The second episode of Platform by AmCham Indonesia features one of Indonesia’s top business leaders discussing the investment climate amid the COVID-19 pandemic, and assesses the economic importance of the long-awaited Omnibus Job Creation Bill.
AmCham Indonesia Managing Director A Lin Neumann hosts the podcast, with Shinta Kamdani, vice-chair of both the Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Employers Association (Apindo), as well as CEO of the Sintesa Group conglomerate, providing insight on both investment and the Job Creation Bill, something Neumann terms “the single biggest reform effort the Indonesian government has undertaken in a decade or more.”
Shinta opens the podcast with a frank assessment of the bill and a stark message to its critics. “I am very hopeful it will pass. We do not have the luxury not to pass, as [if the House of Representatives does not pass it] it will be a big issue for Indonesia to attract more investment and create jobs.”
She notes that most of the controversies over the bill have been settled, with the main outstanding issue reform of the existing 2003 Indonesia labor law. Again, she says, Indonesia has no option but to pass it. She cites data showing that under the pandemic more than six million workers have either been placed on unpaid leave or terminated in the formal sector alone, while the informal sector – which accounts for 55 percent of the working-age population – has been hit even harder. Indonesia needs to create more jobs.
“The bill is made up of big chapters, but the top is improving the ecosystem of investment,” she said. Most of the issues facing investors now pre-date COVID: overlapping regulations at the central and local government levels, legal uncertainty, unwieldy bureaucracy and finding qualified manpower. The pandemic has added just surviving the crisis to the list of challenges for business – and the bill is focused on helping with that also.
A big barrier for foreign investment is the negative investment list (DNI), and the government has promised to axe it, with Shinta confirming that under the omnibus bill it will be replaced by an incentivized priority list opening up most sectors, with certain prerequisites.
When quizzed on the three best sectors for foreign companies to invest in once the DNI has gone, Shinta cited infrastructure, IT and digital, and healthcare as vital for Indonesia moving forward.
It does not appear, however, that the bill will encourage investors to own 100 percent of their businesses and our listeners would be wise to pay attention to Shinta’s advice to those wishing to invest in Indonesia – first, go find a local partner who understands the local market and how to do business here – they can create the synergy to be successful.
Shinta also touched on how to balance COVID health protocols with keeping the economy moving, saying the government and people need to work together to maintain the right balance. In particular, she said, people need to strictly follow the health protocols – noting she is concerned that she still sees people not even wearing masks.
“Following health protocols is key to developing the economy,” she said.
Platform by AmCham Indonesia is produced by In-Depth Creative. The podcast looks at investment, business and related issues in Indonesia.
Click the below picture to listen to the full episode.