Three Reasons Why the Jokowi Era Failed to Bring Rp1,500 Trillion in Investment to Indonesia
JAKARTASATU.COM — Investment worth Rp1,500 trillion failed to enter Indonesia in 2024. Deputy Minister of Investment and Downstreaming/Deputy Head of BKPM Todotua Pasaribu said there were several factors that prevented investment from entering 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 note and reflection for all of us," he said on Thursday (3/7), as quoted from Antara.
He said input from various stakeholders was essential to refine existing policies. "Our Ministry has certainly prepared a concept," he said.
Government measures such as the Job Creation Law, the Illegal Levy Eradication Task Force and the OSS system all failed to deliver the Rp1,500 trillion in investment to the country.
Prior to Todotua raising these issues, the government had in fact already identified the same problems. They had also rolled out a number of measures to boost investment inflows. The following are three reasons behind the investment failure:
**1. The Omnibus Law**
The Omnibus Law or Job Creation Law in Indonesia was discussed and initiated during the administration of the seventh President, Joko Widodo (Jokowi). The legislation aimed to streamline regulation and encourage investment.
On 5 October 2020, Law Number 11 of 2020 on Job Creation was approved following rapid and controversial deliberations. Key provisions included the simplification of investment licensing processes and changes to wage calculations more favourable to employers.
However, in November 2021, the Constitutional Court declared the Job Creation Law conditionally unconstitutional, ruling that its deliberation did not comply with procedural rules and lacked transparency. The court then gave two years for rectification.
In 2022, Jokowi issued Government Regulation in Lieu of Law Number 2 of 2022 to replace the conditionally unconstitutional Job Creation Law. In March 2023, the House of Representatives formally approved this regulation into law.
Unfortunately, the Omnibus Law controversy was seen as hindering investment inflows into Indonesia. This was conveyed by Yusuf Rendy Manilet, a researcher at the Center of Reform on Economics (CORE) Indonesia. He said the Job Creation Law was ineffective, noting it was drafted in violation of proper procedures. Consequently, the law could not be challenged at the Constitutional Court and had to be revised. Yusuf argued this created legal threats for investors. Rather than facilitating investment as originally intended, the law instead created new complications.
"This is actually the culmination of what we discussed earlier — the regulatory problem. The regulations keep changing because the process was rushed," he said.
Similarly, Syafruddin Karimi, an economist at Andalas University, said the Omnibus Law through the Job Creation Law was originally conceived as a solution to streamline regulation and accelerate investment. The government promised simplification, streamlined licensing and strengthened national economic competitiveness. In practice, however, the law gave rise to new problems no less serious. The Constitutional Court's 2021 ruling declaring the Job Creation Law conditionally unconstitutional undermined the legal credibility of the legislation.
**2. The Illegal Levy Eradication Task Force**
Jokowi had previously established the Illegal Levy Eradication Task Force (Satgas Saber Pungli) in October 2016 through Presidential Regulation Number 87 of 2016 to facilitate domestic investment flows.
The task force was expected to stamp out illegal levies at both central and regional levels — practices that had long deterred businesses from investing in Indonesia. Illegal levies have frequently been a persistent obstacle to investment.
Diana Dewi, Chair of the Jakarta Chamber of Commerce and Industry (Kadin), said establishing businesses in the regions was difficult due to frequent demands for additional payments from various parties, including non-governmental organisations. "What we experienced was a great deal of illegal levies in the regions. Conditions in the regions are not like in Jakarta — the policies differ, and there are always many under-the-table payments," she said at a press conference in Jakarta on Wednesday (10/1).
Diana said these conditions made the cost of setting up businesses in the regions significantly higher. She lamented that local governments failed to take firm action against those engaging in illegal levies.
Unfortunately, the task force failed to deliver results, with illegal levies remaining rampant. A recent case involved the Cilegon Chamber of Commerce. Cilegon Kadin Chairman Muhammad Salim and two associates allegedly intimidated and pressured PT Chengda Engineering Co Ltd to secure project contracts worth Rp5 trillion without going through a tender process. They were subsequently named suspects.
Meanwhile, the Illegal Levy Eradication Task Force has been dissolved by President Prabowo Subianto through Presidential Regulation Number 49 of 2025 on the Revocation of Presidential Regulation Number 87 of 2016. In its considerations, the task force's existence was deemed no longer effective and therefore needed to be disbanded.
**3. The OSS Investment Licensing System**
The OSS (Online Single Submission) investment licensing 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 expediting business and investment licensing processes in Indonesia.
