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Improving Indonesia's Investment Climate

President Yudhoyono Issues an Executive Order to Make it Easier to Do Business in Indonesia.

(3/6/2006) On February 27, 2006, just prior to departing on a three-country tour to Brunei, Cambodia and Myanmar, Indonesia's President Susilo Bambang Yudhoyono issued Executive Order Number 3 of 2006 aimed at changing a number of regulations and bureucratic procedures that currently impede efforts to encourage investment in the country.

During each of the stops during his ASEAN tour, the President took every opportunity to publicize Indonesia's earnest desire to foster investment. At one of his official stops he said: "This is very important, we are continually working to improve the investment climate. We have been partially successful in this effort, but there is still more work to do. Because of this, we have put together a clear statement of what we wish to accomplish in creating a better investment climate, who must undertake each task, what must be done, and what laws, government regulations or other regulations must be introduced."

The President added: "In this way it is my hope that the steps we are taking to improve the investment climate it will become increasingly clear and transparently visible to both local and foreign investors what we posses. It's been said that the investment climate in Indonesia is terrible; everything is uncertain; everything is unclear and that was indeed the situation 3-4 years ago when things were not fixed and certain because every year there was a new set of regulations. But this time, because we have now identified the problems, our future steps will be more precise, more focused in their direction and more calculated."

Among the investment-related issues addressed in the Presidential instruction are national infrastructure, the taxation system, customs and importation procedures and information technology.

According to the Jakarta Post the changes promised by the new Presidential instructions include:

Plans to reduce the amount of time needed to process a business license from 150 days to just 30 days.

Amendment to the investment laws to formally regulate equitable treatment for foreign investors.

Shortening cargo processing procedures at ports and harbors, reducing processing time from 30 days to just 7 days.

Steps to simplify immigration and labor department processing of stay and work permits for foreigners.

A revamp of the tax office with improvements in self-assessment tax procedures, improving transparency at the tax office and more protection of taxpayer's rights.

Creating more flexibility in the labor market by improving the way in which labor disputes are settled and making regulations more conducive to employment creation.

Steps to empower and protect Indonesia's large number of overseas workers.

Greater emphasis in encouraging investment by small and medium-sized enterprises.