By: Aprilian Hutapea )*
Of course, Indonesia’s economic recovery is not easy, there are challenges to the unexpected that could make investors decide to postpone or cancel investment in Indonesia. One thing that needs to be maintained is the investment climate, where the investment climate has been proven to be able to accelerate Indonesia’s Economic Recovery.
The efforts of President Joko Widodo (Jokowi) in improving the investment climate in Indonesia for 8 years have shown evidence of the success of the confidence of the Indonesian conglomerates in accelerating their business.
Avere Investama Director Teguh Hidayat confirmed that the investment climate will make conglomerates feel more comfortable to invest. After the 2020 recession due to the pandemic, the government has worked hard and as a result the investment climate has become better.
In 2020, Indonesia was hit by the Covid-19 pandemic which resulted in crises in various sectors. At that time, economic growth plummeted due to strict mobility restrictions. But after that, he considered that the economic recovery was going fast because the government had taken many initiatives.
On the other hand, the issuance of the Employment Act (UU) turned out to be quite a breath of fresh air for the investment climate because entrepreneurs get certainty in investing their money in Indonesia.
One of the tycoons who has been aggressively expanding their business in recent years is the DJARUM Group. In 2021, the Needle Group has acquired issuers with a fantastic value, reaching Rp 20 trillion.
Djarum acquired PT Supra Boga Lestari, TBK. management of the 2.03 trillion Ranch Market through its electronics company, PT Global Digital Nuaga (Blibli). Later in the same year, the Needle Group entity, namely PT Professional Telekomunikasi Indonesia (Protelindo) also acquired PT Solusi Tunas Prima TBK (SUPR) for Rp 16.74 trillion. In 2022, the Needle Group claims it is ready to deliver Blibli and is also ready to conduct an initial public offering on the Indonesian Stock Exchange (IDX).
The investment climate is the entire set of policies, institutions and the environment, both ongoing and expected to occur in the future that can affect the rate of return and risk of an investment.
Deputy Chairperson of the Indonesian Chamber of Commerce and Industry (Kadin) Bobby Gafur Umar assessed that the investment climate in Indonesia has improved. This can be seen from the regulations that can support the implementation of investments such as the Omnibus Law . The Indonesian Chamber of Commerce and Industry considers that the investment climate in Indonesia has become increasingly attractive, even after successfully passing two years of the pandemic.
Bobby explained that this new regulation could cut the long bureaucratic process in the investment process into a simple one. Plus, there are 270 million people in the country which can make this country one of the largest economies in the world.
He explained that by improving regulations, this would also contribute to improving infrastructure. This is done in order to reduce logistics costs, provide incentives to investors so that Indonesia becomes very attractive as an investment destination country.
He also mentioned that several years ago, many businesses relocated from China to Vietnam and other countries in Southeast Asia. But now, Indonesia has become a priority destination for the relocation.
Bobby explained that this year Indonesia showed a very good economic performance, after successfully going through the turmoil of the pandemic in the last two years. Kadin sees that based on all economic figures, Indonesia is still one of the world’s suppliers, especially since Indonesia has abundant natural resources.
Meanwhile, President Jokowi emphasized that moving the capital city to the archipelago is Indonesia’s step to build a new work culture, thinking, and economic base. The President also explained that IKN is Indonesia’s future that can be realized with the joint efforts of all parties, including investors.
The implementation of the Job Creation Law and the taxation law can of course be used as a concrete effort by the government to increase investment attractiveness and create a better business climate in increasing Indonesia’s competitiveness.
One of the things that must be considered is the involvement of Indonesia in the global economy. Indonesia is a country that tends to be inward and this can be seen from the index related to participation in the global economy where Indonesia’s participation tends to be low.
The ratio of Indonesia’s FDI to GDP is rarely above 2% while other countries in the ASEAN region such as Thailand are able to be above 3.5 percent. While Vietnam was able to reach 6 percent. Perhaps this was due to policies in Indonesia which were less open when compared to other countries in the Asean region at that time.
Now the Government of Indonesia needs to maintain the investment climate so that investors do not hesitate to invest in Indonesia, with fertile investment, of course the economic recovery will occur faster so that many workers are absorbed.
)* the author is a contributor to the Nusantara Reading Room
