Businessman Reveals the 'Illness' Stalling Foreign Investment in Indonesia

Foreign investment flows into Indonesia are not yet running smoothly despite high global interest. Business players reveal that the main obstacles arise domestically, particularly regarding legal certainty and the implementation of policies deemed inconsistent. Based on data from the Investment Coordinating Board (BKPM), Indonesia has lost potential investment opportunities worth up to Rp 2,000 trillion in one year. This is due to various issues, from permitting processes to an unconducive investment climate. Chairman of the Indonesian Industrial Estates Association (HKI), Akhmad Ma’ruf Maulana, states that Indonesia’s attractiveness to investors has not declined. Various government economic diplomacy efforts have even been successful in opening new cooperation opportunities with several countries. He describes that in terms of policy direction, the government is on the right track in attracting investment. However, problems arise when these policies are translated at the implementation level. According to him, many agreed investment plans end up proceeding more slowly due to snags in the execution process. “Investor interest remains high and opportunities are wide open. The problem lies in legal certainty and the consistency of policy implementation in the field,” said Akhmad Ma’ruf to CNBC Indonesia on Wednesday (6/5/2026). The suboptimal support from ministries, agencies, and regional governments becomes a factor making investment realisation slower than expected. He sees a lack of synchronisation between central policies and regional readiness in implementing them. “In the field, we still see that policies built at the central level are not fully met with execution readiness by ministries, agencies, or regional governments. This then makes the investment process run slower than it should,” he emphasised. In practice, this situation is evident in several government programmes such as Special Economic Zones (KEK) and National Strategic Projects (PSN). The implementation of KEKs and PSNs often loses momentum due to various administrative hurdles and misaligned policies at different government levels. “Programmes that should accelerate investment are instead often hampered because their execution does not run in harmony between central and regional levels,” he said. He emphasises that this situation creates uncertainty for investors. In many cases, business players face unexpected changes in rules or additional policies, thereby increasing investment risks. Businessmen identify several fundamental issues hindering investment. One of them is weak coordination between central and regional governments. Additionally, spatial planning certainty is not yet fully clear. On the other hand, regional policies that do not always have a strong regulatory foundation also slow down investment inflows. “Investors need certainty that rules will not change midway and can be implemented consistently,” Ma’ruf explained. Meanwhile, Deputy Minister of Investment and Downstreaming/BKPM, Todotua Pasaribu, revealed that this issue has been ongoing for a long time and has become a classic problem. Permitting issues and an unconducive investment climate are serious concerns. “This is indeed a classic problem. Every year we record investment realisations, which are inputted by business players. We found that in 2024, the unrealised investment figure was around Rp 1,500 trillion, possibly reaching Rp 2,000 trillion,” he disclosed some time ago.