BKPM seeks to improve ICOR through Job Creation Law

BKPM seeks to improve ICOR through Job Creation Law

The Investment Coordinating Board (BKPM).

We are optimistic of making the bureaucratic process more efficient. Through implementation of the Job Creation Law, the ICOR will improve
Jakarta (ANTARA) - The Investment Coordinating Board (BKPM) targets improving the Incremental Capital Output Ratio (ICOR) through the Job Creation Law owing to persistent relatively high ratio than several Southeast Asian countries to encourage investment flows into Indonesia.

"We are optimistic of making the bureaucratic process more efficient. Through implementation of the Job Creation Law, the ICOR will improve," Deputy for Investment Climate Development at the BKPM Yuliot stated during a discussion in Jakarta, Monday.

According to Yuliot, ICOR, or Indonesia's additional capital ratio, currently reaches 6.8 percent or higher than Malaysia's 5.4 percent, the Philippines at 4.1 percent, or even Vietnam at 3.7 percent.

The higher the ICOR of a country, greater are the economic costs estimated that will erode the capital of business actors.

"The main competitor of ICOR is Vietnam. The Job Creation Law will boost economic competitiveness, facilitate transformation, and encourage the legality of MSMEs," Yuliot stated.

Yuliot explained that the Job Creation Law contained 77 simplified regulations and the implementing regulations will be streamlined to offer convenience, especially in the licensing process.

Licensing is grouped based on business risk categories of low, medium-low, medium-high, and high, according to Yuliot.

Infrastructure development conducted by the government will also reduce the logistics costs, he added.

"There will be improvements in the Job Creation Law, for the location permit will be based on spatial planning. On the basis of the regional spatial planning, this will accelerate location permits," he stated.

Meanwhile, Yuliot stated that investment realization as of September 2020 had reached Rp611.6 trillion, or 74.8 percent of this year's targeted Rp817.2 trillion.

Of that figure, Yuliot pointed out that investment outside Java -- Sumatra, Kalimantan, Sulawesi, and Eastern Indonesia -- had reached Rp301.4 trillion, or 49.7 percent of the investment realization.

The BKPM is targeting investment realization to reach Rp4,983.2 trillion for the 2021-2024 period, with target set for 2021 at Rp854.5 trillion.
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