Rizal Ramli: Foreign Companies Prefer Vietnam Regarding Factory Relocation From China

JAKARTA - Since relations between the United States and China have heated up, exacerbated by the presence of COVID-19, several countries have flocked to intend to shift their investment from the Bamboo Curtain country. However, unfortunately Indonesia is not the choice of foreign companies to relocate their business.

Senior economist Rizal Ramli assessed that he did not pay attention to Indonesia as a destination country for factory relocation because the government had not improved several policies. In fact, according to him, if Indonesia becomes the choice of investors for relocation, this will boost industrial growth in the country.

Furthermore, Rizal said, ideally the industry should grow at twice the rate of economic growth. This means that the industry can create more jobs, raise wages and boost productivity.

"If we are ready, we will improve the policy. So if it happens to achieve 15 percent industrial growth, it is not a difficult thing," he said, in a virtual discussion, Thursday, July 23.

According to Rizal, foreign companies that choose to relocate their companies from China prefer Vietnam, Mexico and India. However, unfortunately not only Indonesia, Malaysia was also not an option.

Not only that, the Japanese government even dared to pay companies from their country of origin to move their factories out of China into the country or to Southeast Asian countries, such as Vietnam, Myanmar and Thailand.

"The Japanese government even gives incentives if a Japanese company wants to leave China, they will be given a bonus," he said.

Rizal explained that the policy was carried out as part of the new Sakura Country program to reduce manufacturing dependence on China.

Previously, the Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia admitted that Indonesia had difficulty competing with other countries, especially Vietnam in terms of investment, because it involved regulations. He considered that the existing regulations in Indonesia were made to make Indonesia less competitive than other countries.

Furthermore, Bahlil said, for example, when a potential investor obtains a Business Identification Number (NIB), it is not automatically possible to immediately carry out business activities in the country.

Obtaining NIB is indeed easy, it is enough through an integrated electronic licensing system or online single submission (OSS). But there are still other permits to take care of and the process is time consuming.

"OSS said that 3 hours of registering immediately to get the NIB. That NIB is the number of the business, it cannot then be used as a basis for doing business. He has to take care of new permits again and then get a notification from the ministry / institution. And the notification is then tawaf. , until 2 years, 3 years have not been completed, "he said, at the Corona Pandemic Book Launching: Virus Deglobalization, the Future of the Global and National Economy, Jakarta, Monday, July 13.

However, Bahlil said, currently Indonesia has become the destination for relocating the factories of large companies from China. Bahlil explained, in 2018-2019 there were no companies relocating from China to Indonesia, all of them chose. However, currently BKPM has noted that it has started to enter. There are even seven companies.

"Now there are seven, yesterday it was inaugurated and later there will be 17 companies with 70-80 percent potential to enter," he said.

Regarding the regulations, President Joko Widodo (Jokowi) issued Presidential Instruction (Inpres) Number 7 of 2019 concerning the Acceleration of Ease of Doing Business. Through this Inpres, BKPM has the mandate to handle business licensing authority and the provision of investment facilities.