Government Prepares New Regulations as Investment Target Soars
JAKARTA - The Indonesian government is directing its primary focus on easing licensing procedures as the key to accelerating domestic investment realisation. This forms part of a strategic effort to achieve the ambitious targets of 8 per cent economic growth and Rp 13,000 trillion in investment by 2029.
To realise these targets, the Ministry of Investment and Downstreaming together with the Investment Coordinating Board (BKPM) are revising three implementing regulations under Government Regulation No. 5 of 2021 governing Risk-Based Business Licensing. The revision of these three regulations represents a critical step towards improving and accelerating the business licensing process, which has continued to face various obstacles and barriers.
Deputy Minister of Investment and Downstreaming/BKPM, Todotua Pasaribu, explained that the three regulations being revised include BKPM Regulation No. 3 of 2021, which governs the Electronically Integrated Risk-Based Business Licensing System; BKPM Regulation No. 4 of 2021, which provides guidelines and procedures for risk-based licensing services and investment facilities; and BKPM Regulation No. 5 of 2021, which governs guidelines for supervising risk-based business licensing.
"This government has a target of economic growth heading towards 8 per cent. This is a fairly ambitious figure, but also quite realistic if it can be achieved," said Todotua in an official statement issued recently.
Looking at investment achievements over the previous ten years of government, investment realisation stood at approximately Rp 9,900 trillion. With the 8 per cent economic growth target for the current administration, the government is targeting a significant increase to Rp 13,000 trillion over the next five years. This means domestic investment inflows must increase dramatically for the economic target to be met.
"If during the previous 10 years of government, the investment realisation figure was approximately Rp 9,900 trillion, then in the next 5 years to reach the 8 per cent figure, we need investment realisation of Rp 13,000 trillion," Todotua affirmed.
For this year, the government has already raised the investment target to Rp 1,900 trillion, up from last year's realisation of Rp 1,700 trillion. This figure serves as an initial benchmark for measuring the effectiveness of various policies and licensing system improvements in attracting both domestic and foreign investors.
The investment realisation report for the first quarter of 2025 showed achievement of approximately Rp 465 trillion, and early data for the second quarter also showed relatively stable results. However, the government remains vigilant against potential obstacles that could emerge particularly in the third and fourth quarters.
Licensing services remain a primary concern as longstanding problems in this sector have previously caused Indonesia to lose significant investment potential. According to Todotua, in 2024 Indonesia experienced "unrealised investment" estimated at between Rp 1,500 trillion and Rp 2,000 trillion. These losses were caused by classic barriers such as complex and convoluted licensing processes, an investment climate that was not fully conducive, and overlapping policies that confused investors.
"We found that in 2024, the unrealised investment figure was around 1,500, possibly reaching 2,000 trillion. Unrealised investment — why? Because of problems like these: licensing, an unconducive investment climate, various overlapping policies and so on," he stated firmly.
The revision of the three ministerial regulations is viewed as a solution to overcome these barriers. One important aspect of the revision is the simplification and acceleration of licensing processes involving multiple ministries and agencies. Currently, there are approximately 1,700 types of licences that investors must navigate, involving at least 17 different ministries and agencies.
Additionally, the financial industry sector, which has not yet been incorporated into the Online Single Submission (OSS) system, is a primary focus for integration. This aims to ensure that licensing processes and investment realisation records in the financial sector — including banking, insurance and non-banking sectors — can be recorded transparently and in an integrated manner.
"Approximately 1-2 weeks ago we held a meeting with the Chairman of the Financial Services Authority (OJK) and we provided an explanation, we gave input on why it is important for us to consolidate," said Todotua. He added that financial industry data had never been properly recorded in investment realisation figures because it had not yet been incorporated into the electronically integrated licensing system.
Through data consolidation and streamlined licensing processes, the government hopes investors will receive faster and more efficient services, thereby driving significant investment growth. This will not only help attract new capital but also accelerate the achievement of higher and more sustainable economic growth targets.
The 8 per cent economic growth target is not merely an ambitious figure without foundation. The government views it as a strategic necessity to strengthen Indonesia's economic competitiveness amid intense global competition. Accordingly, improving regulations and easing business licensing have become key pillars in the national economic development strategy going forward.
