Government Prepares 'Fictive Positive' Policy to Slash Investment Permit Delays
Jakarta – Deputy for Investment Promotion at the Ministry of Investment and Downstreaming/BKPM, Nurul Ichwan, has identified the key obstacles that frequently hinder investment in Indonesia, chief among them the lengthy permit process.
Despite this, the government is continuously working to improve regulations to streamline licensing, including through the planned implementation of a "fictive positive" mechanism to accelerate investment permits.
In addition to obtaining permits from the Ministry of Investment and Downstreaming/BKPM, businesses must also secure approvals from various technical ministries. Under the fictive positive system, if a technical ministry fails to issue a permit within the agreed timeframe, the business licence will be granted automatically.
"The other contribution is the fictive positive mechanism that we are currently preparing. Initially, it will be applied to six technical ministries that issue licensing requirements, which we will limit based on their service level agreements. If the deadline passes, the permit will automatically be issued," Nurul said at the detikcom Indonesia Investment Talk Series in Jakarta on Wednesday (30 April 2025).
According to Nurul, licensing issues have long been a barrier for investors. Business operators have previously reported that permits take 65 days to process, whereas the expectation is just one day.
"These permits have been a persistent bottleneck, making it impossible to match investors' expectations," he said.
The fictive positive policy is supported by Shinta Kamdani, Chairwoman of the Indonesian Employers' Association (Apindo), particularly given the persistent uncertainty surrounding the business licensing process in Indonesia.
"Currently there is no clarity — for example, a particular permit might be supposed to take 10 days, but those 10 days can become 20 days, 30 days, or even months. With fictive positive, if there is no approval after 10 days, it is automatically deemed approved. That will make a difference, because investors need certainty," Shinta explained.
The government is also preparing to relax restrictions on several sectors previously closed to foreign investors. Nurul noted that some sectors currently restricted to domestic investors are underperforming due to capacity constraints.
He also assessed Indonesia as being quite competitive as an investment destination within Southeast Asia. According to the Business Ready (B-Ready) report, Indonesia's score surpasses several regional peers.
"Indonesia is at approximately 63 — the higher the score, the better. We are still below Singapore at 77 and Vietnam at 64, but we are ahead of the Philippines at 60 and Cambodia at 54," he said.
This means Indonesia remains among the top three countries with the best investment ratings in Southeast Asia. Furthermore, according to Switzerland's Institute of Management Development, Indonesia's ranking has risen from 44th to 27th.
"In this index, a lower number is better. These two assessments at least demonstrate that credible international institutions have evaluated Indonesia alongside other nations, and that is where Indonesia stands," Nurul concluded.
Despite this, the government is continuously working to improve regulations to streamline licensing, including through the planned implementation of a "fictive positive" mechanism to accelerate investment permits.
In addition to obtaining permits from the Ministry of Investment and Downstreaming/BKPM, businesses must also secure approvals from various technical ministries. Under the fictive positive system, if a technical ministry fails to issue a permit within the agreed timeframe, the business licence will be granted automatically.
"The other contribution is the fictive positive mechanism that we are currently preparing. Initially, it will be applied to six technical ministries that issue licensing requirements, which we will limit based on their service level agreements. If the deadline passes, the permit will automatically be issued," Nurul said at the detikcom Indonesia Investment Talk Series in Jakarta on Wednesday (30 April 2025).
According to Nurul, licensing issues have long been a barrier for investors. Business operators have previously reported that permits take 65 days to process, whereas the expectation is just one day.
"These permits have been a persistent bottleneck, making it impossible to match investors' expectations," he said.
The fictive positive policy is supported by Shinta Kamdani, Chairwoman of the Indonesian Employers' Association (Apindo), particularly given the persistent uncertainty surrounding the business licensing process in Indonesia.
"Currently there is no clarity — for example, a particular permit might be supposed to take 10 days, but those 10 days can become 20 days, 30 days, or even months. With fictive positive, if there is no approval after 10 days, it is automatically deemed approved. That will make a difference, because investors need certainty," Shinta explained.
The government is also preparing to relax restrictions on several sectors previously closed to foreign investors. Nurul noted that some sectors currently restricted to domestic investors are underperforming due to capacity constraints.
He also assessed Indonesia as being quite competitive as an investment destination within Southeast Asia. According to the Business Ready (B-Ready) report, Indonesia's score surpasses several regional peers.
"Indonesia is at approximately 63 — the higher the score, the better. We are still below Singapore at 77 and Vietnam at 64, but we are ahead of the Philippines at 60 and Cambodia at 54," he said.
This means Indonesia remains among the top three countries with the best investment ratings in Southeast Asia. Furthermore, according to Switzerland's Institute of Management Development, Indonesia's ranking has risen from 44th to 27th.
"In this index, a lower number is better. These two assessments at least demonstrate that credible international institutions have evaluated Indonesia alongside other nations, and that is where Indonesia stands," Nurul concluded.