The avoidance of Indonesia in the recent wave of investment relocations made by dozens of companies from China, Japan and South Korea has angered the government.
President Joko “Jokowi” Widodo was upset to learn that none of the Chinese companies that had relocated their factories chose Indonesia as their new investment location. In fact, various efforts have been taken by the government to facilitate investment in Indonesia.
Investors still consider Indonesia not attractive enough. Of the 33 Chinese companies, 23 chose to relocate to Vietnam; the rest went to Cambodia, India, Malaysia, Mexico, Serbia and Thailand. The same thing also happened in the relocation of Japanese and Korean industries. This fact shows that what the government has done has not touched the main concerns of investors.
All studies, starting from the World Bank, the World Economic Forum (WEF), Bank Indonesia, to Regional Autonomy Watch (KPPOD), show that the investment climate in Indonesia is still worrying. And the problems that hamper it are complex, starting from the regulations, the system to their implementation.
A total of 16 deregulation policy packages implemented during the five years of Jokowi\'s administration have yet to completely cope with problems that hamper investment. Most of the policies were even allegedly stopped for years at ministries /agencies.
In fact, investors still face difficulties. The term, if it can be made difficult, why should it be facilitated, is still common. Complaints remain about classic issues, ranging from complicated licensing, overlapping/inconsistency/disharmony of policies, to the contradictions of central-regional policies. Issues of labor, taxation and uncertainties are also still big problems.
Regions that are not pro-investment should also receive sanctions, in addition to the punishment of being shunned by investors.
It is not clear who is responsible for overseeing the implementation of the policy in the lowest to the top level of government offices. The World Bank has emphasized the importance of the existence of the team that oversees the implementation. It needs support from all parties. There should be sanctions for those who do not carry out their duties or are not cooperative at both at government agencies or ministries. Regions that are not pro-investment should also receive sanctions, in addition to the punishment of being shunned by investors.
The orchestra is not coherent, making series of pro-investment policies introduced since the beginning of Jokowi’s government stalled here and there. This makes Indonesia to continue to become the loser in the competition in attracting investment. We still often find the interests of groups or individuals make the whole system stall.
Policies issued by the central government are often opposed in the regions. Surprisingly, according to the facts revealed by the Finance Minister, dozens (72) of laws were inherited from the colonial government. Thousands of the regulations, according to economists, must also be revised. There should be a big job that requires determination and high commitment to unravel the investment problem. It should not be just a movement, or ad hoc and patchy policies.
Lately, for example, the government has aggressively introduced various tax incentives for businesses in a number of sectors. This step is considered by the World Bank as being ineffective if the main problems hampering investment and competitiveness are not resolved.
Indonesia lags behind neighboring countries, even those that have only recently emerged, in almost every aspect of competitiveness, including productivity and innovation capabilities. Of the 12 aspects of WEF competitiveness, Indonesia is only superior in the aspect of market scale. This is dangerous because it can only strengthen the position of Indonesia as the market of other countries.