JAKARTASATU.COM \u2014 Investment worth Rp1,500 trillion failed to enter\nIndonesia in 2024. Deputy Minister of Investment and\nDownstreaming\/Deputy Head of BKPM Todotua Pasaribu said there were\nseveral factors that prevented investment from entering the country,\nincluding licensing issues and overlapping policies.<\/p>\n
\u201cProblems such as these \u2014 licensing, an unconducive investment\nclimate, overlapping policies and so forth \u2014 must indeed become a note\nand reflection for all of us,\u201d he said on Thursday (3\/7), as quoted from\nAntara.<\/p>\n
He said input from various stakeholders was essential to refine\nexisting policies. \u201cOur Ministry has certainly prepared a concept,\u201d he\nsaid.<\/p>\n
Government measures such as the Job Creation Law, the Illegal Levy\nEradication Task Force and the OSS system all failed to deliver the\nRp1,500 trillion in investment to the country.<\/p>\n
Prior to Todotua raising these issues, the government had in fact\nalready identified the same problems. They had also rolled out a number\nof measures to boost investment inflows. The following are three reasons\nbehind the investment failure:<\/p>\n
1. The Omnibus Law<\/strong><\/p>\n The Omnibus Law or Job Creation Law in Indonesia was discussed and\ninitiated during the administration of the seventh President, Joko\nWidodo (Jokowi). The legislation aimed to streamline regulation and\nencourage investment.<\/p>\n On 5 October 2020, Law Number 11 of 2020 on Job Creation was approved\nfollowing rapid and controversial deliberations. Key provisions included\nthe simplification of investment licensing processes and changes to wage\ncalculations more favourable to employers.<\/p>\n However, in November 2021, the Constitutional Court declared the Job\nCreation Law conditionally unconstitutional, ruling that its\ndeliberation did not comply with procedural rules and lacked\ntransparency. The court then gave two years for rectification.<\/p>\n In 2022, Jokowi issued Government Regulation in Lieu of Law Number 2\nof 2022 to replace the conditionally unconstitutional Job Creation Law.\nIn March 2023, the House of Representatives formally approved this\nregulation into law.<\/p>\n Unfortunately, the Omnibus Law controversy was seen as hindering\ninvestment inflows into Indonesia. This was conveyed by Yusuf Rendy\nManilet, a researcher at the Center of Reform on Economics (CORE)\nIndonesia. He said the Job Creation Law was ineffective, noting it was\ndrafted in violation of proper procedures. Consequently, the law could\nnot be challenged at the Constitutional Court and had to be revised.\nYusuf argued this created legal threats for investors. Rather than\nfacilitating investment as originally intended, the law instead created\nnew complications.<\/p>\n \u201cThis is actually the culmination of what we discussed earlier \u2014 the\nregulatory problem. The regulations keep changing because the process\nwas rushed,\u201d he said.<\/p>\n Similarly, Syafruddin Karimi, an economist at Andalas University,\nsaid the Omnibus Law through the Job Creation Law was originally\nconceived as a solution to streamline regulation and accelerate\ninvestment. The government promised simplification, streamlined\nlicensing and strengthened national economic competitiveness. In\npractice, however, the law gave rise to new problems no less serious.\nThe Constitutional Court\u2019s 2021 ruling declaring the Job Creation Law\nconditionally unconstitutional undermined the legal credibility of the\nlegislation.<\/p>\n 2. The Illegal Levy Eradication Task Force<\/strong><\/p>\n Jokowi had previously established the Illegal Levy Eradication Task\nForce (Satgas Saber Pungli) in October 2016 through Presidential\nRegulation Number 87 of 2016 to facilitate domestic investment\nflows.<\/p>\n The task force was expected to stamp out illegal levies at both\ncentral and regional levels \u2014 practices that had long deterred\nbusinesses from investing in Indonesia. Illegal levies have frequently\nbeen a persistent obstacle to investment.<\/p>\n Diana Dewi, Chair of the Jakarta Chamber of Commerce and Industry\n(Kadin), said establishing businesses in the regions was difficult due\nto frequent demands for additional payments from various parties,\nincluding non-governmental organisations. \u201cWhat we experienced was a\ngreat deal of illegal levies in the regions. Conditions in the regions\nare not like in Jakarta \u2014 the policies differ, and there are always many\nunder-the-table payments,\u201d she said at a press conference in Jakarta on\nWednesday (10\/1).<\/p>\n Diana said these conditions made the cost of setting up businesses in\nthe regions significantly higher. She lamented that local governments\nfailed to take firm action against those engaging in illegal levies.<\/p>\n Unfortunately, the task force failed to deliver results, with illegal\nlevies remaining rampant. A recent case involved the Cilegon Chamber of\nCommerce. Cilegon Kadin Chairman Muhammad Salim and two associates\nallegedly intimidated and pressured PT Chengda Engineering Co Ltd to\nsecure project contracts worth Rp5 trillion without going through a\ntender process. They were subsequently named suspects.<\/p>\n Meanwhile, the Illegal Levy Eradication Task Force has been dissolved\nby President Prabowo Subianto through Presidential Regulation Number 49\nof 2025 on the Revocation of Presidential Regulation Number 87 of 2016.\nIn its considerations, the task force\u2019s existence was deemed no longer\neffective and therefore needed to be disbanded.<\/p>\n 3. The OSS Investment Licensing System<\/strong><\/p>\n The OSS (Online Single Submission) investment licensing system is an\nelectronically integrated business licensing platform managed by the\nMinistry of Investment\/Investment Coordinating Board (BKPM). OSS was\nfirst launched in 2018 with the aim of expediting business and\ninvestment licensing processes in Indonesia.<\/p>\n Unfortunately, the OSS system has not worked effectively. Syafruddin\nKarimi, economist at Andalas University, said the OSS system, promised\nas a \u201cone-stop shop\u201d, had not fully resolved licensing barriers on the\nground. OSS, he said, was a reformist idea of high value but was held\nhostage by entrenched practices resistant to change.<\/p>\n \u201cThe government appears to have been overly confident that\ndigitalisation would automatically resolve bureaucratic problems. Yet\nwithout process simplification, institutional integration and reform of\nofficials\u2019 behaviour, even the most sophisticated system will be\nparalysed in the hands of structures unwilling to change,\u201d he said.<\/p>\n He added that if the government was serious about making OSS an\nengine of economic growth, what was needed was not merely a digital\nplatform but a comprehensive overhaul of licensing governance from end\nto end.<\/p>",
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