House Of Representatives: Ministry Of Investment Must Improve The Quality Of Investment In Indonesia

ILLUSTRATION/BETWEEN

JAKARTA - Member of Commission VI of the House of Representatives, Amin Ak assessed the change of nomenclature from the Investment Coordinating Board (BKPM) to the Ministry of Investment (Keminves) should have an impact on improving the quality of investment in Indonesia.

"At least, there are 3 main indicators to measure whether the quality of investment in Indonesia is better or not. Namely the pace of increase in exports, the significant increase in new jobs, and the continuity of investment", Amin told reporters on Monday, April 12.

In addition to the three indicators, Amin continued, for foreign investment must also include the transfer of technology to improve the ability of Indonesians in the mastery of technology.

Referring to the BKPM data, said Amin, the investment realization in Indonesia is quite high compared to other countries. The investment value in 2020 was recorded at IDR 826.3 trillion consisting of domestic investment (PMDN) of IDR 413.5 trillion (50.1%) and foreign investment (PMA) of IDR 412.8 trillion (49.9%).

"However, the investment in Indonesia has not been efficient which is characterized by a very high ICOR (incremental capital-output ratio, red) value", explained the PKS Party politician.

Amin explained that the Ministry of Finance noted that in 2019 ICOR, Indonesia reached 6.77 which means that an additional capital of 6.77 points is needed for each additional unit of output.

"Compare with ICOR in the era of President SBY which averages only 4.3. The lower the value of ICOR, the more efficient investment", he explained.

According to him, ICOR is strongly influenced by the ease in business and competitiveness of the workforce. The high value of ICOR indicates that both are still chronic diseases that must be cured radically.

"The investment is currently faced with high investment costs to the weak competitiveness of our investment capital absorption and management at the output level", he said.

Such inefficiencies, Amin continued, cause the competitiveness of Indonesian products is weak even compared to Vietnam and the Philippines. It has an impact on the low export value of industrial products.

"Until now our exports are still dominated by raw materials and semi-finished materials", he said.

He reminded President Jokowi's statement, the Keminves will double job creation. Based on the August 2020 National Labour Force Survey, there were 9.77 million unemployed out of 138.22 million people in the workforce. Previously in 2019, the number of unemployed was recorded at 7 million people.

The BKPM noted that throughout 2020, the investment in Indonesia absorbed 1.156.361 migrant workers with a total of 153.349 investment projects. "When compared to the need for jobs, then there is a fairly wide gap between the need and the creation of new jobs", he said.

Amin also encouraged the Keminves not only to pursue jumbo investments. But also medium and small-scale investments but in large aggregate.

"We urge the government to apply the principle of fairness in investment services and facilities", Amin said.

Alluding to Government Regulation (PP) No.42/2021 and Regulation of the Minister of Finance No. 10/2020, Amin hopes that the rules can import without import duties, may not use domestic components, free of export tax obligations, tax-free profits up to 25 years, and value-added tax (VAT) that can be applied fairly.

The facility is given selectively by considering the much greater benefits provided by investors for Indonesia.

"Do not let the convenience and premium services are only enjoyed by certain investors. While medium and small investments are raised", he added.

The Keminves, added Amin, should also create investment continuity by strengthening the selectivity of incoming investment types.

"Do not let, the incoming investment has a bad impact on the environment so the cost that must be borne by the people of Indonesia is very expensive due to the disaster caused by environmental damage", he said.