2023 investment: Rational target for capital investment
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Investasi 2023: Target rasional penanaman modal
31 January 2023
By: Tegar Arief
Jakarta - Concerns regarding the impact of recession on the national economy have been detected by policy makers. The concerns can be seen from the direction of the government’s work plan in the investment sector.
Several officials from President Joko Widodo to Investment Minister/Investment Coordinating Board Head (BKPM) Bahlil Lahadalia repeatedly say that investments in 2023 are full of challenges.
Besides the recession and the global uncertainty that are continuously hindering Indonesia’s economy, the political tension that is heating up approaching the 2024 presidential election is also thoroughly observed by the government.
Those factors will affect economic, social, and political stability as well as make the business world uncertain. In the end, investors will wait and see.
The government realises the problem that narrows the view on the investment prospect this year.
This pessimism is reflected in Presidential Regulation Number 134/2022 on Updating of Government Work Plan of 2023 issued on 31 December 2022.
In the newest government work plan, investment this year is set to reach Rp1,200 trillion-Rp1,300 trillion, which is lower compared to the target that is repeatedly stated by the government at Rp1,400 trillion.
Based on Bisnis’ record, the newest target is also lower compared to the long-term target set by the government at around Rp1,250 trillion-Rp1,400 trillion.
This change in investment target affirms the significance of the global pressure faced by Indonesia in 2023.
President Joko Widodo even instructs related authorities to prepare strategic policies to increase investments.
“For investments, I am asking the Coordinating Minister for Maritime Affairs and Investment to state the activities that we must do in 2023, especially breakthroughs to increase investments,” the President said on Monday (30/1).
With further observation, the global economy dynamic and the political year are only small pebbles that obstruct capital flow from domestic and foreign investors.
There is a large rock that obstructs capital flow, which is licensing through the Online Single Submission (OSS) Risk-Based Approach (RBA) licensing system.
Issues in this system include the Conformity of Spatial Utilisation Activities (KKPR) or the Detailed Spatial Plan (RDTR), the Building Approval (PBG), the Environmental and Social Impact Assessment (EIA), as well as the many business lines that have yet to be included in Indonesia Standard Industrial Classification (KBLI).
This is admitted by Coordinating Minister for Economic Affairs Airlangga Hartarto who affirmed that licensing was a significant hinderance in accelerating investments.
In response to the obstacles, the government will immediately revise the government regulation on risk-based business licensing.
“The government is continuously carrying out various activities regarding licensing so that investments can flow excellently,” Airlangga said.
Issues regarding licensing are continuously handled by the government. Improvement efforts are not lacking, but they still cause a polemic.
