Rp1,500 Trillion in Investment Failed to Enter Indonesia in 2024: Licensing, Overlapping Policies to Blame
Jakarta, CNN Indonesia — Some Rp1,500 trillion in investment failed to enter Indonesia in 2024. Deputy Minister of Investment and Downstreaming/Deputy Head of BKPM Todotua Pasaribu said several factors prevented investment from flowing into the country, including licensing issues and overlapping policies.
"Problems such as these — licensing, an unconducive investment climate, overlapping policies and so forth — must indeed become a shared note and reflection for all of us," he said on Thursday (3 July), as quoted by Antara.
He said input from various stakeholders was urgently needed to refine existing policies. "Our Ministry has certainly prepared a concept," he added.
Before Todotua raised these issues, the government had in fact already acknowledged the same problems and rolled out a number of measures to boost investment inflows. Among them:
**1. The Omnibus Law**
The Omnibus Law, or Job Creation Law, was conceived and initiated during the administration of Indonesia's seventh president, Joko Widodo (Jokowi). The legislation aimed to simplify regulations and encourage investment.
On 5 October 2020, Law No. 11 of 2020 on Job Creation was enacted following a swift and controversial deliberation process. Key provisions included simplified investment licensing procedures and changes to the wage calculation formula that were more business-friendly.
However, in November 2021, the Constitutional Court ruled the Job Creation Law conditionally unconstitutional, finding that its deliberation process did not comply with procedural rules and failed to meet transparency requirements. The court gave the government two years to make corrections.
In 2022, Jokowi issued Government Regulation in Lieu of Law (Perppu) No. 2 of 2022 to replace the conditionally unconstitutional Job Creation Law. In March 2023, the House of Representatives formally approved the Perppu as law.
Nevertheless, the Omnibus Law controversy was seen as hindering investment into Indonesia. Researcher at the Center of Reform on Economics (CORE) Indonesia, Yusuf Rendy Manilet, said the Job Creation Law had proven ineffective. The regulation, he said, was drafted in violation of proper procedures, leading to constitutional challenges and mandatory revisions that created legal uncertainty for investors.
"This is essentially the culmination of what we discussed earlier — the regulatory problem. The regulations kept changing because the process itself was rushed," he said.
Similarly, economist at Andalas University Syafruddin Karimi said the Omnibus Law through the Job Creation Law was originally conceived as a solution to simplify regulations and accelerate investment. The government promised ease of doing business, streamlined licensing and strengthened national economic competitiveness. But in practice, the law gave rise to equally serious new uncertainties.
"The Constitutional Court's 2021 ruling declaring the Job Creation Law conditionally unconstitutional weakened the legal credibility of the legislation. For investors, legal certainty is the primary foundation for making long-term decisions. And when the legal framework is constitutionally questioned, the legal risk becomes too great to ignore," he said.
**2. Establishment of the Illegal Levies Eradication Task Force**
Jokowi also established the Illegal Levies Eradication Task Force (Satgas Saber Pungli) in October 2016 through Presidential Regulation No. 87 of 2016, aimed at facilitating domestic investment flows.
The task force was expected to eradicate illegal levies at both central and regional levels that had long discouraged businesses from investing in Indonesia. Illegal levies have persistently been a major impediment to investment.
Jakarta Chamber of Commerce and Industry (Kadin) Chairwoman Diana Dewi said establishing businesses in the regions was difficult due to frequent demands for additional payments by various parties, including non-governmental organisations.
"What we have experienced is that there are a great many illegal levies in the regions. In the regions it is not like in Jakarta — the policies faced are different and they consider it legitimate. What we would call under-the-table payments are always abundant," she said.
Diana said these conditions made the cost of opening businesses in the regions much higher, and she lamented that regional governments failed to take firm action against the perpetrators.
However, the task force failed to deliver results. Illegal levies continued to run rampant. Most recently, illegal levies were allegedly committed by Kadin Cilegon itself. Kadin Cilegon Chairman Muhammad Salim and two members were suspected of intimidating and pressuring PT Chengda Engineering Co Ltd to secure project allocations worth Rp5 trillion without going through a tender process. Shortly after the case emerged, they were named suspects.
Meanwhile, the Illegal Levies Eradication Task Force has since been dissolved by President Prabowo Subianto through Presidential Regulation No. 49 of 2025 on the Revocation of Presidential Regulation No. 87 of 2016. The regulation stated that the task force was deemed no longer effective and therefore needed to be disbanded.
**3. OSS Investment Licensing**
The Online Single Submission (OSS) system is an electronically integrated business licensing platform managed by the Ministry of Investment/Investment Coordinating Board (BKPM). OSS was first launched in 2018 with the aim of accelerating and simplifying business and investment licensing processes in Indonesia.
However, the OSS system has not worked effectively. Economist Syafruddin Karimi said the OSS system, promised as a "one-stop shop", had not fully resolved licensing obstacles on the ground.
OSS, he said, was a reformist concept of high value but had been held hostage by entrenched old practices reluctant to change.
"The government appears to have been overly confident that digitalisation would automatically resolve bureaucratic problems. Yet without process simplification, institutional integration and reform of officials' behaviour, even the most sophisticated system will be paralysed in the hands of structures unwilling to change," he said.
