"In a bid to attract investment, we have to reform bureaucracy into ones that serve and are investment-friendly," Brodjonegoro noted in a regional consultation for Maluku and Papua here on Thursday.
According to the World Bank’s report, 33 companies in China have decided to relocate their business from the country, though none having selected Indonesia as the new location for investment.
Those companies preferred to relocate the factories to Vietnam, Thailand, and Malaysia.
The minister pointed to this fact as becoming a cause of concern for President Joko Widodo.
Brodjonegoro stated that the main factor behind the investors' decision of reluctance to invest in Indonesia was the "uncomfortable feeling" to invest in the country.
He pointed to unfavorable regulations having hampered the growth of investment in the country and being inconducive to business development.
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Restriction on Foreign Direct Investment (FDI) has hindered the establishment of businesses in Indonesia that can attract technology and boost exports, he stated. Regulation on investment in the services sector is more restrictive as compared to other G20 countries.
Indonesia's FDI in 2018 had only reached 22.1 percent of the gross domestic product (GDP), lower than the FDI in the Philippines, at 25.1 percent; Malaysia, 43 percent; Thailand, 45.7 percent; and Vietnam, 60.1 percent.
Restriction on FDI has also caused an eight percent loss of export-oriented potential investment to Indonesia.
On the other hand, regulation on relaxation of the List of Negative Investment (DNI) in the film industry in 2016 has encouraged the development of the domestic film industry. Related news: Govt to revoke regulations hindering investment inflow
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