ASEAN KEY DESTINATIONS
European firms upbeat about business in Indonesia
European companies demonstrated a high level of confidence in Indonesia last year, thanks to expectations of economic reforms under the new administration, according to a joint survey released by European business communities.
Investor confidence in Indonesia increased to 72 percent in 2014 from 66 percent a year earlier, buoyed by stronger macroeconomic conditions driven chiefly by an improved political and investment climate.
More than half of the business executives surveyed said they would boost investments in Southeast Asia’s biggest economy this year, while nearly half said they would maintain their level of investment.
“It’s a very positive outlook and position, that I think, we can also say, shows that there’s a real commitment from European businesses to further [supporting] growth in Indonesia,” said Adrian Short, chairman of the British chamber of commerce in Indonesia (BritCham), the body that managed the survey, which was held online last year from late October through mid-November.
The survey, which was expanded from an annual survey carried out by BritCham that included other European chambers of commerce, collected views from 206 senior managers and chief executive officers from a wide range of business sectors based in Jakarta, such as infrastructure and construction, energy and natural resources, and food and beverage.
Around 33 percent of the respondents said they were mulling expansions into big cities outside Greater Jakarta, such as Surabaya in East Java, Lampung, Medan in North Sumatra and Balikpapan in East Kalimantan. Another 15 percent said they might consider making such a move.
Some 76 percent said they planned to boost revenues, while 67 percent hoped to maximize profits this year.
In addition to citing the positive aspects of doing business in Indonesia, respondents also noted the major challenges that needed to be addressed, including bureaucratic inefficiency, corruption, a lack of infrastructure and a difficult regulatory environment. They also criticized regional administrations for failing to provide sufficient support for their expansion plans.
Commenting on the survey’s findings, Investment Coordinating Board (BKPM) chief Franky Sibarani said the rise in the confidence index was significant, adding that he hoped greater confidence would translate into new investment interest in Indonesia. By 2019, the BKPM hopes to attract investments of Rp 932.9 trillion (US$75.33 billion).
Franky added that the confidence index could climb even further this year with government pledges to improve the overall business climate and the ease of doing business.
“All businesspeople complain about the regional administrations. It’s surely a big task to overcome. But first we will make sure that the one-stop investment service at the regional level works,” he told reporters.
The board is currently streamlining the process of issuing licenses and the system is set to be launched at the end of this month by President Joko “Jokowi” Widodo.
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