Indonesia Update: President Jokowi issued Implementing Regulation of the 16th Economic Policy Package

Indonesia Update | February 8, 2018
Authors: Kim Yaeger, Artha Sirait, Ian Saccomanno and Jade Hoang
 
LOOKING AHEAD
 
 
  • March 13-15: Indonesia Business Mission. The Council is now registering executives for its Annual Business Mission to Indonesia. The mission’s themes will be to maintain and promote FDI; deregulation and regulatory harmonization; and to enhance a vibrant ecosystem to support Indonesia’s development. This timely mission is especially valuable in light of Indonesia’s upcoming 2018 regional elections and 2019 national elections. Click here to register. Please note that the registration deadline is February 27. Contact Artha Sirait at asirait@usasean.org for more information.

  • March 14-15: BKPM's Regional Investment Forum. Participants will obtain first-hand investment project opportunities and receive information presented by key speakers including BKPM Chairman Tom Lembong, Minister of Tourism Arief Yahya, Chairman of BEKRAF Triawan Munaf, Bank Indonesia Governor Agus Martowardojo and Yogyakarta Governor Sri Sultan Hamengku Buwono X. BKPM will also provide interested participants with free accommodation (3D2N) at the Grand Hyatt (airport transfer included) in Yogyakarta. Click here for more information and contact Anton Siswohartono at anton@bkpm.go.id for more information.

 
THE COUNCIL'S TAKE
 
 

President Jokowi issued Implementing Regulation of the 16th Economic Policy Package

On January 23, President Joko “Jokowi” Widodo met with government officials both national and regional to discuss policy harmonization between the central and regional governments. President Jokowi held the meeting particularly to discuss the implementation of Presidential Regulation No. 91 of 2017 (PR91/2017), which is an implementing regulation of the Jokowi administration’s 16th economic policy package aimed at improving the ease of doing business in the country. The 16th economic policy package deals exclusively with the general licensing process for business activities. It was enacted with the view that Indonesia’s lengthy and unintegrated licensing process has discouraged potential investors. PR91/2017 identifies two steps to be taken by the government to achieve the purpose of accelerating business in Indonesia.

First step

  1. A National Task Force will be formed, responsible for the development of policies that simplify licensing regulations and address various barriers. This team will be chaired by the Coordinating Minister for Economic Affairs, supported by among others (list is not exhaustive): Coordinating Minister for Political and Security Affairs; Coordinating Minister for Maritime Affairs; Minister of Home Affairs; Minister of Finance; Minister of Law and Human Rights; Minister of Communication and Information Technology; Chief of National Police; Cabinet Secretary; and Head of Investment Coordinating Board.

  2. Simplifying business licensing process in the form of a checklist, particularly in Special Economic Areas, Free Trade Zones, Industrial Areas and Tourism Areas. The checklist is expected to accelerate the licensing process related to labor, immigration and land affairs although no details are available at this point.

  3. Coordinating with other relevant government agencies to minimize the duplication of process through data sharing e.g. companies can obtain several sequential licenses by submitting the required documents once. These documents will then be used by other government agencies in processing further licensing such as environmental licenses, nuisance licenses, building construction license, etc.

Second step

  1. Licensing regulation reform: PR91/2017 instructs that the ministers, governors and/or mayors/regents are to identify relevant regulations pertaining to doing business within their respective authorities and revoke the specifically identified regulations. Based on these evaluations, the government will attempt to simplify the licensing process by enacting new regulations that are more business-friendly.

  2. Standardizing future license applications through an integrated single submission system, expected to be in effect gradually by March 1, 2018. The government will synchronize the submitted data between relevant ministries to allow for a more transparent licensing process and registration. PTSP under the supervision of BKPM is expected to be in charge of this system.

Timeline

The first phase began with the enactment of PR91/2017 and the establishment of the National Task Force. The Integrated Single Submission System is expected to be implemented gradually through March 2018.