Unfortunately, the OSS system has not worked effectively. Syafruddin Karimi, economist at Andalas University, said the OSS system, promised as a "one-stop shop", had not fully resolved licensing barriers on the ground. OSS, he said, was a reformist idea of high value but was held hostage by entrenched practices resistant 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 note and reflection for all of us," he said on Thursday (3/7), as quoted from Antara.
He said input from various stakeholders was essential to refine existing policies. "Our Ministry has certainly prepared a concept," he said.
Government measures such as the Job Creation Law, the Illegal Levy Eradication Task Force and the OSS system all failed to deliver the Rp1,500 trillion in investment to the country.
Prior to Todotua raising these issues, the government had in fact already identified the same problems. They had also rolled out a number of measures to boost investment inflows. The following are three reasons behind the investment failure:
**1. The Omnibus Law**
The Omnibus Law or Job Creation Law in Indonesia was discussed and initiated during the administration of the seventh President, Joko Widodo (Jokowi). The legislation aimed to streamline regulation and encourage investment.
On 5 October 2020, Law Number 11 of 2020 on Job Creation was approved following rapid and controversial deliberations. Key provisions included the simplification of investment licensing processes and changes to wage calculations more favourable to employers.
However, in November 2021, the Constitutional Court declared the Job Creation Law conditionally unconstitutional, ruling that its deliberation did not comply with procedural rules and lacked transparency. The court then gave two years for rectification.
In 2022, Jokowi issued Government Regulation in Lieu of Law Number 2 of 2022 to replace the conditionally unconstitutional Job Creation Law. In March 2023, the House of Representatives formally approved this regulation into law.
Unfortunately, the Omnibus Law controversy was seen as hindering investment inflows into Indonesia. This was conveyed by Yusuf Rendy Manilet, a researcher at the Center of Reform on Economics (CORE) Indonesia. He said the Job Creation Law was ineffective, noting it was drafted in violation of proper procedures. Consequently, the law could not be challenged at the Constitutional Court and had to be revised. Yusuf argued this created legal threats for investors. Rather than facilitating investment as originally intended, the law instead created new complications.
"This is actually the culmination of what we discussed earlier — the regulatory problem. The regulations keep changing because the process was rushed," he said.
Similarly, Syafruddin Karimi, an economist at Andalas University, said the Omnibus Law through the Job Creation Law was originally conceived as a solution to streamline regulation and accelerate investment. The government promised simplification, streamlined licensing and strengthened national economic competitiveness. In practice, however, the law gave rise to new problems no less serious. The Constitutional Court's 2021 ruling declaring the Job Creation Law conditionally unconstitutional undermined the legal credibility of the legislation.
**2. The Illegal Levy Eradication Task Force**
Jokowi had previously established the Illegal Levy Eradication Task Force (Satgas Saber Pungli) in October 2016 through Presidential Regulation Number 87 of 2016 to facilitate domestic investment flows.
The task force was expected to stamp out illegal levies at both central and regional levels — practices that had long deterred businesses from investing in Indonesia. Illegal levies have frequently been a persistent obstacle to investment.
Diana Dewi, Chair of the Jakarta Chamber of Commerce and Industry (Kadin), said establishing businesses in the regions was difficult due to frequent demands for additional payments from various parties, including non-governmental organisations. "What we experienced was a great deal of illegal levies in the regions. Conditions in the regions are not like in Jakarta — the policies differ, and there are always many under-the-table payments," she said at a press conference in Jakarta on Wednesday (10/1).
Diana said these conditions made the cost of setting up businesses in the regions significantly higher. She lamented that local governments failed to take firm action against those engaging in illegal levies.
Unfortunately, the task force failed to deliver results, with illegal levies remaining rampant. A recent case involved the Cilegon Chamber of Commerce. Cilegon Kadin Chairman Muhammad Salim and two associates allegedly intimidated and pressured PT Chengda Engineering Co Ltd to secure project contracts worth Rp5 trillion without going through a tender process. They were subsequently named suspects.
Meanwhile, the Illegal Levy Eradication Task Force has been dissolved by President Prabowo Subianto through Presidential Regulation Number 49 of 2025 on the Revocation of Presidential Regulation Number 87 of 2016. In its considerations, the task force's existence was deemed no longer effective and therefore needed to be disbanded.
**3. The OSS Investment Licensing System**
The OSS (Online Single Submission) investment licensing 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 expediting business and investment licensing processes in Indonesia.
Unfortunately, the OSS system has not worked effectively. Syafruddin Karimi, economist at Andalas University, said the OSS system, promised as a "one-stop shop", had not fully resolved licensing barriers on the ground. OSS, he said, was a reformist idea of high value but was held hostage by entrenched practices resistant 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.