Economist: Deregulation Task Force Could Improve Indonesia's Investment Inflow
The Head of the Macroeconomics and Finance Centre at the Institute for Development of Economics and Finance (Indef), M. Rizal Taufikurahman, believes that the presence of a deregulation task force could improve Indonesia’s investment inflows if it can effectively prune overlapping regulations.
Speaking in Jakarta on Monday, Rizal explained that Indonesia’s investment challenges within the context of ASEAN competition involve not only fiscal incentives but also the complexity of rules and bureaucracy. Therefore, if the task force can resolve regulatory issues that hinder the business world, Rizal predicts the impact on increasing investment flows will be significant.
Additional benefits of the task force accelerating licensing and simplifying coordination across ministries and agencies include job creation and enhanced national industrial competitiveness. However, Rizal emphasised that the role of the deregulation task force must ensure it is not merely a short-term measure or an administrative symbol lacking real structural reform.
“The government needs to ensure the task force has strong authority, measurable targets, transparent regulatory evaluation, and involves business actors and regional authorities so that implementation does not stop at the central level,” said Rizal. Furthermore, he added that deregulation must maintain the quality of supervision, environmental protection, and legal certainty to avoid turning into uncontrolled liberalisation.
“Indonesia’s greatest challenge currently is not a lack of regulation, but too many conflicting and frequently changing rules, which diminishes investor confidence,” he added.
President Prabowo Subianto previously instructed the Minister of State Secretary, Prasetyo Hadi, to prepare for the formation of a deregulation acceleration task force. According to the President, the task force is necessary to simplify various regulations and business licences that have been deemed overly layered. He added that regulatory simplification must be carried out immediately, as overly complex regulations can create loopholes for corruption. Additionally, deregulation steps are considered vital to maintaining the confidence of investors looking to invest and operate businesses in Indonesia.