Investment climate in Indonesia has been very interesting towards foreign investment accesses. Some benefits of investing in Indonesia are offered; no value limitation on fiscal intensive facility, the possibility for investors to have the whole investments in almost every sectors as well as the simplified investment approval. Indonesia which is ASEAN member country, and located on the crosslink of two continents, Asia and Australia, as well as two oceans, Indian Ocean and Pacific Ocean, offers some comparative advantages for investors along the gap and interesting harmony such:
- A big and prosperous country gifted with rich and diversified natural resources, among them is agriculture, plantation, fishery, mine, oil and gas.
- Big amount of citizens, more or less 240 millions citizens (census 2010), which are very dynamic in adapting themselves towards development, a highly potential market also competitive working forces.
- Strategic location controls vital international communication route.
- An increasingly democratic nation.
A market oriented open economy, with free foreign currency exchange regime. Indonesian government realizes that investment is one fundamental factor in accelerating economy; hence make serious efforts on fixing investment procedure to stimulate the more advantageous investment climate.
It is not after the enactment of Law on Foreign Investment in 1967 that the Government of Indonesia recognized the urgency for coordinating between all relevant departments and other related government organizations. To this end, the Government created the Foreign Capital Investment Advisory Board (Badan Pertimbangan Penanaman Modal Asing, BPPMA) in 1967. The Board main task was to give advice to the President with respect to the implementation of foreign investment.
In 1968 the Government passed a law on domestic investment. The need to improve the institutions involved in the processing of investment is unavoidable. As a result, on September 1968, the Indonesian Government established a new body called the Technical Committee on Investment (Panitia Teknis Penanaman Modal) and, hence, dissolved BPPMA. The Committee main task was to study and evaluate investment applications, both foreign and domestic, to secure that all requirements had been fulfilled. In its daily operation, however, the Committee did not have the authority to issue investment permits and has to rely on technical departments for evaluating investment applications.
During the course of time, there is obvious need to improve the coordination in the issuance of investment permits. In addition, the need to improve the level of investment through promotion is also evident. The Government responded to this need by creating a new body called Investment Coordinating Board (Badan Koordinasi Penanaman Modal, BKPM) to replace the Technical Committee on Investment in 1973.
Indonesia encourages private sector-led growth and foreign investment. It maintained a relatively open foreign investment regime. Under Indonesia's current investment law, the Capital Investment Coordinating Board (BKPM) plays a key role in promoting foreign investment and approving many project proposals, including investments in Bonded Zones (Kawasan Berikat) and Integrated Economic Zones (KAPET). Investors may also apply for investment approvals with Indonesian Embassies abroad or provincial Regional Capital Investment Coordinating Boards (BKPMDs). Regional autonomy legislation also appears to permit each province, district and city to accept and approve investment applications. Thus, additional regulations are needed to clarify the situation.
BKPM is the Investment Coordinating Board of the Republic of Indonesia. As the primary interface between business and government, BKPM is mandated to boost domestic and foreign direct investment through creating a conducive investment climate. Restored to Ministerial status in 2009, and reporting directly to the President of the Republic of Indonesia, this investment promotion agency’s goal is not only to seek more domestic and foreign investment, but also seek quality investments that improve social inequality and reduce unemployment. The agency works as a proactive advocate for investments as well as a matchmaker for investors. Since October 2009, BKPM is chaired by Mr. Gita Wirjawan.