JAKARTA (TheInsiderStories) — Indonesia expanded the negative investment list to attract more investment coming, said one official on Friday (16/11). The government will allowed foreign investor have 100 percent shares in 54 business fields.
“With the release of negative list, it is expected the investment value will increase,” said the Special Staff of the Coordinating Minister for Economic Affairs (CMEA) Edy Putra Irawady during a press conference at his office.
He added, 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.
Lembong attributed the decline to the dull investment policies introduced by relevant government organizations since 2017.
“Regrettably, in 2017, there was no breakthrough in regulatory reform. It meant investment inflows were less optimal in the following year,” He said.
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.
At the same day, Indonesia set new economic policy to lowered the current account deficit (CAD), addressed the global economic pressure, normalization of United States (US) monetary policy and the US-China trade war.
The government issued the Economic Policy Package and tax policy by obliged Foreign Exchange Revenues from export to be placed in Indonesia’ Financial System. This policy package is intended to strengthen trust in the government so that capital inflow continues to enter Indonesia.
The contents of the new Package are the expansion of tax holidays, relaxation of negative investment lists and relaxation related to Foreign Exchange Exports for Natural Resources.
For the expansion of the tax holiday, the government refined the provisions as well regulated in Minister of Finance Regulation Number 35/PMK.010/2018 concerning Provision of Corporate Income Tax Deduction Facilities.