Job Creation Law Can Change Indonesia's Investment Climate
The Omnibus Job Creation Law can change the domestic investment climate in Indonesia, according to the head of Economics for the Center for Strategic and International Studies (CSIS), Yose Rizal Damuri.
He said President Joko Widodo has simplified the rules since the beginning of his administration through policy packages, but the Omnibus Law showed that those efforts were hampered by conflicting regulations. The Omnibus Law eradicates those legal contradictions and simplifies bureaucracy.
This view is shared by Indonesian Chamber of Commerce and Industry (Kadin) Chairman Rosan Roeslani. He says the Omnibus Law will strengthen Indonesia's potential to seize investment in ASEAN. Investors and companies moving away from China are eyeing ASEAN countries as an alternative, Rosan said, and he believes the structural reforms inside the law will allow Indonesia to compete with Vietnam, Malaysia and Thailand. He also hopes there will be improvements in terms of unemployment, investment climate, ease of doing business and productivity.
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Special Routes to Open for Indonesia-Singapore Travelers
Indonesia and Singapore have agreed to establish a Reciprocal Green Lane (RGL) travel corridor, but it is a far cry from a return to normal for the once-bustling travel between the two countries.
The corridor will enable passengers to travel only for urgent diplomatic missions and essential business trips and will come into effect on Oct 26. It will provide special lanes for passengers traveling between the two countries between Soekarno-Hatta International Airport and Changi International Airport, and another between the Batam Ferry Terminal and the Tanah Merah Ferry Terminal in Singapore.
The RGL requires travelers to comply with strict COVID-19 health protocols, including providing a negative PCR test result that is valid for 72 hours, and filling out an electronic health alert card (e-HAC) application prior to departure. Indonesian and Singaporean nationals are also required to have official sponsors from each country’s state agencies and enterprises in addition to a safe travel pass.
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BUMN Health Holding Company Due
The Ministry of State-Owned Enterprises is to create a health holding company for state-owned enterprises (SOEs) to expand its footprint in the sector. Assistant Deputy for Telecommunications and Pharmacy at the Ministry of State-Owned Enterprises, Aditya Dhanwantara said this is important as the pharmaceutical sector needs to integrate with other healthcare services. The new holding company will consist of SOEs that provide other health services such as IHC Pertamedika, Krakatau Medika and other state-owned hospitals.
However, Dhanwantara also said the new entity will require stages of synergy between the SOEs, joint ventures and other agencies. This is to ensure the companies and stakeholders are prepared and not left out. He promised to start building synergies as soon as the integration is feasible.
In early 2020, the Ministry of State-Owned Enterprises established a pharmaceutical holding company consisting of BioFarma as the parent company plus Kimia Farma and Indofarma.
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AmCham Cares: Microsoft
Continuing its aim to empower teachers in Indonesia, Microsoft and The Indonesian Teachers Association (PGRI) launched Gurulympics 2020 on Oct 7.
Gurulympics 2020 is a continuation of the Innovative Teacher Training of Trainers (TOT) program to encourage the spirit of learning and innovation for teachers through the use of technology to improve their skills and the overall quality of education in Indonesia. The program began in June 2020 and was initially attended by nearly 7,000 teachers; it has now expanded to more than 100,000 teachers ranging from kindergarten to higher education from 34 provinces, as well as overseas Indonesian schools in 13 countries.
By utilizing technology to support accessibility to education, digital transformation in the sector can be accelerated in accordance with the priority of education in the national development agenda.
This is in line with Microsoft’s mission to improve the national education system by empowering teachers through the use of technology.
Recovery Budget Absorption Reaches 47.7 Percent
Some 47.7 percent or Rp 331.94 trillion allocated for the national economic recovery program (PEN) in the 2020 State Budget had been absorbed as of the first week of October. Rp 695.2 trillion has been allocated, a Rp 13.47 trillion increase since Sept 30. However, of the Rp 87.5 trillion allocated for health services, only 29 percent or Rp 25.94 trillion has been realized.
Social protection funds and assistance to micro, small and medium-sized enterprises (MSMEs) have seen the highest realization, with 78.32 percent or Rp 159.69 trillion and 73.24 percent or Rp 90.42 trillion absorbed, respectively.
