Coordinating Minister of Economy Darmin Nasution, Minister of Finance Sri Mulyani and Minister of Communication and Informatics Rudiantara during meeting (10 Jan. 2018)

JAKARTA (TheInsiderStories) – The Indonesian government is stymied by incomplete disbursement of funds for investment, a serious drawback in Southeast Asia’s largest economy. In fact, many investors still have to realize their commitment.

From 2010 to 2017, almost US$26.2 billion of investment was either unrealized or failed to be disbursed, due to various reasons, according to Edy Putra Irawadi, an official from the Coordinating Ministry of Economic Affairs.

“From planned investment, a total of Rp 351 trillion (equal to US$ 26.2 billion) consisting of 190 projects, has not yet been realized,” he said, adding that the investments were already earmarked and have long been in the Investment Coordinating Board’s pipeline.

The unrealized investments area are dominated by Java where there are about 51 cases (projects) stalled or abandoned, 35 cases in Sumatra, 26 in Kalimantan, 24 in Sulawesi, and the remainder spread over other areas.

Nevertheless, he said, the government will identify problems and is committed to streamline licensing processes to speed up investment in more than 1,000 public and private sector projects, totaling approximately US$42.6 billion.

Coordinating Economics Minister Darmin Nasution said some of the new projects were proposed as early as September last year, after President Joko ‘Jokowi’ Widodo issued a regulation to simplify and integrate business licensing processes.

The regulation sets a deadline in March for the government to begin operation of a single permit submission system, called the ‘One Stop Integrated Service’. It represents a complete overhaul of the current permit service, which only provides basic licensing for newly-established businesses and does not process specialized licensing on the regional governmental level or for any of several government agencies.

For now, Nasution said the government will focus on resolving licensing problems on the existing 1,054 unfinished projects, to lay a path for cooperation among various task forces in regional governments and agencies.

“The central task force will supervise the investments that have been listed for each ministry or institution,” he said.

The Ministry of Industry and the Ministry of Tourism will handle most of the projects already registered with the authorities, the Minister said. The ministries will identify and check permits and requirements to help resolve obstacles as well as to provide periodical reports to the central task force.

Foreign and domestic investments account for about a third of Indonesia’s economy. The country needs to attract Rp765 trillion (US$53.6 billion) in investment — excluding those in the oil and gas and banking sectors — in 2018, up 13 per cent from last year’s target of Rp 678.8 trillion.

Data from the Investment Coordinating Board showed that total investments reached Rp513 trillion as of the end of September. Indonesia recorded Rp613 trillion of investments in 2016, a 3 per cent increase from the Rp595 trillion recorded in 2015.

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com

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