Although a step in the right direction, it remains unclear how the establishment of an additional task force will assist in simplifying Indonesia’s complex regulations. Indonesia currently has four coordinating ministries, with a main role to coordinate and synchronize the 30 ministries within their purviews. In practice, the coordinating ministries do not always use their convening authority. Indonesia also face challenges to harmonize and coordinate between national and regional governments. The decentralization process that took place as a result of the 1998 democratization reform has shifted a significant amount of regulatory power from the central government to the regional governments on certain sectors. This makes it more difficult for companies that operate in different regions of Indonesia as they need to adjust their business practices per region, and at high business and efficiency costs, in order to comply with sometimes conflicting national and local regulations. The need for harmonization between national and regional regulations is especially important now subsequent to the Constitutional Court’s April 2017 ruling which revoked the central government’s authority to annul regional laws without going through the judicial process.

Bank Indonesia Governor to Retire in May 2018

Bank Indonesia Governor Agus Martowardojo is set to retire in May 2018 even though President Jokowi has yet to announce any candidates to replace Martowardojo. The position of Bank Indonesia Governor must be proposed and appointed by the President with the approval of the House of Representatives. The President has publicly stated that he is considering announcing the names of the candidates by late February. Traditionally, the outgoing Governor would provide his replacement recommendation for the President to consider although this is not a requirement. There is also no particular pattern for a Bank Indonesia Governor to come within Bank Indonesia. Martowardojo himself came from a mixed of public-private sector background; he was the CEO of the state-owned Bank Mandiri and at some point a senior officer at Bank Niaga prior to joining Bank Indonesia.

Bank Indonesia is led by a Governor who is assisted by a Vice-Governor, and at least four but not more than seven Deputy Governors. Board Members are appointed for a term of office of five years and may be reappointed to the same position for no more than one subsequent term of office. A member of the Board of Governors may not be dismissed during his or her term of office, unless the person resigns; is convicted of a felony; unable to attend in person for a period of three consecutive months without a reasonable cause; is declared bankrupt or unable to settle liabilities to creditors; or is permanently incapacitated.

Martowardojo was appointed in March 2013 by Indonesia’s House of Representatives. He previously served as Minister of Finance in the administration of former President Susilo Bambang Yudhoyono in May 2010 replacing Sri Mulyani Indrawati.

The new Governor will inherit the policies pioneered by Martowardojo such as the national payment gateway and upon the finalization of the amended Government Regulation No. 82 of 2012, how it will it be interpreted in the financial sector. The Council will continue to monitor this development.

 
ADVOCACY UPDATE
 
 
On February 2, Indonesia's Minister of Communications and Information Technology Rudiantara shared with the Council the newest draft amendment to Government Regulation 82/2012 on Electronic Systems and Transactions Operations (GR82), which can be found here in Indonesian and English. The Council is urgently seeking input from members on the new draft before it is issued. A summary of the provisions of the draft amendment can be found in our recent Update here. If you have any questions, or would like to submit comments, please contact Artha Sirait at asirait@usasean.org and Ella Duangkaew at eduangkaew@usasean.org

Please submit all comments by COB Monday, February 12. 
 
IN THIS UPDATE
 
 
Regional Affairs
Indonesia, Cambodia reaffirm commitment to enhancing bilateral cooperation
Indonesian trade mission to Pakistan opens investment opportunities

National Affairs
Floods & Landslides: Jakarta & Bogor Plagued by Torrential Rains
Government urged to implement decree on corruption elimination
Some 5,000 East Jakartans affected by floods

Customs
Indonesia strives for conclusion of RCEP talks

Defense & Security
Asean nations unite in fighting terrorism

Economics
Indonesia needs to boost exports as foreign debt increases: BI
VP encourages economic development amid years of politics
Indonesia eyes South Asia to expand and diversify its exports
Indonesia to deal with last part of One Map Policy
GDP up 5.07 percent in 2017 despite slow growth in govt spending
Jokowi wants to privatize airports, says Luhut
Trade Ministry initiates $3.1m buying mission
President wants simplification for foreign workers permit
President chairs limited meeting to boost investment
Indonesia records exports worth US$168.7 billion in 2017

Energy
Kalla urges to develop mercury-free mine processing technology

Financial Services
Digital rupiah won't be issued anytime soon: BI
Government to provide national banks easy chance to expand businesses in ASEAN
Indonesia to ratify ASEAN act to liberalize banking
Taxed Out: New Regulation Requires Indonesian Banks to Give Up Credit Card Data to Gov't

