JAKARTA. The protest from the China Chamber of Commerce to President\nPrabowo Subianto regarding investment regulations is seen as a serious\nsignal of foreign investors\u2019 perceptions of Indonesia\u2019s business\nclimate, which could affect the competitiveness of attracting investor\nexpansions domestically.<\/p>\n
Paramadina University economist Wijayanto Samirin stated that\nregulatory uncertainty and inconsistent law enforcement have long been\nmajor obstacles for both foreign investors and domestic businesses\nseeking to expand in Indonesia.<\/p>\n
\u201cBusiness climate uncertainty has always been a challenge for foreign\ninvestors and domestic entrepreneurs to conduct business in Indonesia.\nInconsistent law enforcement only worsens the situation,\u201d Wijayanto told\nKontan on Thursday (14\/5).<\/p>\n
\u201cIf this trend is not ended, the private sector will stop expanding,\nand the wheels of the economy will experience a very serious slowdown,\u201d\nhe said.<\/p>\n
Wijayanto also assessed that this negative sentiment could impact\nIndonesia\u2019s risk perception in the eyes of global investors, including\nahead of the planned Panda Bond issuance in June 2026.<\/p>\n
\u201cThe Panda Bond will be somewhat affected; Indonesia will be\nperceived as a country with high country risk. Investors will demand\nhigher returns,\u201d he said.<\/p>\n
He highlighted the response from Finance Minister Purbaya Yudhi\nSadewa, who stated that the government would also protest illegal\nbusiness practices by several Chinese companies.<\/p>\n
According to Wijayanto, the government needs to be careful in\nresponding to investor protests to avoid worsening market sentiment and\ntriggering a wait-and-see attitude.<\/p>\n
\u201cA spontaneous response that seems like retaliation will only harm\nIndonesia; prepare to be further abandoned by investors,\u201d he said.<\/p>\n
He reminded that China is currently one of Indonesia\u2019s largest\ninvestors. Therefore, if Chinese investors begin to reduce expansions,\nthe national investment situation could become even more pressured.<\/p>\n
\u201cChina is one of our mainstays; if they also shy away, we will face\nan even more difficult situation,\u201d he said.<\/p>\n
Meanwhile, economist from the Center of Reform on Economics (Core),\nYusuf Rendy Manilet, assessed that the China Chamber of Commerce\u2019s step\nto directly write to the President shows increasing frustration among\ninvestors.<\/p>\n
\u201cIn business diplomacy practices, this channel is usually used when\nbusiness actors feel that regular communication channels are no longer\nsufficiently effective,\u201d Yusuf said.<\/p>\n
According to him, the impact on the Panda Bond issuance or the\ngovernment securities (SBN) market does not occur directly but can still\ninfluence Indonesia\u2019s overall risk perception.<\/p>\n
\u201cIf the perception worsens, pressure can emerge through rupiah\nweakening, more cautious capital flows, and rising SBN yields due to\nincreased risk premiums,\u201d he explained.<\/p>\n
Yusuf assessed that the main issue for investors is not merely strict\nregulations, but uncertainty in policy direction and implementation that\nis seen as changing frequently.<\/p>\n
\u201cInvestors can usually still accept strict rules, as long as the\npolicy direction is clear, does not change too suddenly, and the\ncommunication process is transparent,\u201d he said.<\/p>\n
He noted that the Export Proceeds in Foreign Exchange from Natural\nResources (DHE SDA) policy protested by Chinese investors was actually\ndesigned flexibly and has several exceptions.<\/p>\n
\u201cIf companies that do not borrow money in Indonesia are exempt from\nDHE SDA, there is such an exception. So China should not have a\nproblem,\u201d said Purbaya when met at the Ministry of Finance on Tuesday\n(12\/5).<\/p>\n
According to Purbaya, the government must still safeguard national\ninterests in managing natural resources, including regarding plans to\nincrease royalties and levies in the mineral sector.<\/p>\n
\u201cIt has not been imposed yet because it\u2019s just a plan. Let it be, but\nwe will prioritise our country\u2019s interests,\u201d he emphasised.<\/p>\n
He also mentioned that Indonesia-China investment relations are\ntwo-way. The Indonesian government, he said, has also conveyed\ncomplaints regarding illegal business practices by several Chinese\ncompanies in Indonesia.<\/p>\n
\u201cI have already complained to them about many Chinese entrepreneurs\nhere who also engage in illegal business,\u201d he said.<\/p>\n
In its letter to President Prabowo, the China Chamber of Commerce\nexpressed several objections to various Indonesian government policies\ndeemed burdensome to the business world.<\/p>\n
One of the protested issues is the increase in taxes and levies,\nincluding mineral royalties and export duties, which are said to have\nincreased repeatedly, accompanied by more aggressive tax inspections\nleading to large fines of up to tens of millions of US dollars.<\/p>\n
The China Chamber of Commerce also highlighted the planned DHE SDA\npolicy, which requires exporters to place 50% of export proceeds in\ndomestic banks for at least one year. According to them, this policy has\nthe potential to disrupt company liquidity and long-term business\noperations.<\/p>\n
In addition, they protested the slashing of nickel ore quotas in the\nWork Plan and Budget (RKAB), which is said to reach more than 70%,\nequivalent to a production reduction of around 30 million tonnes.<\/p>\n
The China Chamber of Commerce also complained about the tightening of\nforestry law enforcement, the halting of several strategic projects, and\nthe tightening of work visas, which are seen as hindering the mobility\nof technical and managerial personnel from China.<\/p>\n
Not only that, changes to the nickel ore benchmark price (HPM)\nregulations are also said to trigger a surge in production costs of up\nto 200%.<\/p>\n
According to the China Chamber of Commerce, these various policies\nnot only disrupt ongoing projects but also have the potential to affect\nfuture investments, exports, and hundreds of thousands of jobs in\nIndonesia\u2019s nickel industry supply chain.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/china-chamber-of-commerce-protest-to-prabowo-serves-as-alarm-for-indonesias-investment-climate-1778781556", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }