JAKARTA – Corruption remains the foremost challenge for foreign investors seeking to invest in Indonesia. This was reported from the Business Confidence Index (BCI) survey, which indicates that respondents were asked about the depicted challenges that will affect Indonesia in the next 12 years. In fact, 71% of respondents stated that corruption is the biggest challenge they face. “So there is a very small increase compared to the data from 2019 and 2020. And this is a key factor for businesses here,” explained Ian Betts, Honorary Secretary of BritCham Indonesia and Managing Director of CastleAsia, during the International Business Confidence Index (BIC) on Tuesday (23/4/2024). He stated that corruption has been widely reported in the media and public domain and has become pervasive. This is said to be a barrier to foreign investment in Indonesia.
The next challenges, according to respondents, are bureaucratic inefficiency or “red tape” and regulatory environment, both at 70%, lack of skilled labor at 68%, and labor policies at 64%. Although in the 2023/2024 survey, bureaucratic inefficiency now occupies the second position after corruption, in reality, this category has experienced a significant decrease compared to 2019/2020, which was at 86%. The regulatory environment is also said to possibly focus on some more controversial nationalist policies. However, this category has also decreased from the 2019/2020 survey, which was at 76%, and the 2018/2019 survey, which was at 78%. This decrease reflects a positive development. “So, some of the focus areas will be very welcomed by the business community,” he explained. Next, regarding the challenge of a lack of skilled labor, it is said to have been slightly addressed. He sees some optimism in accessing skilled labor because businesses are beginning to acquire and access skilled labor. Then, labor policies remain constant at 64%, the same as in 2018/2019. This is considered quite neutral considering the various businesses and labor unions involved, and their relationship is considered more mature. “So overall, this is a positive story, and of course, the decrease in bureaucratic inefficiency is welcomed. However, it remains a challenge for businesses like the shortage of skilled labor,” he explained. As a note, BCI is a series of snapshots of the economy and government performance that reflects overall business confidence. This includes revenue, number of employees, profits, and future investments. This survey contains 90 respondents gathered online from March 7 to April 3, 2024. The business sectors mostly come from Services at 26%, Energy and Natural Resources at 14%, and Infrastructure and Construction at 13%. The last time this survey was conducted was in 2020.
