President Joko Widodo has elevated the authority of the long-standing Indonesian Investment Coordinating Board (also known as BKPM or Badan Koordinasi Penanaman Modal) into the Ministry of Investment, granting the government agency the power to issue decrees and create regulations.
On April 28, 2021, Indonesian president Joko Widodo officially appointed Mr. Bahlil Lahadalia, the current chief of the Indonesian Investment Coordinating Board (BKPM), as the Minister of Investment. The appointment is made in regards to the government’s proposal of changing the BKPM, a ministry-level agency, into the Ministry of Investment – a proposal that the Indonesian had Parliament agreed to earlier this month.
More than a shift in nomenclature, Mr. Lahadalia said the new structure would improve the flow and quality of foreign and domestic investments in Indonesia’s economy as his office is now able to create regulations to better manage the “playing field”.
“As BKPM, we executed regulations. We executed Ministerial Regulations, as well as the law and government regulations... As the Ministry of Investment, we can be a focal point to connect, collaborate and stitch together the various sectors that involves investments,” Mr. Lahadalia said, as quoted by the public news agency Antara.
It was not immediately clear what exact authority the Ministry of Investment will have in comparison to its former status as the BKPM. The BKPM has had the authority to issue regulations concerning investments, such as the recent three implementing regulations following the issuance of government regulation No. 5/2021 concerning risk-based business licensing.
When asked whether there would be changes to the investment regulations that the BKPM have issued, he simply answered that any changes on regulations would be done to make it easier for investors to come and invest in Indonesia.
Earlier this year, Mr. Lahadalia announced that the government is targeting to secure Rp 900 trillion (US$61.9 billion) in both foreign and domestic investments. In 2020, his former office recorded realized investment of Rp 826.3 trillion. As of the first quarter of 2021, the BKPM has recorded Rp 219.7 trillion in realized investment, or a 4.3% increase compared to the same period last year.