Jokowi Pushes Foreign Investment Drive With Cabinet Shift
(Bloomberg) -- Indonesia plans to ease business and licensing rules further with the establishment of a new Ministry of Investment, a key part of President Joko Widodo’s drive to attract overseas money.
Southeast Asia’s biggest economy is aiming to lure more foreign direct investment to help boost growth to around 5% this year after suffering its first contraction last year since the Asian Financial Crisis in 1998.
The new ministry was approved earlier this month with the aim of increasing investment and expanding job creation. It will be led by Bahlil Lahadalia, who will also remain head of the Investment Coordinating Board. Its main objective is boosting the quality of foreign and domestic investments, Lahadalia said after being sworn in as minister at the presidential palace in Jakarta on Wednesday.
“The new ministry has the power to issue regulations to encourage new investments,” he said. Small- and medium-sized businesses will get more attention with better coordination between the central administration and regional governments, he added.
Wednesday’s cabinet makeover is the second in four months. In December the health minister was replaced amid criticism over the response to the pandemic, and new appointments were announced for trade, social affairs and tourism posts.
Jokowi, as the president is known, has prioritized luring overseas investment and overcoming the country’s reputation for onerous, overlapping and confusing regulations. Lahadalia said, without mentioning names, that he expects new investments from two or three global companies this year. Talks with Tesla Inc. about a potential investment is also continuing, he added.
Indonesia last year implemented an omnibus law that aims to cut red tape and reform the investment bureaucracy, with a goal of reaching 900 trillion rupiah ($62 billion) of total direct investment this year. Jokowi is also targeting $200 billion for a newly established wealth fund to finance long-term development.
Through that omnibus law, the government now applies a risk-based licensing, removes permit requirements for low risk businesses and only requires registration through the Online Single Submission system.
The country managed to record 826 trillion rupiah in direct investment last year, 2.1% higher than 2019, despite the pandemic, and it didn’t include investments in upstream oil and gas, financial services and those made by the government.
Jokowi on Wednesday also appointed Nadiem Makarim, co-founder of ride-hailing giant Gojek, as minister for the newly merged Ministry of Education, Culture, Research and Technology. The previous Ministry of Research and Technology was led by Bambang Brodjonegoro.
He also named Laksana Tri Handoko, former chief of the Indonesian Institute of Science, as head of the new National Research and Innovation Agency.
©2021 Bloomberg L.P.