In recent years, Indonesia** has placed great emphasis on improving the business environment and is committed to creating a more open, transparent and efficient business environment. Through a series of strategic policies and reform measures, Indonesia aims to lower administrative barriers, simplify the process of starting a business, reduce unnecessary bureaucracy, and enhance the certainty of the legal framework.
Today, we will take you through the specific measures to optimize the business environment in Indonesia.
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Simplify the business registration process
On August 9, 2021, Indonesia's Ministry of Investment launched an upgraded version of the Enterprise Investment and Operation Application System (OSS) to further shorten the time for enterprises to register. Except for mining, oil and gas, finance, and real estate, all other business fields can be registered through the OSS system. Both individual and non-sole proprietors can register their companies through OSS.
The main licenses that operators apply for in the OSS system include BKPM Investment Permit, Land Location Permit, Building Permit, Social Security Registration Permit and Environmental Permit.
Further relaxation of market access
In accordance with Indonesia's Order No. 10 of 2021, the "New Investment List" was released, which will be implemented from March 4, 2021. The New Investment List has fundamentally changed the original foreign investment access system in Indonesia, which was mainly based on negative list management, to a positive investment list-based access model, further opened up foreign investment in relevant industries, reduced the restrictive conditions for foreign investment, relaxed the existing regulatory framework, and promoted the transformation of the domestic economy to accept foreign investment, hoping to change the domestic economic downturn due to the new crown pneumonia epidemic.
Promote infrastructure construction
In the field of infrastructure, Jokowi has been planning and working to improve the connectivity of the archipelago to promote a balanced development of Indonesia's eastern and western regions. Indonesia** introduced the concept of a "maritime highway", using a seaport as a corridor to connect Indonesia's eastern and western archipelagos, thereby reducing high logistics costs. In addition, more roads, toll roads, airports and railways are planned to be built, not only on the island of Java, but also on areas such as Sumatra, Kalimantan, Sulawesi and Papua.
According to data released by the Indonesian Ministry of Finance, Indonesia's 2020-2024 infrastructure construction plan needs to reach US$450 billion. Among them, Indonesia's *** finance is expected to bear 37%, local ** and state-owned enterprises are expected to bear 21%, and the remaining 42% of the funding gap (about 190 billion US dollars) will be financed through cooperation with domestic and foreign private capital. To this end, Indonesia has set up a sovereign wealth** and investment management agency to make strategic investments in toll roads, airports, ports, digital infrastructure, etc.
Relax the policy on the use of foreign workers
On November 2, 2020, Indonesia's **Jokowi officially signed the "Job Creation Act", further relaxing policies on the use of foreign labor, etc., indicating Indonesia's determination to attract foreign investment.
The relaxation policy for foreign employees is mainly reflected in three aspects, one is that employers who hire foreign employees should develop an approved foreign employee employment plan (RPTKA), and no longer need to obtain written permission from the labor department (compared with the original labor law, the employment procedures for foreign employees are simplified, and employers have more freedom in hiring foreign employees). Second, the bill removes Article 46 of the Labor Law on specific positions for foreign employees of Indonesian companies, and only requires foreign employees to be employed in positions that match their abilities. The third is to stipulate that employers have the obligation to pay compensation to foreign employees, but the compensation obligation does not apply to certain positions in ** institutions, foreign representative offices, international institutions, social institutions, religious institutions and educational institutions.
Today, I would like to share with you the "Guide to the Business Environment of Countries (Regions) for Enterprises Investing Abroad in Indonesia" This guide was released in 2022 and organized and compiled by China's Council for the Promotion of International Trade relying on overseas representative offices and cooperating with professional institutions at home and abroad, aiming to promote the steady, orderly and healthy development of foreign investment cooperation and help enterprises better explore the international market. The Guide uses data, cases and special tips to systematically introduce Indonesia's economic and trade overview, foreign investment environment and policies, investment status of Chinese enterprises, financing channels of Chinese enterprises, compliance operations, and basic information on work and life.
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Disclaimer: The article is based on publicly available information and does not constitute any investment advice.