He added that if the government was serious about making OSS an engine of economic growth, what was needed was not merely a digital platform but a comprehensive overhaul of licensing governance from end to end.
"Problems such as these — licensing, an unconducive investment climate, overlapping policies and so forth — must indeed become a shared note and reflection for all of us," he said on Thursday (3 July), as quoted by Antara.
He said input from various stakeholders was urgently needed to refine existing policies. "Our Ministry has certainly prepared a concept," he added.
Before Todotua raised these issues, the government had in fact already acknowledged the same problems and rolled out a number of measures to boost investment inflows. Among them:
**1. The Omnibus Law**
The Omnibus Law, or Job Creation Law, was conceived and initiated during the administration of Indonesia's seventh president, Joko Widodo (Jokowi). The legislation aimed to simplify regulations and encourage investment.
On 5 October 2020, Law No. 11 of 2020 on Job Creation was enacted following a swift and controversial deliberation process. Key provisions included simplified investment licensing procedures and changes to the wage calculation formula that were more business-friendly.
However, in November 2021, the Constitutional Court ruled the Job Creation Law conditionally unconstitutional, finding that its deliberation process did not comply with procedural rules and failed to meet transparency requirements. The court gave the government two years to make corrections.
In 2022, Jokowi issued Government Regulation in Lieu of Law (Perppu) No. 2 of 2022 to replace the conditionally unconstitutional Job Creation Law. In March 2023, the House of Representatives formally approved the Perppu as law.
Nevertheless, the Omnibus Law controversy was seen as hindering investment into Indonesia. Researcher at the Center of Reform on Economics (CORE) Indonesia, Yusuf Rendy Manilet, said the Job Creation Law had proven ineffective. The regulation, he said, was drafted in violation of proper procedures, leading to constitutional challenges and mandatory revisions that created legal uncertainty for investors.
"This is essentially the culmination of what we discussed earlier — the regulatory problem. The regulations kept changing because the process itself was rushed," he said.
Similarly, economist at Andalas University Syafruddin Karimi said the Omnibus Law through the Job Creation Law was originally conceived as a solution to simplify regulations and accelerate investment. The government promised ease of doing business, streamlined licensing and strengthened national economic competitiveness. But in practice, the law gave rise to equally serious new uncertainties.
"The Constitutional Court's 2021 ruling declaring the Job Creation Law conditionally unconstitutional weakened the legal credibility of the legislation. For investors, legal certainty is the primary foundation for making long-term decisions. And when the legal framework is constitutionally questioned, the legal risk becomes too great to ignore," he said.
**2. Establishment of the Illegal Levies Eradication Task Force**
Jokowi also established the Illegal Levies Eradication Task Force (Satgas Saber Pungli) in October 2016 through Presidential Regulation No. 87 of 2016, aimed at facilitating domestic investment flows.
The task force was expected to eradicate illegal levies at both central and regional levels that had long discouraged businesses from investing in Indonesia. Illegal levies have persistently been a major impediment to investment.
Jakarta Chamber of Commerce and Industry (Kadin) Chairwoman Diana Dewi said establishing businesses in the regions was difficult due to frequent demands for additional payments by various parties, including non-governmental organisations.
"What we have experienced is that there are a great many illegal levies in the regions. In the regions it is not like in Jakarta — the policies faced are different and they consider it legitimate. What we would call under-the-table payments are always abundant," she said.
Diana said these conditions made the cost of opening businesses in the regions much higher, and she lamented that regional governments failed to take firm action against the perpetrators.
However, the task force failed to deliver results. Illegal levies continued to run rampant. Most recently, illegal levies were allegedly committed by Kadin Cilegon itself. Kadin Cilegon Chairman Muhammad Salim and two members were suspected of intimidating and pressuring PT Chengda Engineering Co Ltd to secure project allocations worth Rp5 trillion without going through a tender process. Shortly after the case emerged, they were named suspects.
Meanwhile, the Illegal Levies Eradication Task Force has since been dissolved by President Prabowo Subianto through Presidential Regulation No. 49 of 2025 on the Revocation of Presidential Regulation No. 87 of 2016. The regulation stated that the task force was deemed no longer effective and therefore needed to be disbanded.
**3. OSS Investment Licensing**
The Online Single Submission (OSS) system is an electronically integrated business licensing platform managed by the Ministry of Investment/Investment Coordinating Board (BKPM). OSS was first launched in 2018 with the aim of accelerating and simplifying business and investment licensing processes in Indonesia.
However, the OSS system has not worked effectively. Economist Syafruddin Karimi said the OSS system, promised as a "one-stop shop", had not fully resolved licensing obstacles on the ground.
OSS, he said, was a reformist concept of high value but had been held hostage by entrenched old practices reluctant to change.
"The government appears to have been overly confident that digitalisation would automatically resolve bureaucratic problems. Yet without process simplification, institutional integration and reform of officials' behaviour, even the most sophisticated system will be paralysed in the hands of structures unwilling to change," he said.
He added that if the government was serious about making OSS an engine of economic growth, what was needed was not merely a digital platform but a comprehensive overhaul of licensing governance from end to end.