President Joko Widodo Launch Making Industry 4.0 - Photo by Industry Ministry

JAKARTA (TheInsiderStories) – Indonesian government confirms that the implementation of a negative investment list will continue despite protested from the businessmen. On Nov. 18, Indonesian government allowed foreign investor to have 100 percent shares in 54 business fields.

This was conveyed by Minister of Industry Airlangga Hartarto after meeting with Coordinating Minister for Economy Darmin Nasution, Chamber of Commerce and Industry and Indonesian Young Entrepreneurs Association today (11/22).

Since its announcement, the revised negative lists has drawn criticism from business people. As an example, the Indonesian Internet Service Providers Association Secretary General Henri Kasyfi Soemartono rated, this relaxation has several weaknesses from several points of view.

“At least related to the nation’s digital sovereignty and protection for local business actors, especially the small and medium level,” he said.

Soemartono said, around 400 business people in the field of internet services can actually be crushed by the regulation. In addition, he added, the growth of investment in the business sector has the potential to “kill” the small and medium-scale business actors (SMEs).

The Indonesian Young Entrepreneurs Association also rejects the relaxation of the negative list. It said, the decision considered irrelevant bring investment into Indonesia and tends to be ineffective in attracting foreign investment.

In the other hand, the organization said, the regulation actually brought economic turmoil among SMEs players. The association reminded all parties that SMEs are the driving force of the national economy.

Indonesia has regulated, foreign and domestic investors, also small medium-enterprises and cooperation can have 100 percent ownership and license easing on 25 businesses in 8 sectors.
Those are eight business fields in communication and informatics service sector, seven business fields in energy and mineral resources, three business fields in health, two business fields in transportation, two business fields in tourism, one business field in trade, one business field in labour, and one business field in forestry licenses to be eased.

It said, the new policy taking by the government to protect the domestic entrepreneurs from competing with foreign businessmen. Other reasoned, there is a lack of foreign investment in those various sector.

Indonesia has releasing the negative list through Presidential Regulation Number 44 Year 2016 concerning List of Closed Business Fields and List of Open Business Fields with Requirements in the Investment Sector.

With the new policy package, the total number of business fields that have been relaxed has reached 303, while a total of 87 business fields have been released to foreign parties.

Foreign investors have welcome some efforts undertaken by the President Joko Widodo government over the past two years or so, including the launching of 16 economic policy packages, which include streamlining regulations. However, there still still many restrictive regulations that hamper investment.

Recently, the investment flows to the country has been declining. In the third quarter of 2018, total investment lowered 1.4 percent to Rp 173.8 trillion (US$11.4 billion) compared to the second quarter of this year at Rp176.3 trillion.

Investment inflows in the period between 2016 and 2017 were a result of regulatory reform in 2015, including the tax amnesty in 2016. As of the first quarter, the country was still enjoying significant investment inflows.

An external factors were having a negative impact on the investment climate such as global economic slowdown, the weakness of Rupiah exchange rate, and trade war between the United States vs China.

As those impacts, many of investment countries will wait and see, so that it was made foreign investment slowdown in Indonesia. The agency has revised down this year’s investment target to Rp 730 trillion (US$49.66 billion), from initially Rp765 trillion.

Besides external factors which had made declining foreign direct investment, other factors have to support those declining, such as many of industrial raw material in Indonesia is an import contents and the rise of oil prices which makes production capacity have been suppressed.

Other one is Indonesia needs to issue investment friendly policies and breakthroughs. Some observers have predicted that Indonesian government will face defiance and trouble to lift foreign investment development in Indonesia, because this year Indonesia is coming the election year.

Meanwhile, Indonesian government has try to lift foreign investment come to Indonesia through Indonesia government will finish an infrastructure project such as connectivity and electricity project and will offer one to foreign investment to funding participation.

The country must offer banking and tourism sector to attract foreign investment, because banking and tourism industries are lucrative business sector in Indonesia due to it has many of captive market and Indonesia millennial generations  have lifestyle in tourism.

Besides that, banking industry in Indonesia has a positive prospective during Indonesia’s development program and Bank clients candidate especially from medium and small enterprises has always been growth in Indonesia respectively.

US$1: Rp14,700