Food & Agriculture
Indonesia explores coffee market in Vietnam
Marsudi highlights palm oil issue in meeting with Alfano
Susi Pudjiastuti Gets Banks to Lend Money to Fishermen

Health & Life Sciences
Indonesia hosts FAO pilot projects for tackling zoonoses
Taiwan eyes cooperation with Indonesia in biomedical industry
Indonesia declares Papua health crisis under control
Southeast Asia's top drugmaker sets its sights on consumer market

ICT
Sri Mulyani Calls on Media to Help Combat Fake News
Indonesian innovations win top four at Bangkok tech exposition
E-commerce threatening imported footwear outlets: Aprisindo
Bawaslu to Block Accounts Spreading Hoaxes During Elections
BSSN to team up with Australia to deal with cyber attacks
Indonesia lauded for its PPP scheme to develop ICT infrastructure

Infrastructure
Jokowi to kick off Padang-Pekanbaru toll road construction: Minister

Manufacturing
Government continues to boost growth of aircraft mro industry
 
ARTICLE CLIPS
 
 
Regional Affairs

Indonesia, Cambodia reaffirm commitment to enhancing bilateral cooperation Antara News 3rd Feb 2018
The governments of Indonesia and Cambodia have agreed to enhance bilateral cooperation during the visit of Cambodian Minister of Foreign Affairs Prak Sokhonn to Jakarta on Friday.

Indonesian trade mission to Pakistan opens investment opportunities Antara News 1st Feb 2018
The Indonesian Trade Ministry`s Trade Mission to Pakistan has recorded potential trade and investment transactions of US$115.02 million. "The transaction covers several commodities of palm oil, cocoa, coffee, spices and tea," Trade Minister Enggartiasto Lukita said here on Wednesday. 

National Affairs

Floods & Landslides: Jakarta & Bogor Plagued by Torrential Rains Indonesia Investments 6th Feb 2018
On February 5, Indonesia's National Disaster Mitigation Agency (BNPB) issued a flood warning for Jakarta because the Katulampa Dam in Bogor, located some 40 kilometers to the south of Jakarta, was likely to overflow. 

Government urged to implement decree on corruption elimination Antara News 5th Feb 2018
The House of Representatives (DPR) has called on the government to effectively implement the presidential decree on the prevention and elimination of corruption.

Some 5,000 East Jakartans affected by floods The Jakarta Post 5th Feb 2018
Severe flooding hit a number of Ciliwung riverbank areas in East Jakarta and have affected some 5,000 people in the municipality. East Jakarta Mayor Bambang Musyawardana said on Monday the water levels in the affected areas, such as Bidara Cina, Cawang and Kampung Melayu, had reached depths of up to 160 centimeters. 

Customs

Indonesia strives for conclusion of RCEP talks The Jakarta Post 7th Feb 2018
Indonesia is committed to accelerating negotiations on the Regional Comprehensive Economic Partnership (RCEP), said Trade Minister Enggartiasto Lukita said at the 21st round of RCEP negotiations, recently. 

Defense & Security

Asean nations unite in fighting terrorism Bangkok Post 8th Feb 2018
SINGAPORE: Deputy Prime Minister and Defence Minister Prawit Wongsuwon has joined his Asean counterparts in a fresh regional move to fight terrorism in the region and conduct a joint naval military drill with China. 

Economics

Indonesia needs to boost exports as foreign debt increases: BI The Jakarta Post 8th Feb 2018
Bank Indonesia (BI) has said Indonesia needs to boost its exports as the country's foreign debt continues to increase as the government seeks to accelerate its infrastructure projects. 

VP encourages economic development amid years of politics Antara News 8th Feb 2018
Vice President Jusuf Kalla has reminded all parties to maintain and boost Indonesia`s economy in the run-up to the 2018 regional head elections and 2019 general elections. Kalla conveyed his message to Secretary General of the Central Board of the Lembang Sembilan Institute Eva Kusuma Sundari at the Vice President`s Office on Thursday. 