Through strategic measures such as regulatory revision and electronic licensing system integration, the government aims to ensure the investment climate becomes increasingly conducive and transparent. Success in this area will pave the way for more optimal investment realisation, enabling Indonesia to effectively achieve its established development targets.
To realise these targets, the Ministry of Investment and Downstreaming together with the Investment Coordinating Board (BKPM) are revising three implementing regulations under Government Regulation No. 5 of 2021 governing Risk-Based Business Licensing. The revision of these three regulations represents a critical step towards improving and accelerating the business licensing process, which has continued to face various obstacles and barriers.
Deputy Minister of Investment and Downstreaming/BKPM, Todotua Pasaribu, explained that the three regulations being revised include BKPM Regulation No. 3 of 2021, which governs the Electronically Integrated Risk-Based Business Licensing System; BKPM Regulation No. 4 of 2021, which provides guidelines and procedures for risk-based licensing services and investment facilities; and BKPM Regulation No. 5 of 2021, which governs guidelines for supervising risk-based business licensing.
"This government has a target of economic growth heading towards 8 per cent. This is a fairly ambitious figure, but also quite realistic if it can be achieved," said Todotua in an official statement issued recently.
Looking at investment achievements over the previous ten years of government, investment realisation stood at approximately Rp 9,900 trillion. With the 8 per cent economic growth target for the current administration, the government is targeting a significant increase to Rp 13,000 trillion over the next five years. This means domestic investment inflows must increase dramatically for the economic target to be met.
"If during the previous 10 years of government, the investment realisation figure was approximately Rp 9,900 trillion, then in the next 5 years to reach the 8 per cent figure, we need investment realisation of Rp 13,000 trillion," Todotua affirmed.
For this year, the government has already raised the investment target to Rp 1,900 trillion, up from last year's realisation of Rp 1,700 trillion. This figure serves as an initial benchmark for measuring the effectiveness of various policies and licensing system improvements in attracting both domestic and foreign investors.
The investment realisation report for the first quarter of 2025 showed achievement of approximately Rp 465 trillion, and early data for the second quarter also showed relatively stable results. However, the government remains vigilant against potential obstacles that could emerge particularly in the third and fourth quarters.
Licensing services remain a primary concern as longstanding problems in this sector have previously caused Indonesia to lose significant investment potential. According to Todotua, in 2024 Indonesia experienced "unrealised investment" estimated at between Rp 1,500 trillion and Rp 2,000 trillion. These losses were caused by classic barriers such as complex and convoluted licensing processes, an investment climate that was not fully conducive, and overlapping policies that confused investors.
"We found that in 2024, the unrealised investment figure was around 1,500, possibly reaching 2,000 trillion. Unrealised investment — why? Because of problems like these: licensing, an unconducive investment climate, various overlapping policies and so on," he stated firmly.
The revision of the three ministerial regulations is viewed as a solution to overcome these barriers. One important aspect of the revision is the simplification and acceleration of licensing processes involving multiple ministries and agencies. Currently, there are approximately 1,700 types of licences that investors must navigate, involving at least 17 different ministries and agencies.
Additionally, the financial industry sector, which has not yet been incorporated into the Online Single Submission (OSS) system, is a primary focus for integration. This aims to ensure that licensing processes and investment realisation records in the financial sector — including banking, insurance and non-banking sectors — can be recorded transparently and in an integrated manner.
"Approximately 1-2 weeks ago we held a meeting with the Chairman of the Financial Services Authority (OJK) and we provided an explanation, we gave input on why it is important for us to consolidate," said Todotua. He added that financial industry data had never been properly recorded in investment realisation figures because it had not yet been incorporated into the electronically integrated licensing system.
Through data consolidation and streamlined licensing processes, the government hopes investors will receive faster and more efficient services, thereby driving significant investment growth. This will not only help attract new capital but also accelerate the achievement of higher and more sustainable economic growth targets.
The 8 per cent economic growth target is not merely an ambitious figure without foundation. The government views it as a strategic necessity to strengthen Indonesia's economic competitiveness amid intense global competition. Accordingly, improving regulations and easing business licensing have become key pillars in the national economic development strategy going forward.
Through strategic measures such as regulatory revision and electronic licensing system integration, the government aims to ensure the investment climate becomes increasingly conducive and transparent. Success in this area will pave the way for more optimal investment realisation, enabling Indonesia to effectively achieve its established development targets.