Chinese Chamber of Commerce Writes to Prabowo Requesting Improvement of Business Environment
The China Chamber of Commerce in Indonesia has written to President Prabowo Subianto requesting improvements to the business environment in Indonesia. The letter notes that many companies from the Bamboo Curtain country have invested, contributing to economic growth, job creation, industrial enhancement, and fulfilling social responsibilities in Indonesia.
The organisation complains that companies operating in Indonesia generally face problems including overly strict regulations, excessive law enforcement, and corruption and extortion by authorities.
“These problems have severely disrupted normal business operations, directly damaging long-term investment confidence, and causing widespread concern among Chinese investment companies regarding the current business environment and their future development in Indonesia,” as quoted from the letter.
Detailed complaints include increases in taxes and fees, including repeated hikes in mineral resource royalties. This is accompanied by intensive and even large-scale tax audits valued at tens of millions of US dollars, creating panic among companies.
Second, plans for mandatory foreign exchange retention requirements that cause high uncertainty for natural resource exporters, who must hold 50 percent of their foreign exchange earnings in state-owned banks for at least one year. This will severely harm company liquidity and long-term operations.
Third, drastic reductions in nickel ore quotas. Since this year, nickel ore mining quotas have been sharply cut, with reductions for large mines exceeding 70 percent. The total decline reaches 30 million tonnes, disrupting the development of downstream industries such as new energy and stainless steel.
Fourth, forestry law enforcement has been excessively tightened. The Indonesian Forest Management Special Task Force has imposed a record fine of US$180 million on a Chinese investment company for allegedly lacking a valid Forest Area Borrowing Permit (IPPKH).
Fifth, major projects have been suspended. Authorities have forcibly intervened in company operations, accusing large hydropower plant (PLTA) projects invested in and built by Chinese investment companies of damaging forest land and exacerbating flooding, ordering work stoppages and imposing sanctions.
Sixth, work visa oversight has been intensified. Approvals for work visas have become increasingly complicated, with rising costs, higher thresholds, and unreasonable restrictions such as designating specific work locations, which hinder the mobility of technical and managerial personnel.
“In addition, relevant government departments are considering further measures, including new export duties on certain products, the removal of incentives for electric vehicles, and reductions in tax relief for special economic zones,” as quoted from the letter.
The China Chamber of Commerce also highlights the significant increase in the nickel ore benchmark price (HMP) and revisions to pricing rules, including for cobalt, iron, and other minerals. These updates have caused a 200 percent surge in nickel ore costs.
Chinese companies are facing rising production costs, swelling operational losses, and imbalances across the industrial chain. The impacts affect future investments, exports, and jobs throughout the industrial chain.
The China Chamber of Commerce hopes that the government will continue to cultivate a stable, fair, transparent, and predictable business environment, stabilise policy expectations, standardise law enforcement standards, and protect the legitimate rights and interests of foreign investment companies.
Second, relevant competent authorities will listen to company complaints, promptly improve unreasonable policies and law enforcement practices, and effectively resolve practical difficulties faced by companies.
Third, government-business communication mechanisms will be further enhanced to open channels for problem resolution.