion, which surpassed President Joko Widodo's target of Rp 1,200 trillion. The machinery, metal, and equipment industries received the biggest share of FDI, followed by the mining, chemical and pharmaceutical, ICT, and energy sectors.

Indonesia has targeted capitalizing on its natural resources, particularly mining ores, to boost export performance. The Indonesian Chamber of Commerce and Industry (KADIN) said it appreciated the government's efforts to boost foreign investment promotion and said stronger public-private partnership will be needed to improve investor confidence. The attainment of the investment goal is also linked to the success of the Indonesian Presidency of the G20 and B20 last year.

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Indonesia to Talk With WHO About Ending Pandemic Status

President Joko Widodo has instructed Minister of Health Budi Gunadi Sadikin to discuss with World Health Organization leaders in March about lifting Indonesia's public health emergency status as the pandemic situation continues to improve.

WHO Director General Dr Tedros Adhanom Ghebreyesus has expressed optimism that the global public health emergency status could end in 2023. However, he warned this might not be the right time as new cases have been popping up worldwide.

According to data from the WHO and other organizations, the wave of new cases in China and the rest of the world has been falling for the past month after peaking in mid-December. The confirmed case count, however, is becoming an increasingly unreliable indicator of actual cases given the decrease in Covid-19 testing globally.

The Indonesian government says it will remain vigilant. The second booster campaign has already begun, and the Ministry of Health is planning to launch a free Covid-19 vaccination campaign for kids between the ages of six months and 11 years in March.

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Gov't Admits Investment Delays Due to Omnibus Law Glitch

Lingering uncertainties regarding the regulation in lieu of law (Perppu) on Job Creation has delayed investments for several projects, said Coordinating Minister for Economic Affairs Airlangga Hartarto. The Perppu was intended to solve the Omnibus glitch, yet several uncertainties remain.

First, although the Perppu became effective immediately when it was signed by President Joko Widodo, it remains a temporary law unless the House of Representatives (DPR) passes it to become permanent legislation. Second, completion of its implementing regulations is needed, as previous implementing regulations of the old omnibus Job Creation law need to be replaced.

The DPR is set to put the Perppu to a vote in its next plenary session, in March at the latest. Observers say the majority of DPR members in the government coalition will support the passing the Perppu into law due to the absence of criticism from parties other than the Islamist opposition Prosperous Justice Party (PKS) and the Democratic Party.

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Jakarta Mulls Electronic Road Pricing, Again

The Jakarta Provincial Government is once again considering implementing Electronic Road Pricing (ERP) to reduce congestion, including on motorcycles. The ERP is planned to apply on 25 main roads in Jakarta every day from 5am to 10pm WIB. The government is proposing a tariff between Rp 5,000 and Rp 19,000, depending on type of vehicle. This pricing scheme has been considered since 2004, but has consistently been met with widespread opposition.

Many motorists view the scheme as restrictive and ill-advised and have complained about the adverse effect it will have on their daily activities, while some have also highlighted the lack of viable public transport as an alternative. The Jakarta government said it will accommodate public input to the ERP scheme, and is in ongoing discussions with the Jakarta Regional Legislative Council regarding a draft regional regulation on electronic traffic control.

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President Joko Widodo Kicks Off 2023 ASEAN Chair

President Joko Widodo officially kicked off Indonesia’s Chairmanship of ASEAN in 2023 on Jan 29. During the ceremony, President Widodo expressed optimism that ASEAN will remain relevant in the midst of global uncertainties and challenges. Minister of Foreign Affairs Retno Marsudi announced that this year’s theme is “ASEAN Matters: Epicentrum of Growth”, reflecting Indonesia’s commitment to highlight the importance of ASEAN in the global community.

Indonesia’s ASEAN chairmanship will prioritize making ASEAN the engine of peace and stability. The region will continue contributing to the Indo-Pacific region and maintaining regional economic growth. Retno emphasized that cooperation in food security, energy security, health and financial sectors will be strengthened and some priority ideas will be promoted.

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The 2024 Elections and Potential for Business Disruption

It is one year away from the presidential and regional elections, and six months away from the start of election campaigns. There is a history of security incidents related to past elections in Indonesia and it is likely campaign events will trigger security incidents that may cause business disruptions.

Hill and Associates (H&A), a risk management, security, investigation, training, and project management company, has provided a briefing note on the potential for business disruptions during the 2024 elections. Click the link below for the full briefing note.

CLICK HERE FOR HILL AND ASSOCIATES SIMPLE GUIDES

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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard is the Managing Editor.

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