KSPSI Urges Licensing Efficiency to Strengthen Investment
Jakarta: The high level of investment realisation in Indonesia throughout the first quarter of 2025 must be leveraged by the government to boost purchasing power and improve public welfare. To achieve this, the first step the government must take is to make it easier for investors to commence their business activities.
"In Indonesia's industrial world, there is a ranked list of investment barriers. The number one barrier is regulation, ranging from licensing, taxation, land acquisition, and various others," said Jumhur Hidayat, General Chairman of the Confederation of Indonesian Workers' Unions (KSPSI), in a statement on Thursday, 8 May 2025.
Meanwhile, labour dynamics rank only eleventh on the list of factors hindering capital inflows into Indonesia. According to Jumhur, welfare improvement demands voiced by labour groups in Indonesia do not significantly affect investor interest.
"For wages, there are benchmarks. What workers are demanding is still reasonable compared to Vietnam or the Philippines," he explained.
At the end of April, the Investment Coordinating Board (BKPM) recorded that investment realisation during the January-March 2025 period reached Rp465.2 trillion, an increase of 15.9 per cent compared to the same period last year at Rp401.5 trillion.
Jumhur argued that now is the moment for the government to fulfil its promise of improving public welfare. The way to do so is by cutting licensing requirements, enabling more workers to be absorbed by industry and automatically reducing unemployment.
"All those permits cost money. The government knows and is capable — if all of that is dropped, companies can grow and provide decent welfare for workers. That is the government's job," he explained.
**Cost of doing business for Indonesian entrepreneurs**
In mid-2024, the Indonesian Employers' Association (Apindo) released research findings stating that the cost of doing business in Indonesia is the highest compared to four neighbouring countries — Malaysia, the Philippines, Thailand, and Vietnam — making Indonesia uncompetitive from the perspective of industry players.
According to Apindo, the high costs borne by entrepreneurs include logistics and bank loan interest. Indonesia's logistics costs reach 23.5 per cent of Gross Domestic Product (GDP), far higher than Malaysia at just 13 per cent and well behind Singapore at only eight per cent. Meanwhile, lending rates in Indonesia range between 8-14 per cent, higher than the four other countries at just 4-6 per cent.
"Don't burden everything on entrepreneurs. The government should help them there. Bring down logistics costs, don't let bank interest rates be so high. Pity the entrepreneurs. They borrow money for capital and have to pay 14-15 per cent interest — it's madness," Jumhur lamented.
The high interest rates demanded by banks as a condition for credit, according to the former head of BNP2TKI, are one example of unproductive costs that harm Indonesia.
"Neighbouring countries can manage with just 6-7 per cent, so why must bank interest in Indonesia reach 13-15 per cent for SMEs and others? So most of the profits are taken up by unproductive things. But if that were returned to companies, returned to workers, it would become purchasing power and livelihoods for others," he said.
According to him, KSPSI firmly believes the government can fulfil its mission of improving public welfare. Moreover, President Prabowo Subianto strongly prioritises dialogue with all elements of society to build Indonesia. Jumhur argued that the current low purchasing power of Indonesians is the result of previous government policies that must be untangled one by one.
"The most severe and alarming carry-over from past policies is the devastated purchasing power of the public. Imagine, in 2014 the average daily bank balance of citizens was still Rp3.8 million. Now it is down to just Rp1.3 million, meaning purchasing power has plummeted. If people have no money, industry will inevitably suffer too," said Jumhur.
Therefore, to restore public purchasing power, Jumhur again urged the government to facilitate incoming investment whilst simultaneously reducing the cost of doing business for entrepreneurs. The hope is that with more job creation, the money spent by workers can once again drive the wheels of the economy.
"The government as the current policymaker is very open to receiving input from people directly involved in their respective fields. Consider the next six months to one year as a temporary phenomenon. Hopefully, through dialogue and the right policies, good outcomes can be achieved for the people," he said.
"In Indonesia's industrial world, there is a ranked list of investment barriers. The number one barrier is regulation, ranging from licensing, taxation, land acquisition, and various others," said Jumhur Hidayat, General Chairman of the Confederation of Indonesian Workers' Unions (KSPSI), in a statement on Thursday, 8 May 2025.
Meanwhile, labour dynamics rank only eleventh on the list of factors hindering capital inflows into Indonesia. According to Jumhur, welfare improvement demands voiced by labour groups in Indonesia do not significantly affect investor interest.
"For wages, there are benchmarks. What workers are demanding is still reasonable compared to Vietnam or the Philippines," he explained.
At the end of April, the Investment Coordinating Board (BKPM) recorded that investment realisation during the January-March 2025 period reached Rp465.2 trillion, an increase of 15.9 per cent compared to the same period last year at Rp401.5 trillion.
Jumhur argued that now is the moment for the government to fulfil its promise of improving public welfare. The way to do so is by cutting licensing requirements, enabling more workers to be absorbed by industry and automatically reducing unemployment.
"All those permits cost money. The government knows and is capable — if all of that is dropped, companies can grow and provide decent welfare for workers. That is the government's job," he explained.
**Cost of doing business for Indonesian entrepreneurs**
In mid-2024, the Indonesian Employers' Association (Apindo) released research findings stating that the cost of doing business in Indonesia is the highest compared to four neighbouring countries — Malaysia, the Philippines, Thailand, and Vietnam — making Indonesia uncompetitive from the perspective of industry players.
According to Apindo, the high costs borne by entrepreneurs include logistics and bank loan interest. Indonesia's logistics costs reach 23.5 per cent of Gross Domestic Product (GDP), far higher than Malaysia at just 13 per cent and well behind Singapore at only eight per cent. Meanwhile, lending rates in Indonesia range between 8-14 per cent, higher than the four other countries at just 4-6 per cent.
"Don't burden everything on entrepreneurs. The government should help them there. Bring down logistics costs, don't let bank interest rates be so high. Pity the entrepreneurs. They borrow money for capital and have to pay 14-15 per cent interest — it's madness," Jumhur lamented.
The high interest rates demanded by banks as a condition for credit, according to the former head of BNP2TKI, are one example of unproductive costs that harm Indonesia.
"Neighbouring countries can manage with just 6-7 per cent, so why must bank interest in Indonesia reach 13-15 per cent for SMEs and others? So most of the profits are taken up by unproductive things. But if that were returned to companies, returned to workers, it would become purchasing power and livelihoods for others," he said.
According to him, KSPSI firmly believes the government can fulfil its mission of improving public welfare. Moreover, President Prabowo Subianto strongly prioritises dialogue with all elements of society to build Indonesia. Jumhur argued that the current low purchasing power of Indonesians is the result of previous government policies that must be untangled one by one.
"The most severe and alarming carry-over from past policies is the devastated purchasing power of the public. Imagine, in 2014 the average daily bank balance of citizens was still Rp3.8 million. Now it is down to just Rp1.3 million, meaning purchasing power has plummeted. If people have no money, industry will inevitably suffer too," said Jumhur.
Therefore, to restore public purchasing power, Jumhur again urged the government to facilitate incoming investment whilst simultaneously reducing the cost of doing business for entrepreneurs. The hope is that with more job creation, the money spent by workers can once again drive the wheels of the economy.
"The government as the current policymaker is very open to receiving input from people directly involved in their respective fields. Consider the next six months to one year as a temporary phenomenon. Hopefully, through dialogue and the right policies, good outcomes can be achieved for the people," he said.