Sunda Kelapa, old harbour of Jakarta. Indonesia is keen to open up to the outside world. Source: Wikimedia
Indonesia’s President Joko Widodo says there is no excuse for Indonesia to lag behind the rest of Asean in facilitating investment into the country, as its Investment Coordinating Board (BKPM) introduced two measures it has hailed as bureaucratic shortcuts.
With the Asean Economic Community (AEC) now in operation and Jakarta considering whether to sign up to free-trade agreements such as the US-led Trans-Pacific Partnership, Widodo said it was time to open up to foreign investment. It would create jobs and improve welfare, the reforming head of state announced.
He pointed to the archipelago’s poor performance in the World Bank’s report, Doing Business 2016, where it ranked 109th out of 189 countries.
This can hardly be seen as an aberration as Indonesia came 120th in 2015. It is ranked far below neighbours, with Singapore coming top, Malaysia 18th and Thailand 49th.
“Let me repeat: 109. Embarrassing,” Widodo said.
Widodo said the government’s target was now 40th, adding that Indonesia could not retreat from the AEC, meaning it was competing with the rest of Asean for foreign investment.
Widodo’s reforms have borne fruit with the BKPM announcing that investment last year jumped by 17.8 per cent compared to the previous year.
This created 1.4 million jobs during the course of the year, although the economy grew by 4.79 per cent, its slowest rate in six years. Jakarta is targeting 5.3 per cent growth this year.
He said there were 42,000 Indonesian regulations on top of the 3,000 provincial laws that have become a hindrance to investment.
“Do not add more regulations, so that we can be nimble and quick in overcoming challenges in the world”, he said, adding that he has instructed his chief economic minister to remove more regulations by April.
“Ministers who are too slow will be replaced. Unfortunately, I’m not allowed to replace governors, regents and mayors,” he added.
“In the Asean summits, we heads of state join hands. But in spite of that, I view them as our competitors,” Widodo said. “If we don’t change ourselves, we’ll be run over in this era where everything is done fast.”
Again he used the word “embarrassing” in reference to how many international firms had cancelled investment plans in what is Asean’s largest economy after becoming mired in labyrinthine bureaucracy.
The increasingly confident president said he wanted to end complaints that it took four to five years to acquire permits to construct power plants and other important projects.
“Who would want to [build power plants] then? When, on the other hand, people keep complaining about blackouts whenever I visit the regions,” Widodo said.