Indonesia eyes South Asia to expand and diversify its exports Antara News 7th Feb 2018
Indonesian President Joko Widodo (Jokowi)`s recent tour of five South Asian nations has significant meaning not only to foster friendship but also to increase trade with the countries. 

Indonesia to deal with last part of One Map Policy The Jakarta Post 5th Feb 2018
President Joko “Jokowi” Widodo said on Monday that the Indonesian government was now dealing with the last part of One Map Policy by focusing on mapping Papua, Maluku and Java in 2018. In 2016, the government started work on the Kalimantan map, and the following year, started to deal with the Sumatra, Sulawesi, Bali and Nusa Tenggara map. 

GDP up 5.07 percent in 2017 despite slow growth in govt spending The Jakarta Post 5th Feb 2018
The Indonesian economy grew 5.19 percent year-on-year (yoy) in the fourth quarter of 2017, slightly above the 5.06 percent recorded in the previous quarter, the Central Statistics Agency (BPS) announced on Monday. 

Jokowi wants to privatize airports, says Luhut The Jakarta Post 2nd Feb 2018
Coordinating Maritime Affairs Minister Luhut Pandjaitan said on Thursday that President Joko "Jokowi" Widodo intended to privatize several airports. According to the Antara report, Luhut said the airports that could be privatized included the newly inaugurated Silangit International Airport in North Sumatra, the HAS Hanandjoeddin International Airport in Bangka Belitung and the one in Jakarta. 

Trade Ministry initiates $3.1m buying mission The Jakarta Post 2nd Feb 2018
The Trade Ministry is intensifying efforts to increase exports by initiating a buying mission between Indonesian companies and importers from Spain and Thailand on Thursday. 

President wants simplification for foreign workers permit Antara News 1st Feb 2018
President Joko Widodo (Jokowi) wants the foreign workers permit which is until now still complicated will immediately be simplified. It is realized that until now so many things related to foreign workers permit are still convoluted, Cabinet Secretary Pramono Anung quoted the president as saying here on Wednesday after a limited cabinet meeting presided over by President Jokowi. 

President chairs limited meeting to boost investment Antara News 31st Jan 2018
President Joko Widodo chaired a limited meeting at the presidential office in Jakarta on Wednesday to discuss efforts to boost investment in the country. 

Indonesia records exports worth US$168.7 billion in 2017 Antara News 31st Jan 2018
Indonesia`s Trade Minister Enggartiasto Lukita revealed that the country`s exports in 2017 had reached US$168.7 billion, a year-on-year increase of 19.8 percent. 

Energy

Kalla urges to develop mercury-free mine processing technology Antara News 5th Feb 2018
Vice President Jusuf Kalla has encouraged the Research, Technology, and Higher Education Ministry to develop mercury-free mine processing technology by involving the local universities. 

Financial Services

Digital rupiah won't be issued anytime soon: BI The Jakarta Post 7th Feb 2018
Bank Indonesia Governor Agus Martowardojo has stressed that the planned issuance of digital rupiah will not happen anytime soon. Time was needed for research on the necessity of a virtual currency, to assure that such currency would not disrupt financial stability, Agus said in Jakarta on Tuesday, as reported by kompas.com.

Government to provide national banks easy chance to expand businesses in ASEAN Antara News 7th Feb 2018
The Indonesian government has tried to provide national banks with easy chance to expand their businesses in other ASEAN member states, by encouraging the ratification of the sixth protocol of ASEAN Framework Agreement on Services (AFAS). 

Indonesia to ratify ASEAN act to liberalize banking The Jakarta Post 7th Feb 2018
The government and the House of Representatives have agreed to swiftly ratify a protocol to implement the Sixth Package of Commitments on Financial Services under the ASEAN Framework Agreement on Services (AFAS). 

Taxed Out: New Regulation Requires Indonesian Banks to Give Up Credit Card Data to Gov't Jakarta Globe 5th Feb 2018
Indonesia's Finance Ministry has finally issued a regulation that will make it compulsory for banks to relinquish data about their credit card customers to the government. 

