Chinese Investors' Complaints to Prabowo: Serious 'Warning' of Rising Business Risks in Indonesia
Chinese investors’ complaints reflect the real conditions of investment in Indonesia. Legal certainty, bureaucracy, and regulatory efficiency are still seen as the main obstacles.
JAKARTA, KOMPAS — Complaints from Chinese investors regarding the business climate in Indonesia serve as a serious signal of increasing perceptions of investment risk domestically. The government is urged to maintain a balance between strengthening state revenues and business certainty to prevent Indonesia’s investment competitiveness from weakening amid global competition.
Economist from the Institute for Development of Economics and Finance (Indef), M Rizal Taufikurahman, stated that the letter from the China Chamber of Commerce in Indonesia to President Prabowo Subianto indicates emerging concerns among strategic investors about the direction of national investment policy.
“I see this letter from the Chinese Chamber of Commerce as a serious warning that some investors are beginning to perceive an increase in business risks in Indonesia,” Rizal said when contacted on Wednesday (13/5/2026).
According to him, China’s position is crucial for Indonesia as one of the largest investors, particularly in strategic sectors such as nickel downstreaming, smelters, and electric vehicles. In 2025, for instance, China’s realised investment amounted to around $8.1 billion USD.
“This means that when strategic investors openly voice complaints about regulations, taxation, and law enforcement, it can no longer be considered an ordinary issue,” Rizal said.
The government, Rizal noted, has interests in strengthening state revenues, managing natural resources, and environmental oversight. “However, the business world requires policy certainty and consistency so that long-term investments remain feasible,” he continued.
Previously, the China Chamber of Commerce in Indonesia wrote to President Prabowo Subianto regarding various investment obstacles that burden Chinese business actors.
The complaints were conveyed by the China Chamber of Commerce in Indonesia through a letter to Prabowo that has been widely circulated publicly since Tuesday afternoon (12/5/2026). Kompas has confirmed that the letter was officially issued by the China Chamber of Commerce.
In the letter, Chinese investors highlighted various classic issues that hinder investment in Indonesia. These include overly strict regulations, excessive law enforcement, and several new policies such as tax and royalty increases, export proceeds foreign exchange retention obligations, nickel ore quota reductions, tightened foreign worker permits, as well as allegations of corruption and extortion practices by rogue authorities.
“These problems have disrupted normal business operations, directly damaging long-term investment confidence, and raising widespread concerns among Chinese investment companies about the business climate and the future of their business development in Indonesia,” the letter stated.
Rizal assessed that most of these complaints reflect the real investment conditions in Indonesia, which are often voiced by domestic entrepreneurs and foreign investors from other countries.
Last year, for example, a South Korean consortium led by LG Energy Solution officially withdrew from an electric vehicle (EV) battery project in Indonesia. In addition to shifts in the global EV industry landscape, one of the driving factors was investment certainty in Indonesia.
Various global surveys such as the World Competitiveness Ranking and Ease of Doing Business have previously shown that Indonesia’s main issues still revolve around legal certainty, bureaucracy, and regulatory efficiency.
“Many investors complain about rapid changes in rules, overlapping central and regional authorities, and high business compliance costs,” he said.
In the nickel sector, for instance, changes in the mineral reference price (HPM), reductions in work plans and cost budgets (RKAB), and natural resource export proceeds foreign exchange (DHE SDA) policies are said to create additional pressure on companies’ cash flows and business planning.
According to Rizal, oversight of foreign companies does need to be strengthened so that Indonesia does not become merely a location for natural resource exploitation. However, problems arise when law enforcement is perceived as inconsistent, overly discretionary, and changeable.
“Global investors can actually accept high taxes or strict environmental obligations as long as the rules are clear and predictable,” he said.
He added that the greatest risk emerges when business costs rise due to regulatory uncertainty and high informal costs. In the current global conditions, Indonesia is seen as directly competing with Vietnam, Thailand, and Malaysia in attracting global industry relocation.
Regarding the DHE SDA policy, Rizal views the government’s step to retain export foreign exchange domestically as important for maintaining macroeconomic stability and strengthening domestic foreign currency supply.
However, its implementation needs to consider the capital-intensive nature of the mining and downstreaming industries. “These industries require high cash flow flexibility for importing machinery, paying USD debts, and business expansion,” he said.
If export proceeds foreign exchange is held domestically for too long, companies’ liquidity could be strained, particularly for debt refinancing, importing heavy equipment, and building new smelters. In the short term, this could slow expansion.
Rizal also highlighted the issue of investment bureaucracy governance, which is still a major homework for the government. Legal certainty and regulatory consistency are the most determining factors in maintaining foreign direct investment flows.
Global investors do not only calculate potential profits but also factor in long-term policy risks. “The smelter, electric vehicle, and downstreaming industries require billions of dollars in investment with a 10-20 year horizon,” he said.
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