Invest In Indonesia

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Jakarta/Lei- Indonesia has almost 230 million populations, which represents an enormous market. Additionally, the country has abundant natural resources (timber, fish, oil, natural gas, metals) and enormous biodiversity. Internal demand is growing due to the development of the middle class. Indonesia natural resources has not optimally empowered for prosperity of the people due to limited capital, technology and human resources. To explore all potentials, Indonesia needs foreign investment. It must be accompanied by a set of rules that guarantee and protect investors as well as providing them a legal certainty without sacrificeing the national interest. So that the enactment of Law No. 25 of 2007 on Investment is to accommodate the various interests of parties regarding the certainty and legal protection for investors with regard to national economic interests.

Capital investment is significantly important to the growth of the national economy. There are two main benefits. First, rising income (as increase in the level of wages, the consumer or the increase in government revenue). Secondly, the indirect benefits such as the introduction of new technology and knowledge. On the other hand, investment is also expected to expand its role in Indonesia’s foreign exchange through the export of its production abroad.

There are at least five basic reasons why Indonesia needs foreign investment today:

  1. Provision of employment
  2. Develop an import substitution industries to save foreign exchange, to help develop import substitution industries.
  3. Encourage the development of industrial goods non-oil exports to earn foreign exchange.
  4. Construction of the lagging regions. Foreign investment is expected as one of the sources of financing in development that can be used to build infrastructure such as ports, electricity, water, roads, railroads, and others.
  5. Transfer of technology. 



    Based on the investment competition with other countries and also considering to the UNCTAD report, the necessary breakthrough steps to attract foreign investors in Indonesia is the state of the art information investment. Regarding policies,   particularly in the areas of related law to the protection and legal certainty as well as the mechanism of bureaucracy. Handling of providing information on foreign investors can be done through diplomacy and between businesses themselves.

    Increasingly developed economic globalization based on the principle of trade liberalization, drives regional economic cooperation among countries such as the North American Free Trade (NAFTA), Single European Market (SEM), European Free Trade Agreement (EFTA), the Australian-New Zealand Closer Economic Relations and Trade Agreement (ANCERTA), ASEAN Free Trade Area (AFTA), Asia Pacific Economic Cooperation (APEC) and the World Trade Organization (WTO). The robust economic globalization drive  the interdependence and integration in   finance, production and trade. This situation infuences  of the economic management of Indonesia.



    The Joko Widodo -Jusuf Kalla – (Jokowi-JK) Government is targeting the state policy improvements since their reign that began in the early 2015. One of them in the improvement of investment. The   is targeting a IRD 3,500 trillion investment within five years. These efforts taken in order to boost the economic growth of 5 to 7 percent.

    Investment is one of the driving processes to strengthen the country’s economy, so that some countries are trying hard to increase their investment. Foreign investments are invited to bring funds to boost the industries to drive the economic development of the country.

    Legal reforms that have been carried out, in particular structuring investment law is not yet completed with the advent of the Capital Market Law. In the normative level (law making process) implementing regulations are still needed, such as government regulation and other regulations that also repeal regulations that are contrary and contradictory to the purpose of the establishment of the Capital Market Law. The strengthening of institutional arrangements that support the implementation of the investment law should also be a major concern that all policies and strengthening institutions both at the central and regional synergy in the granting of licenses in the field of investment, such as one-stop service institution set out in the Capital Market Law.

    In this context the need for reform in all aspects (not just legal) and increase the role of civil society in monitoring the development is a key change in the development paradigm. So that all forms of in-efficiency is at the root of the economic crisis may be minimal, and structural reform efforts will improve the government’s credibility among the international community in particular. So that foreign investment will increase, the economy experienced significant growth to reduce unemployment and improve social welfare.

    Structuring investment law in order to create the investment climate has begun with the presence of that normatively UUPM have to accommodate the various interests of foreign investors. For example the provisions and treatment that is discriminatory, given to local entrepreneurs or domestic arena for market share, the protection and guarantee of investments over the threat the risk of nationalization, and the guarantee of the right to be able to transfer profits and dividends, and the right to legal settlement through international arbitration.

    So necessary in the future to further encourage investment is how the further implementation of the Capital Market Law in creating business and investment climate more attractive. In short, a positive investment climate needs to be improved in the future implemental policy level is in harmony with the continuous efforts made by bureaucrats and economic actors in the localities where the investment in such things as the following:

    1. Provide legal certaintyonthe rulesatcentral and local levelsas well as producethe law relating toinvestment activitiesso asnot to burden theadditional burdenonbusiness productioncosts.
    2. Maintainingthe securityofpotentialcriminalityinterferenceby unscrupulouspeopletovaluable assetsof the company,forthe distribution of goodsandwarehouseas well asinplaces of storage offinishedandsemi-finishedgoods.
    3. Providethe most basicconveniencesfor servicesaimed atinvestors, including investment licensing, immigration, customs, taxationanddefense ofterritory.
    4. Provide aselectiverange ofinvestmentincentive packagescompetitive.
    5. Maintainthe climatic conditionsof employmentwhichsupport business activitiesin a sustainable manner.


    Dr. St. Laksanto Utomo, SH, MH

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