IDF 2019: Formulate a Pro Investment Policy to Expand Employment

Kharisma Bintang Alghazy, a member of the Business Licensing Regulatory Reform Team of the Coordinating Ministry for Economic Affairs in the Inspire Session, Improving the Investment Climate for Employment Creation.

The demographic bonus in 2045 can be an economic engine and is capable of transforming the structure of the country's economy, if supported by investment. Productive investment is the key to expanding employment opportunities. This was the message delivered by the Investment Coordinating Board (BKPM). Based on BKPM data, investment returns from 2014 to 2018 created 6.3 million new jobs.

The Head of BKPM, Thomas Lembong said that job openings would have an impact on people's income. Various efforts are being made by the government to bring productive investment, namely by launching various policy instruments. 

"Especially for investment in the export-oriented sector and the substitution of imported goods or services," Thomas said as reported by Katadata.

This topic of investment is one of the main topics at the 2019 Indonesia Development Forum (IDF), which carries the theme "Mission Possible: Seizing the Opportunities of Future Work to Drive Inclusive Growth".  Efforts to boost investment have been made at the national and regional levels, despite many challenges. One good example was set up by Pinrang Regency, South Sulawesi.

"There are four things that are used to facilitate investment, namely the strengthening of pro-investment policies, the establishment of a task force for investment acceleration, the development of technology-based service systems, and the development of information network promotion through the prospectus and Pinrang Investment Forum," said Andi Mirani as Head of the Investment and Service Office Integrated One Door of Pinrang Regency.

"We always strive to provide facilities for investors in various aspects, from licensing to providing incentives. We also implemented an online system for managing licenses and this turned out to be an important key, because it greatly facilitates investors," he said in the Inspiring Session entitled "Improving the Investment Climate for Employment Creation".

Robert Endi Jaweng, Executive Director of the Regional Autonomy Implementation Monitoring Committee (KPPOD) underlined the importance of involving private investors in investment in the region. Investment licensing reform should include deregulation as the complicated licensing procedures discourage investment. It should also include simplifying the bureaucracy by streamlining business processes, and introducing digitalisation.

"Regional fiscal space is only 10-20 percent left, making it difficult for the investment climate to grow.  Collaboration between the government and the private sector is needed where the government creates the climate and the private sector prepares 'seeds' for investment," Endi said in the Innovate session entitled" Improving the Investment Climate for Employment Creation". 

The sector that is expected to be able to create employment equally, both in cities and villages, is the agriculture sector. Therefore, investment in the agricultural sector continues to be encouraged. BKPM noted, the realisation of investment in Foreign Direct Investment (PMA) and Domestic Investment (PMDN) in the agricultural sector rose significantly over the past five years, from Rp21.8 trillion in 2013 to Rp54.2 trillion in 2018. The amount of this investment puts the agricultural sector in the second largest position in terms of contribution to the national Gross Domestic Product by 13.41 percent.

Investment in the agricultural sector can continue to be encouraged, if issues related to land, business licenses, investments, and research and innovation budgets can be overcome. In addition, adaptation to digital economic trends is also important to consider.

"The agricultural sector is actually very potential to absorb a lot of labor and investment trends in this sector are increasing. As long as there is a good investment climate. That is why the digital map of the RDTR (Spatial Detail Plan) is very important for each region in Indonesia. Because this map can identify in detail the potential of an area," said Kharisma Bintang Alghazy, a member of the Business Licensing Regulatory Reform Team of the Coordinating Ministry for Economic Affairs in the Inspire Session, Improving the Investment Climate for Employment Creation.

The challenges, said Kharizma, included the fact that 31 million farmers does not have access to the internet, which prevents them from accessing information on agriculture.  That is why digitalisation becomes important in efforts to boost investment. Not only in agriculture, but in many other potential sectors equally in Indonesia.

In the same session, there was Melisa Irene, a Partner from East Ventures, a provider of equity participation services that is behind the development of the startup industry in Indonesia.

"Indonesia with a large population (the fourth largest in the world) will remain a large business potential. One of them is for the application-based technology industry. This is what makes capital providers, such as East Ventures, still interested in investing in Indonesia,“ she explained.

There are notes as well as suggestions submitted by Banking Research and Financial Services Authority (OJK) Policy, Alwin Adityo. He pointed out the striking difference between Vietnam and Indonesia. Withdrawal of Foreign Direct Investment (FDI) is important because there are many relocated companies from China to Vietnam. At present, Vietnam is one of the biggest relocation targets. Because Vietnam has a free trade agreement that can guarantee the business. According to him, Indonesia can learn from Vietnam, even though Indonesia was one of the originators of the World Trade Organization (WTO).

"As many as 60 percent of Vietnam's Gross Domestic Product (GDP) comes from Foreign Direct Investment, while Indonesia only reaches 20 percent," he said. 

"The Free Trade Agreement can attract Foreign Direct Investment through economic benefits, and legal certainty," added Alwin in the Inspection Session entitled "Improving the Investment Climate for Employment Creation".

On various occasions, President Joko Widodo reminded ministries and institutions to make it easier to enter investments. Jokowi stressed that investment is very important in order to open new jobs. According to President Jokowi, everything that impedes investment must be cut, from the complicated licensing issue to the extortion fee. To that end, IDF 2019 is opening collaboration on improving the investment climate to be able to create jobs that lead to high levels of welfare.