JAKARTA - The action of asking for a share of the project carried out by the Cilegon Chamber of Commerce and Investment (Kadin) can be an indication that Indonesia is not a comfortable and good place for investment.
Recently, social media was enlivened with unpleasant news. There is an alleged demand for a project allotment of IDR 5 trillion without going through a tender or auction process from the Cilegon Chamber of Commerce and Industry to management representatives from China Chengda Engineering, a contractor working for PT Chandra Asri Alkali (CAA), a subsidiary of PT Chandra Asri Group engaged in the energy and chemical sectors.
For information, the construction of the PT CAA factory has been designated by the government as a National Strategic Project (PSN), in accordance with Presidential Regulation Number 12 of 2025 concerning the 2025-2029 National Medium-Term Development Plan (RP JMN).
The determination of PSN was signed by Prabowo on February 10, 2025. In the Presidential Decree, the implementer of this PSN is a private company, namely the Chandra Asri Group.
Before the video asked for a project allocation of IDR 5 trillion in Cilegon, the Indonesian people had already been treated to burglary efforts carried out by community organizations (ormas) in Bekasi against one of the companies in March, ahead of Eid al-Fitr.
The person argued that he asked for holiday allowances (THR) in the burglary action.
The moment was recorded in a video and spread on social media. However, the member of the organization concerned mentioned that he had a lot of mass. They even threatened to close the road in front of the company if they did not comply with the request.
Cases of this kind of burglary, of course, make the investment climate in Indonesia not conducive. Director of the Center of Economic and Law Studies (Celios) Nailul Huda said, one of the investment problems in Indonesia is that investment costs are too high.
"The cost of this investment is not only in terms of the benchmark interest rate of Bank Indonesia (BI) which has not yet decreased, but also from the problem of extortion in the field. Including the problem of procuring development projects that must be given to an institution," said Huda.
"If it is done without an auction, then what happens is investment inefficiency. If it is done by auction, then the project owner can get the quality of goods according to the cheapest price," he added.
All forms of extortion, said Huda, are carried out by thugs and local entrepreneurs by asking for project rations, which is a cost for investors to invest in Indonesia.
Thus, the budget that should have been reduced could have actually become higher because of the unofficial licensing costs.
As an institution formed by law, Huda said it would be very embarrassing if Kadin did not support the government's investment agenda, eradicating extortion and thuggery.
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"Therefore, the value of Indonesia's Capital Output Ratio (ICER) is higher than that of neighboring countries. To form Rp1 GDP, the investment value issued by investors is much higher than neighboring countries," he said.
Indonesia's economics is becoming inefficient. Finally, many investors turn back when they want to invest in Indonesia when this thuggery is allowed to," Huda added.
For this reason, cases like this according to Huda should be brought to a more serious meeting. He urged President Prabowo Subianto to intervene directly if necessary.
"Because the investment potential is lost, not only from this project. But other investors will see that Indonesia is not a comfortable and good place for investment. It could be thousands of trillions of investments that are threatened with being lost," explained Huda.
In recent years, foreign investment entering Indonesia has been in the spotlight, because it is said that it often loses to neighboring countries, including Vietnam which is on the rise.
World Bank data shows that foreign direct investment in Indonesia throughout 2019-2023 lost to Vietnam, Singapore and Malaysia. Indonesia is also competing closely with Thailand, which was minus 2020.
Late last year, NVIDIA announced the opening of an artificial intelligence (AI) research and development center for the first time in Vietnam. Likewise with Apple, which plans to increase investment in Vietnam. In fact, since 2019, their investment has touched the figure of 16 billion US dollars.
Vietnam was also chosen by Google as a large data center location. Meanwhile, Malaysia and Thailand also obtained investment from Apple, Google, and Microsoft.
Meanwhile, in Indonesia, Microsoft and Apple agreed to invest. For Apple's case, there was tough negotiations between the government and the company led by Tim Cook regarding the distribution of iPhone 16 products and its relation to the Domestic Component Level (TKDN).
Sales of the new iPhone 16 opened in Indonesia after Apple changed investment offers to USD 1 billion, from the previous USD 100 million.
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