Indonesia is open and ready for business, Indonesian Coordinating Minister of Economic Affairs Mr. Airlangga Hartarto said at an online seminar with European companies recently, citing the country鈥檚 latest economic reform effort that introduces various incentives for foreign investors.
On Thursday, February 25, 2021, the Ministry of Foreign Affairs, in cooperation with the Coordinating Ministry of Economic Affairs, held an inaugural seminar to a series that will introduce various investment opportunities in Indonesia. The online seminar on Thursday, entitled 鈥淚nvest in Indonesia: Opportunities in Asia鈥檚 Economic Powerhouse鈥�, drew some 900 registered participants from over 40 countries, with at least 575 investors and potential investors from Europe specifically according to Kemlu.
Opened by Deputy Minister of Foreign Affairs Mahendra Siregar, the seminar was a showcase of Indonesia鈥檚 potential as Asia鈥檚 upcoming economic powerhouse with the capacity to strengthen strategic partnership with the two global economic powerhouses that are the People鈥檚 Republic of China and the United States. This is due to the recent signing of the Regional Comprehensive Economic Partnership (RCEP) 鈥� a major free-trade agreement between 15 member countries that covers about 30% of the world鈥檚 population, out of which Indonesia is the second largest after China 鈥� as well as the recent issuance of 51 implementing regulation of the much-awaited Omnibus Law on Job Creation.
Mr. Siregar said Indonesia鈥檚 position as the largest economy in ASEAN as well as it鈥檚 signing of the RCEP means that the region is even more integrated in the world economy, which makes Indonesia a strategic investment partner for companies looking to tap into the upcoming prospect of the 21st century as the 鈥淎sian Century鈥�.
This statement was echoed by Mr. Airlangga Hartarto, the Indonesian Coordinating Minister of Economic Affairs, who acted as the keynote speaker of the online seminar. Mr. Hartarto said he expects Indonesia鈥檚 economy to rebound to its pre-pandemic growth rate of around 5% by the end of 2021. This is supported not only by the country鈥檚 ongoing national vaccination program as a response to the COVID-19 pandemic, but also to the aforementioned implementation of its Omnibus Law on Job Creation.
The Omnibus Law, which was passed on October 5, 2020, is a massive revision of Indonesia鈥檚 business laws - often deemed to be obstructive towards foreign investments - aiming to improve the Ease of Doing Business in Indonesia and boost the national investment climate. The Omnibus law touches nearly all facets of doing business Indonesia, from Business Licensing to Land Procurement.
On February 22, 2021, the government issued the implementing regulation to the Omnibus Law, which comprised of 45 government regulations and 6 Presidential Decrees. These regulations have thus far reflected accurately the intent of the Law, with implementing revisions that include the opening of all business categories to foreign ownership except those explicitly stated by the government (as opposed to the 515 business categories closed or only partially open to foreign ownership previously). Other improvements to the Ease of Doing Business in Indonesia are the reduction in severance pay obligation, and further facilitation for the issuance of work permit to foreigners.
鈥淚ndonesia is one of the few countries who are still doing their homework during the COVID-19 pandemic. No other countries see this much regulatory reform during the pandemic. This means that Indonesia is serious about reforming its economy,鈥� said Mr. Airlangga.
To identify the opportunities that are available in Indonesia, the Kemlu invited four panelist who represents some of the main players in Indonesia鈥檚 economy. They are Prakash Chandran, CEO of Siemens Indonesia; Donald Kanak, Chairman of the EU-ASEAN Business Council (EU-ABC); Rosan Roeslani, Chairman of the Indonesia Chamber of Industry and Commerce; and Danang Parikesit, Chairman of the Indonesia Toll Road Regulatory Agency.
In regards to Indonesia鈥檚 position as a strategic investment partner, all four panelists are in agreement that the implementing regulation will serve as a momentum that could further push Indonesia鈥檚 economy forward.
Mr. Chandran said the new labor law introduced in the Omnibus Law will allow companies to develop a productivity-based employment system and in upskilling their Indonesian workers. He added that while the clarity is still needed in terms of the regulation are worded, the tone from the Indonesian government suggests that the regulation will be an enabler.
鈥淩ight now, it is getting much better than it used to be before. It鈥檚 getting into the next level,鈥� he said.
Mr. Kanak said, based on an EU-ABC survey, companies are very enthusiastic about investing in Indonesia and that the new regulation would further enable these companies to finally enter the Indonesian market.
鈥淚f you look at one of the most missed opportunities, it鈥檚 bonds, it鈥檚 sukuk [Sharia bonds]. The Indonesian DINFRA (Infrastructure Investment Fund) is also another entry point,鈥� said Mr. Kanak.
In addressing foreign investors about Indonesia鈥檚 historically protectionist tone regarding its business sectors, Mr. Roeslani attested that the country has been continually getting better at accommodating foreign investors while balancing the need of Indonesia's small and medium-sized enterprises. Mr. Parikesit added that there are still many entry points for foreign investors to benefit from the Indonesian market, such as through the capital market or through the acquisition of existing concession.
鈥淔or example, from my agency nine tenders for toll road projects were announced recently, six of which are not for state-owned enterprises. One of these, for electronic payment, was won by an European Company,鈥� said Mr. Parikesit.
In closing the online Seminar, Mr. Siregar told participants that Indonesia is more ready and more open for business than ever. He urged foreign investors to take another look at Indonesia and consider the country as an investment partner in ushering the upcoming Asian Century.