New U.S. Chamber, AmCham Indonesia Report Finds Improving Investment and Regulatory Environment in Indonesia

Thursday, September 27, 2018 - 10:15am

Government Should Move Quickly to Further Open Markets and Remove Burdensome Regulations


JAKARTA, INDONESIA — Indonesia’s business climate is moving in the right direction, but the country needs to quicken the pace of its economic reforms, according to a new report released today by the U.S. Chamber of Commerce and the American Chamber of Commerce (AmCham) in Indonesia at the annual U.S.-Indonesia Investment Summit. Jointly organized by the two organizations, the Summit brings together U.S. private sector leaders and the Indonesian cabinet for discussions on the current business climate in Indonesia.

The summit was co-hosted by Kadin, Apindo, and BKPM.

This year’s report, entitled “Indonesia’s Journey,” examines the economic progress made under President Joko Widodo’s administration. It also compares the country’s investment environment to other countries in Southeast Asia.

 “The U.S. Chamber and American business see great opportunities in Indonesia because of recent regulatory reforms undertaken by President Widodo” said Charles Freeman, U.S. Chamber senior vice president for Asia. “The government has rightly focused on reducing regulations to encourage new investment opportunities. However, too many of those opportunities will remain unrealized unless the government moves expeditiously to create a more welcoming environment for foreign investment by establishing regulatory certainty.”

This year’s report recognizes the focus President Widodo has placed on infrastructure development and discusses areas that have held back the program from reaching its full potential, including budgetary pressures, an over-reliance on state-owned enterprises and limited success with public-private partnerships. Issues related to permits, licenses and land acquisition also stymie the preparation of financially feasible infrastructure projects.

“We have been impressed with the openness of the Widodo government to dialogue with the private sector and look for common solutions to regulatory challenges,” said AmCham Managing Director A. Lin Neumann. “But there are major sectors where we think foreign investment could do more and is still held back by regulatory hurdles.”

Under President Widodo’s tenure, there have been substantial improvements in access to health care as well as education reforms that have helped poorer students stay in school, according to the report. Continued education reforms are vital if the country is to develop the workforce it needs for a 21st century economy.

The report makes recommendations for short and medium-term action as well as the need for expanded dialogue with the private sector. The report is available online here.

U.S. Ambassador Joseph R. Donovan Jr. provided opening remarks and underscored the commitment of the United States to continued economic engagement with Indonesia and the Indo-Pacific region.  “America wants to contribute to Indonesia’s prosperity, fostered through the private sector partnerships that naturally develop from fair and reciprocal trade, open investment environments, transparent agreements between nations, and improved connectivity.”

This year’s U.S.-Indonesia Investment Summit was held as part of “Initiative Indonesia,” a joint program between the U.S. Chamber and AmCham Indonesia. The initiative is designed to increase trade and investment between the two countries.

Today’s Summit featured participation by many Indonesian cabinet ministers, including:

  • Sri Mulyani, Minister of Finance

  • Airlangga HartartoMinister of Industry

  • Rudiantara Minister of Communication and Information Technology

  • Hanif Dhakiri, Minister of Manpower

  • Bambang Brodjonegoro, Minister of National Development Planning

  • Wimboh Santoso, Chairman of Board of Commisioner of Financial Services Authority (OJK)

  • Enggartiasto Lukita, Minister of Trade

Active since 1971, AmCham Indonesia is one of the country’s largest and most active bi-lateral business chambers. It represents the broad cross section of U.S. businesses in Indonesia.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. Its International Affairs division includes more than 80 regional and policy experts and 25 country- and region-specific business councils and initiatives. The U.S. Chamber also works closely with 117 American Chambers of Commerce abroad.