Government Identifies Land Costs, Licensing Delays and Thuggery as Key Investment Barriers
Jakarta — The government has set an investment target of Rp 1,905 trillion this year. Achieving this target will be no easy task given the numerous challenges arising both domestically and internationally.
Deputy for Investment Implementation Control at the Ministry of Investment and Downstreaming/BKPM, Edy Junaedi, outlined several obstacles to investing in Indonesia. Among the key issues highlighted was the matter of land, including difficulties in land acquisition and relatively high prices.
"Compared to other ASEAN countries, our land prices — both for industrial and investment purposes — remain relatively higher," he said at the Indonesia Investment Talk Series in Jakarta on Monday (19/5/2025).
Edy further noted that convoluted licensing processes, which can take months to complete, remain a significant problem. The Ministry of Investment and Downstreaming/BKPM plans to implement a "fictive positive" mechanism in the licensing process. Under this approach, business permits would be automatically issued if the relevant technical ministry fails to grant approval within the agreed timeframe.
Additionally, Edy said the ministry would improve the OSS (Online Single Submission) system as an integrated electronic business licensing platform.
Other problems emerge during the investment execution phase, including intimidation by thuggish elements from certain civil society organisations (ormas). A recent high-profile case of such thuggery occurred at the BYD factory in Subang, West Java.
"Among those already in the execution phase, there have also been cases — as we saw a few days ago, which attracted considerable attention — of disruptions from ormas and local communities around project sites. But this is a challenge we must face," Edy said.
Meanwhile, Executive Director of the Segara Research Institute, Piter Abdullah Rejalam, assessed that such thuggery occurs due to weak law enforcement in Indonesia. The failure to enforce the law and rapid, unpredictable changes ultimately create uncertainty.
"I have been frequently asked recently about issues such as thuggery, which is essentially a result or indication caused by the failure to enforce the law — it comes down to the legal approach," Piter concluded.
Deputy for Investment Implementation Control at the Ministry of Investment and Downstreaming/BKPM, Edy Junaedi, outlined several obstacles to investing in Indonesia. Among the key issues highlighted was the matter of land, including difficulties in land acquisition and relatively high prices.
"Compared to other ASEAN countries, our land prices — both for industrial and investment purposes — remain relatively higher," he said at the Indonesia Investment Talk Series in Jakarta on Monday (19/5/2025).
Edy further noted that convoluted licensing processes, which can take months to complete, remain a significant problem. The Ministry of Investment and Downstreaming/BKPM plans to implement a "fictive positive" mechanism in the licensing process. Under this approach, business permits would be automatically issued if the relevant technical ministry fails to grant approval within the agreed timeframe.
Additionally, Edy said the ministry would improve the OSS (Online Single Submission) system as an integrated electronic business licensing platform.
Other problems emerge during the investment execution phase, including intimidation by thuggish elements from certain civil society organisations (ormas). A recent high-profile case of such thuggery occurred at the BYD factory in Subang, West Java.
"Among those already in the execution phase, there have also been cases — as we saw a few days ago, which attracted considerable attention — of disruptions from ormas and local communities around project sites. But this is a challenge we must face," Edy said.
Meanwhile, Executive Director of the Segara Research Institute, Piter Abdullah Rejalam, assessed that such thuggery occurs due to weak law enforcement in Indonesia. The failure to enforce the law and rapid, unpredictable changes ultimately create uncertainty.
"I have been frequently asked recently about issues such as thuggery, which is essentially a result or indication caused by the failure to enforce the law — it comes down to the legal approach," Piter concluded.