Expert: Chinese Chamber of Commerce Letter Serves as Alarm for Indonesia's Investment Climate
Jakarta – A five-page letter from the Chinese Chamber of Commerce in Indonesia to President Prabowo Subianto has suddenly drawn public attention. Behind the document’s pages lies a series of critical notes on the national investment climate, ranging from regulatory uncertainty, law enforcement issues, complicated visa bureaucracy, to alleged illegal levies considered to hinder the business world.
More than just a list of complaints, the letter is regarded as a mirror reflecting various structural problems that still overshadow Indonesia’s investment competitiveness. The issue became the subject of discussion in the Bharata Online Dialogue Forum programme, which premiered on Monday (15/6) via a YouTube channel.
Carrying the theme “Reading the Chinese Chamber of Commerce Letter to the President of Indonesia: Potential and Challenges of Indonesia–China Cooperation”, the forum, organised by CGTN Indonesia together with Bharata Production, presented a number of experts from various fields. The panellists agreed that the letter deserves to be read as constructive input as well as a warning that investment climate reform can no longer be delayed.
Amidst the various criticisms that emerged, Indonesia is still considered to have strong appeal for foreign investors. The combination of a large domestic market and the natural resource downstreaming agenda keeps Indonesia on the global investment radar, especially for Chinese businesses that are building new supply chains for strategic industries such as electric vehicles.
Responding to a question from Chinese media activist Andy Qiu regarding the prospects of foreign investment in Indonesia, senior journalist Bekti Nugroho assessed that the size of the national market is the main factor that is difficult for investors to ignore. “Indonesia has a market of around 280 million people. That is not a small figure. Even compared to other ASEAN countries, Indonesia remains the largest market, making it very attractive economically,” he said.
A similar view was expressed by Padang Wicaksono, a Macroeconomic Expert and lecturer at the Department of Economics, Faculty of Economics and Business, University of Indonesia. According to him, the downstreaming policy that the government continues to push provides great opportunities for investors to increase the added value of industries domestically. “If you want to enjoy the benefits of Indonesia’s resources, do not just export raw materials. Build processing industries in Indonesia so that the entire value creation process can be carried out domestically. This is a very opportune moment,” he said.
Although investment opportunities remain wide open, the panellists assessed that the biggest problem does not lie in whether regulations are strict or loose. The concern is instead the inconsistency in policy implementation. Overlapping regulations between central and regional governments, coupled with frequently changing procedures, create uncertainty that is difficult for businesses to predict. In the business world, such conditions are often more worrying than economic risk itself.
Padang Wicaksono emphasised that investors are fundamentally accustomed to facing risk, as long as the risk can be calculated and mitigated. “Risk always exists and that is not a problem, because there is risk management and mitigation strategies. But when what emerges is uncertainty, the situation becomes far more difficult,” he stressed.
The same tone was conveyed by Harryanto Aryodiguno, an international relations expert and Associate Professor of International Relations at President University. “Investors are actually not afraid of strict rules. What they worry about is uncertainty and inconsistency in the application of those rules,” he said.
For Chinese investors, this issue has a deeper dimension. In Chinese business culture, long-term trust and the concept of guanxi, or relational networks, are the main foundations of cooperation. Therefore, sudden policy changes without adequate communication can erode trust that has been built over many years.
Jureynolds, a linguistics expert and Head of the Chinese Literature Study Programme at Bina Nusantara University, reminded that the communication aspect should not be underestimated. “If not managed well, the impact could affect long-term cooperative relations in the future,” he said.
Although most of the spotlight is directed at the government, the panellists assessed that Chinese investors also need to adapt more deeply to the characteristics of Indonesian society. According to Harryanto Aryodiguno, investment success is not only determined by communication at the elite level, but also by the ability to understand the social reality, culture, and diversity of regions in Indonesia. “Investors need to understand that Indonesia has many religious activities and different social characteristics in each region. Even though it is one country, the approach required can be very diverse,” he explained.
Understanding the local context is considered important to maintain investment sustainability while building harmonious relations with the surrounding community.
Responding to the various notes in the letter, the panellists urged the government not to stop at the clarification stage. What is more important is to carry out fundamental improvements to national investment governance. Synchronising regulations between central and regional levels, eradicating corruption, and improving the quality of the bureaucracy are agendas deemed urgent to realise.
Bekti Nugroho assessed that President Prabowo needs to ensure that the bureaucratic reform process is supported by the right figures in strategic government positions. “Bureaucratic reform must be supported by placing the right people in the right positions. That way, the decision-making and coordination process can run more effectively,” he said.