The government is focusing on MSME’s, with a stage 1 presidential assistance program featuring grants of Rp 2.4 million to 9.1 million micro-businesses, incurring 100 percent uptake of a total budget of Rp 21.8 trillion. The government plans to expand that assistance to 12 million grants by the end of November 2020. The business and tax sector has also seen a realization of Rp 28.32 trillion in assistance. Funds for ministries, local governments and institutions have absorbed Rp 27.57 trillion.
Of the eight social assistance programs, the most highly utilized is President Joko Widodo’s Pre-Work Card program, which claims to have realized 99.4 percent of its Rp 20 trillion budget to reach 5.6 million beneficiaries. The Harapan Family program is a close second, claiming a 96.95 percent utilization of its Rp 37.4 trillion budget to reach 10 million beneficiaries.
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State-Owned Islamic Banks to Merge
PT Bank Mandiri, PT Bank Negara Indonesia and PT Bank Rakyat Indonesia signed a conditional merger agreement (CMA) on Oct 12 to combine their Shariah-compliant units. BRI Syariah will become the surviving entity.
The merged entity’s assets could reach Rp 390 trillion rupiah ($26 billion) by 2025, from about Rp 225 trillion by end of 2020, as its larger scale helps it compete with non-Islamic lenders. The official merger is expected to take place in Feb 2021.
Related links:
- https://www.bloomberg.com/news/articles/2020-10-13/indonesia-s-state-islamic-bank-merger-to-form-15-billion-entity
- https://theinsiderstories.com/state-owned-shariah-bank-merges-brisyariah-becomes-a-survivor/
- https://dinsights.katadata.co.id/read/2020/10/14/the-merger-of-state-owned-islamic-banks-the-plan?utm_source=Dinsights&utm_campaign=e5455acb72-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_c3092b0f90-e5455acb72-128039746
Support Independent Journalism: Subscribe to The Jakarta Post
In these difficult times, our hometown English language newspaper, The Jakarta Post, is more important than ever. Given the difficulties of physical circulation and the economic slump, the Post needs to boost its online subscribers – a goal we heartily support at AmCham Indonesia. Quality English language news is vital for our businesses, our home offices and the flow of information out of Indonesia. It is for this reason, that we are urging all of our members and readers to subscribe to JP! Information is what will help get us through this crisis. Below is information about how to sign up.
JP Premium Digital Subscription Packages
https://www.thejakartapost.com/packages
Monthly subscription – Rp 50,000
Yearly subscription – Rp 600,000
We Still Need Your Support to Shelter the Front Line
AmCham Indonesia and Habitat for Humanity have joined forces in an initiative called Sheltering Those Who Care for Us, a program to provide temporary quarters in hotels for Indonesian medical workers during the COVID-19 pandemic. Our program has helped not only medical workers in Jakarta, but also Tangerang and Surabaya; we are now planning to expand to Sulawesi.
With the COVID-19 pandemic still spreading, medical workers are working a lot harder than before. In these difficult times, they often cannot go back home for fear of infecting family members or being rejected by their local communities. As a result, they are forced to sleep in hospitals without a proper bed, also increasing the possibility of getting infected.
By donating, we will increase the overall capability of Indonesia to treat COVID-19. Habitat will match individual hospitals with hotels on an as-needed basis.
Your support is needed more than ever.
CLICK HERE FOR MORE FLYER ON HOW TO DONATE
Now is the Time to Join AmCham!
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We are continuing with a full slate of meetings, events and information offered to our community online. But we can only do this through the support of our members. If you are not yet an AmCham member, please join now!
AmCham Indonesia is open to all companies with an interest in US business relations and we have many non-American members. We are a community and we welcome you!
Reach us at [email protected] or click below!
AmCham Office and Events
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The AmCham Office is on work from home status and all face-to-face meetings and events have been postponed. We are having a number of meetings online using the Zoom platform. You will be notified of virtual meetings as they are scheduled.
What is Your Company Doing on COVID-19?
Please let us know what measures your company may be taking in the form of donations and other assistance to help Indonesia during this time of confusion and concern. Contact [email protected] with your news. We would like to publicize the ways that our AmCham companies are pitching in.
Stay well
We urge you to send us press releases and other information that we can pass on to the broader AmCham community. If you have items of interest, please email material to [email protected]. Follow this link to information provided by the US Embassy
Stay safe, call a doctor if you have a high fever, cough, or difficulty breathing. Stay healthy above all else.
COVID Update is AmCham’s regular newsletter on developments related to the pandemic crisis 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
