The Indonesian government, helmed by President Joko Widodo, made a strategic move to ensure a resilient economic foundation by changing BPKM’s status from a coordinating agency to a ministry, further known as the Ministry of Investment.
Led by Bahlil Lahadalia, who was appointed as the nation’s Investment Minister, BPKM holds a pivotal role in supporting the implementation of transformative regulations by building a positive and business-friendly environment.
Law No. 11/2020 on Job Creation is the legal basis to raise Indonesia’s ease-of-doing-business index by increasing risk-based business licensing. This is implemented through a risk-based Online Single Submission (OSS) system launched on August 9, 202 1, which President Joko Widodo inaugurated.
The President addresses three main focuses of Indonesia’s economic transformation: industrialization, digitalization of MSMEs, and green economy. Investment is the key driver towards these transformations as well as growth during the pandemic. BPKM’s primary role is to ensure a legal and administrative reformation as the basis of a better investment climate.
Innovation and quality are fundamental elements contributing to higher and more sustainable economic growth fairly and equitably. Based on this understanding, BPKM establishes two policy directions. The first one is to increase innovation in order to achieve the investment target.
Innovation needs to be carried out at the planning stage, as well as at the efforts in improving the investment climate. Innovation is also needed in cooperation, promotion, service, implementation control, and internal governance stages.
The second policy is to increase the quality of investment to achieve inclusive and sustainable economic growth by encouraging investments that absorb a large number of laborers, and ones that transfer knowledge and technology. Moreover, increasing quality will translate to increase in market competitiveness and access. An example of sectors that will be affected by this development is the export-oriented and import substitution industries, which might gain benefits from optimal nature resources and domestic production.
Economic transformation towards a knowledge-based economy is the key to sustainable development and inclusive growth. Progressive policies are required to ensure Indonesia’s knowledge, and innovation ecosystem becomes a solid foundation for economic development.
The investment value increases by 3,7% in the third quarter of 2021, compared to 2020. Bahlil Lahadalia said that Indonesia’s investment realization reached IDR216,7 trillion. An increase in direct investment also encourages job creation. According to Bahlil, last year’s foreign investment had absorbed 1.1 million direct workers, and when added with indirect labor, the number can be threefold.
In the past, investment targets were treated as a secondary interest. Today, the government’s shift to put special focus on investment has come to fruition. New opportunities and pro-business regulations make it easier for investors to contribute to the nation’s development plans, while administrative processes and tools have been simplified to increase competitive value. The ministry’s support to realize President Joko Widodo’s vision towards economic transformation is stronger than ever, and 2022 is looking bright and favorable at the current trajectory.