Advinta Consulting



BKPM Reforms Lead Way to Asean Investment

Jakarta, April 10, 2015 - The Investment Coordinating Board, or BKPM, is counting on its one-stop integrated service centers and a tax break to attract more investment from Southeast Asian countries.

The fear is that unless foreign money soon sees Indonesia as a great place to do business, the country may soon be merely a destination market, rather than a source of added value, when the Asian Economic Community opens borders to a freer flow of goods, capital and labor across the Southeast Asian region at the end of this year.


That's why new, one-stop service centers (PTSP) launched in March. They are designed to allow investors to secure business permits — still from 23 ministries and government institutions, involving an equal number of steps, but now cohabiting offices in just one physical location.

The verdict is out among investors whether the centers actually clear red tape or merely consolidate it.

Also unclear is how much time and effort is actually saved for investors, or how much transparency is improved, though officials insist there's already been a substantial improvement.

Prospective investors will also be able to apply for tax cut eligibility at the service centers and learn of the outcome within three days, according to BKPM, although this feature has been delayed until May.

BKPM chief Franky Sibarani said the initiatives should help attract investment from Association of Southeast Asian Nations (Asean) member states, which currently account for about a third of total foreign direct investment.

"One of the critical concerns about AEC is that Indonesia will only be a big market for Asean products because Indonesia accounts for 40 percent of Asean's population [and nothing more]," Franky said.

Investment from Asean grew to $7.9 billion in 2014, up 44 percent from a year earlier, according to BKPM data. "We still have potential to improve, due to our relatively small investment ratio," Franky said, referringto a ratio that reflects the percentage of realized investment over the committed amount.

Source: The Jakarta Globe

[email protected]