Indonesia has now become a favourite investment destination country because of its large population, its rising purchasing power with a potential for an upcoming demographic bonus and its abundant natural resources.
There has been, of course, a long road to reaching this situation. For 45 years the Indonesia Investment Coordinating Board (BKPM) has been acting as an investment driver. The investment policy in Indonesia was started after the issuance of Law No. 1/1967 on foreign direct investments (PMA). At that time, the New Order government set up an institution called the Foreign Investment Advisory Board. One year later, the government issued Law No. 6/1968 on domestic direct investment (PMDN) and established a new institution called the Technical Committee on Investment (PTPM) based on Presidential Decree (Keppres) No. 286/1968.
Since then, the investment institution changed several times until 1999, when the BKPM changed its name to the Investment Coordination and State-Owned Enterprises (BUMN) Development Board (BPM-PBUMN), which was led by a minister in charge of investments and BUMN. In 2002, the BKPM went back to being a non-ministerial institution (LPND), which is led by a leader directly responsible to the president.
To accelerate economic development, realize Indonesia’s political and economic sovereignty and to deal with the global economy, the government issued the Law No. 25/2007 on investment. It was aimed to create a climate more conducive for investments, with more certainty, fairness and efficiency.
Investments have proven to have pushed up the Indonesian economy. A year after the application of the law in 1967 (UU PMA 1967), Indonesia’s economic growth reached 10.9 per cent. In 1970, Indonesia managed to reduce inflation to below 10 per cent.
Of course, in 45 years of spurring investments, there have been ups and downs because of domestic social and political conditions and the global situation. For example, the political crisis in 1998 caused the Indonesian economy to drop and investments to stagnant. After the crisis of 1998, the post-reform era, the investors were still reluctant to invest in Indonesia as the social and political situation was not yet stable.
However, the BKPM has always been acting quickly to attract investments by intensifying coordination with other institutions and pushing for more friendly regulations. Through a good marketing strategy, the BKPM convinced investors that Indonesia is the right choice for investments. Its efforts paid off, as proven by Indonesia becoming increasingly attractive for investors.
The BKPM has played a significant role as the main intermediary between businesses and the government to encourage direct investments, local and foreign ones, through its efforts to create conditions conducive for investments. Although it has undergone a series of changes, the BKPM still maintains the same vision and mission to promote investments in Indonesia and serve all who want to invest in the country. The BKPM is maintaining its strong commitment to serving the public professionally and in a business-friendly way.
During the last 45 years, the BKPM has made various innovations and breakthroughs to realize its vision as set out in Indonesia’s Constitution, which is to create a conducive but competitive investment climate to support the quality of Indonesia’s economy.
Since 2017, the BKPM has run two formal websites: http://www.bkpm.go.id and http://www.investindonesia.go.id/. The website bkpm.go.id focuses on providing information on the institution of the BKPM, which manages investment activities in Indonesia. The website investindonesia.go.id focuses on providing information on the promotion of investments in Indonesia.
To maximize its licensing service quality under the integrated One-Stop Service Center (PTSP), on July 3, 2017, the BKPM innovated by digitalizing its services. Now all data, archives and licensing processes are managed by the digitalized system. Also, the BKPM has actively communicated with the public through Facebook, Twitter, YouTube, Instagram and LinkedIn, which are managed professionally.
The BKPM has also won a number of awards for its achievements in managing investment activities. In 2018, the BKPM won several awards, including for being in the Top 99 Inovasi Pelayanan Publik (Public Service Innovations) for its fast innovative services. It also contributed to the improvement of Indonesia’s debt rating. Standard and Poor’s has given Indonesia a BBB- (stable) investment grade rating, with the Japan Credit Rating Agency also giving an investment grade of BBB/BBB+. Moody’s subsequently raised its credit rating from Baa3 (positive) to Baa2 (outlook). (*)