Component 3 – Investment Promotion

Indonesia is facing an increasingly complex macroeconomic environment with the tapering of the Quantitative Easing from the Federal Reserve and a likely increase of the US interest rates, in addition to a marked slowdown of the largest economy in the region.

Foreign direct investments will therefore play a critical role to relieve the pressure on Indonesia’s currency and foreign exchange reserves, at a time when international investors are particularly mindful of the concerns looming over the emerging markets.

TCF’s support to BKPM in the last year of the project addresses these factors by focusing on activities that potentiate the investment generation effort in Europe through a set of coordinated and hands-on interventions both in Europe and in Indonesia.

Our programme in 2016 covers the following:

FIELD A: THE EU DESK AT BKPM

Learn more about the objectives of Field A

The EU Desk has now been operating for more than a year. To date, the EU Desk has directly assisted more than 100 companies from across Europe. Assistance to these companies has included:

  • Enquiry handling on investment regulations, licenses and processes
  • Providing off-the-shelf and customized market insights
  • Arranging stakeholder meetings and presentations
  • Identifying and introducing European companies to potential Indonesian partners
  • Managing multi-day visits and itineraries for potential investors
  • Corporate advocacy (on behalf of key existing European investors)

The key objective for 2016 is to ensure that the momentum created in 2015 is maintained. Numerous ‘hot leads’ have been identified, some of which are well in excess of $100 million. Overall, the pipeline is on track and by now contains a total of 400 companies, with continued substantial expansion planned in 2016.

It’s equally important to acknowledge that it is the final year of TCF and therefore there’s a need to put in place a new operating and financing model that will ensure the EU Desk’s sustainability. Key to the EU Desk’s sustainability will be the involvement of BKPM’s own staff in the form of secondments.

Meanwhile, the continued involvement of the Indonesian experts is required in order to continue and expand on the work of the EU Desk, as outlined below, as well as to help ensure an effective transition to the new EU Desk operating model in late 2016.

The following are the activities designed and planned under The EU Desk at BKPM field:

FIELD B: SUPPORT TO BKPM’S EUROPEAN OFFICE THROUGH SUPPORT IN EUROPE AND JAKARTA

Learn more about the objectives of Field B

Indonesia’s national strategies in the area of investment are aimed at creating a competitive business climate to enhance investment across all its regions. These strategies are based on a competitively based approach to regional development, the harmonization and streamlining of various legislations both at central and local level, and improvements in infrastructure through effective partnerships between government and the private sector.

We have been working with Indonesia’s Investment Coordinating Board (BKPM) since 2013, helping it to achieve its mandate through a variety of on-the-job technical assistance activities aimed at strengthening capacity at its headquarters, regional and international offices.

Our support to BKPM will continue during 2016 through ongoing assistance to its activities in Europe and the development of enhanced data access through an IT platform that makes critically important data available to potential investors.

The following are the activities designed and planned under The Technical Assistance to International Offices field:

FIELD C: SUPPORT TO THE REGIONAL OFFICES OF BKPM

Learn more about the objectives of Field C

BKPM’s provincial offices have access to information that it crucially important to potential investors engaged in evaluating alternative destinations for their investments. Moreover, these offices are uniquely able to identify local companies to that could potentially act as partners to international investors.

Our technical assistance in this area during 2016 will focus on identifying an efficient approach for collecting data from the 34 provinces and coordinating the collection of this information in a systematic fashion, making it easily accessible through a software. Alongside this, we will also be training provincial officials in how to develop concise company profiles containing the key information investors need.

The following are the activities designed and planned under The Technical Assistance to Regional Offices field:

FIELD D: IMPROVING THE ADR ENVIRONMENT IN INDONESIA

Learn more about the objectives of Field D

A transparent and well-functioning legal framework is critical to attracting quality investments and an increasing number of countries are introducing or improving their current ADR systems. We have been supporting the review and enhancement of Indonesia’s ADR practices since the project started in 2013, working with BKPM and ADR working group members to develop detailed recommendations for activities to improve the current ADR environment.

The activities planned for 2016 are a continuation of the ones running in 2015 and will include the certified training of mediators, raising awareness of dispute prevention techniques and policy recommendations.

For a detailed description of the activities under the Technical Assistance on Alternative Dispute Resolution (ADR), please see below: