President Joko Widodo (Jokowi) received the blessing of the House of Representatives (DPR) to form the Ministry of Investment through a plenary meeting last Friday (9/4). Now, the formation of the new ministry is just waiting for Jokowi’s approval.
Presidential Spokesperson Fadjroel Rachman hinted at the formation of the Ministry of Investment in accordance with the provisions of Law No. 39/2008 on State Ministries.
The regulation requires consideration of efficiency and effectiveness, scope of duties and proportionality of the workload, continuity, harmony and integration of task implementation, as well as developments in the global environment.
“In accordance with Article 13 paragraph 1 and paragraph 2 for consideration,” said Fadjroel in a written statement to reporters, Tuesday (27/4).
Previously, a CNNIndonesia.com source revealed that the head of state would raise the BKPM class to become the Ministry of Investment, instead of forming a new ministry.
With this policy, the Head of BKPM, currently Bahlil Lahadalia, will automatically upgrade to become Minister of Investment. As for the purpose of changing BKPM to become the Ministry of Investment, it is said that investment and investment permits in Indonesia are more focused on one door.
“As far as I know, BKPM will later become the Ministry of Investment. So that its role is more effective,” said the source on Friday (9/4).
On that matter, Bahlil said that the policy was fully the prerogative right of the head of state. “I am the assistant to the president, so it is the matter of the President’s policy, I apologize with all due respect, we are not in a position to explain, because it is not BKPM’s domain,” Bahlil said earlier this week.
It’s no secret that investment is one of the focuses of the Jokowi administration. Often times, he expressed his disappointment and anger because the investment licensing process in Indonesia is still complicated, so that foreign investors are more interested in neighboring countries than the country.
Various policies continue to be launched in order to smooth out the flow of funds. In his first term of leadership, Jokowi initiated 16 economic policy packages which include the provision of income tax (PPh) or tax holiday exemption facilities, corporate income tax reduction facilities or tax allowance, to relaxation of the Negative Investment List (DNI).
In the second period, he again provided the red carpet for investment, starting from improving the investment licensing system through Online Single Submission (OSS) to completing the omnibus law Law Number 11 of 2020 concerning Job Creation.
Not stopping there, Jokowi will also form the Ministry of Investment. Will the formation of the Ministry of Investment be Jokowi’s final move to encourage investment into the country?
Yusuf Rendy, an economist at the Indonesian Center of Reform on Economics (CORE), said that the Ministry of Investment is not the ultimate weapon to boost capital flows into Indonesia. The new ministry is only an entry point for bigger efforts to attract investment.
“If in my opinion it has not been (the ultimate weapon), it means that this is just an entry point. If the final weapon in the execution of policies and policies is waiting, it has been determined from the government, it remains for the Ministry of Investment to execute this, and this is the last weapon of this ministry. “Yusuf said to CNNIndonesia.com, Tuesday (27/4).
This is because inviting investment does not stop at the formation of a new ministry or an institutional change from BKPM to the Ministry of Investment as is widely circulated. According to him, there is still a lot of homework that is the task of the government, not limited to certain ministries.
The first task facing the Ministry of Investment will be to execute derivative regulations on the Job Creation Law relating to investment. In total, there are 49 derivative regulations of the Job Creation Law consisting of 45 government regulations (PP) and four presidential regulations (Perpres).
“There are many tasks, for example investment in the industrial sector, licensing, then labor issues, and so on. This is the Ministry of Investment’s first job to be able to collaborate with other ministries to increase investment,” he said.
This means that the Ministry of Investment’s spurs in boosting incoming capital will depend on the extent of their duties, principal, and functions (tupoksi). In particular, on matters that often hinder investment, such as land permits, execution of incentives at the regional level, coordination between ministries / agencies with local governments, and so on.
“Whether the main tasks and functions are the same as BKPM or is there an increase in responsibility given by the government. Moreover, the responsibility related to matters that often hinder investment realization, will affect the extent to which the new ministry will succeed in boosting investment,” said Yusuf.
Sepakat, Executive Director of the Institute for Development of Economics and Finance (Indef) Tauhid Ahmad said that the ability of the Ministry of Investment to attract investment depends on the authority of a number of ministries / institutions that will be delegated to them later.
This authority includes, among other things, the provision of tax incentives, land management for investment, environmental permits, labor, etc. On the other hand, if the Ministry of Investment is just a ‘change of clothes’ alias a name change from the previous BKPM, he doubts investment can increase.
“If that happens, then the Ministry of Investment will have a plus. I’m sure the investment target can increase. But, if for example, only the ‘clothes’ are changed, in my opinion, there is no added value or just a change in name, no change in authority is the same, nothing. a big change, “added Tauhid.