Food & Agriculture

Indonesia explores coffee market in Vietnam Antara News 8th Feb 2018
Indonesia as the fourth largest coffee producer in the world is exploring potential Vietnamese market, as stated in a press statement from the Indonesian Embassy in Hanoi, Vietnam received by Antara here on Thursday. 

Marsudi highlights palm oil issue in meeting with Alfano Antara News 8th Feb 2018
Indonesian Foreign Minister Retno Marsudi highlighted the palm oil issue during a meeting with her Italian counterpart, Angelino Alfano, at the Foreign Affairs Ministry office in Jakarta on Wednesday. 

Susi Pudjiastuti Gets Banks to Lend Money to Fishermen Tempo 4th Feb 2018
The Marine and Fishery Ministry is working with a number of state banks to provide financing to fishermen. Banks will disburse credits to fishermen who are planning to replace their fishing gears with eco-friendly equipment. 

Health & Life Sciences

Indonesia hosts FAO pilot projects for tackling zoonoses The Jakarta Post 8th Feb 2018
The Agriculture Ministry and the United Nations’ Food and Agriculture Organization (FAO) have designated four areas in Indonesia for pilot projects to contain the spread of zoonoses. 

Taiwan eyes cooperation with Indonesia in biomedical industry The Jakarta Post 7th Feb 2018
The Taiwanese government has expressed interest in working with Indonesia in the biomedical industry as the latter is home to several global biomedical manufacturers. 

Indonesia declares Papua health crisis under control Reuters 6th Feb 2018
A measles and malnutrition crisis that killed dozens of children in Indonesia’s impoverished province of Papua over the past few months is under control, the health ministry said on Tuesday. 

Southeast Asia's top drugmaker sets its sights on consumer market Nikkei Asian Review 5th Feb 2018
A glimpse of the future of health care that Kalbe Farma, Indonesia's largest pharmaceutical company, envisions can be seen in shopping malls, rather than hospitals. 

ICT

Sri Mulyani Calls on Media to Help Combat Fake News Jakarta Globe 8th Feb 2018
Finance Minister Sri Mulyani Indrawati encouraged Indonesia's mainstream media and the public on Thursday (08/02) to create a healthier internet atmosphere by joining the battle against fake news. 

Indonesian innovations win top four at Bangkok tech exposition Antara News 8th Feb 2018
Thirty-seven innovation projects of Indonesian school and university students, who joined the Indonesian Invention and Innovation Promotion Association (INNOPA), have successfully made it to the top four at the 2018 Intellectual Property Invention, Innovation and Technology Exposition (IPITEX) competition in Bangkok, Thailand. 

E-commerce threatening imported footwear outlets: Aprisindo The Jakarta Post 5th Feb 2018
The rapid growth in online retailers, or e-commerce, has apparently affected the sustainability of imported footwear outlets in Indonesia, the Indonesian Footwear Association (Aprisindo) has revealed. 

Bawaslu to Block Accounts Spreading Hoaxes During Elections Tempo 4th Feb 2018
Elections Supervisory Agency (Bawaslu) will block or take down a number of social media accounts that spread hoaxes or hate speech during the general elections. 

BSSN to team up with Australia to deal with cyber attacks Antara News 1st Feb 2018
The State Code and Cyber Agency (BSSN) said it will team up with Australian counterpart in creating standard of handling cyber attacks. 

Indonesia lauded for its PPP scheme to develop ICT infrastructure Antara News 31st Jan 2018
Indonesia has been appraised for its public-private partnership (PPP) scheme to develop information and communication technology (ICT) infrastructure.  

Infrastructure

Jokowi to kick off Padang-Pekanbaru toll road construction: Minister The Jakarta Post 5th Feb 2018
President Joko “Jokowi” Widodo is scheduled to kick off construction of a toll road connecting Padang, the provincial capital of West Sumatra, and Pekanbaru, the provincial capital of Riau, on Thursday, Public Works and Housing Minister Basuki Hadimuljono has said. 

Manufacturing

Government continues to boost growth of aircraft mro industry Antara News 3rd Feb 2018
The government continues to boost growth of the aircraft maintenance, repair, and overhaul (MRO) industry in Indonesia in view of the potential development to be integrated with several airports in the country.