• Dentons HPRP Law and Regulations Outlook 2022: Recovery in Business and Investment, discussed investment recovery in Indonesia and 2022 national strategic projects.
• The event was attended by Coordinating Minister for Economic Affairs Airlangga Hartarto, Deputy of Investment Cooperation at BKPM, Riyatno, 3rd Deputy Chair for Maritime, Investment and International Relations Affairs of the Indonesian Chamber of Commerce and Industry (KADIN) Shinta Kamdani, Managing Director of Investment for the Indonesia Investment Authority (INA) Andry Setiawan, and University of Indonesia Economist, Telisa Falianty.

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Jakarta – The government’s policies aimed at accelerating infrastructure development and simplifying investment regulations have significantly created equitable development. Infrastructure developments and implementation of National Strategic Projects has led to investments no longer being centralized in Java.

Al Hakim Hanafiah, Founding Partner of Dentons HPRP, said that despite the challenges faced by Indonesian businesses and industry sectors from the impact of the Government's new policies, this change opens up new opportunities that must be carefully deployed by all parties.

"In our 32 years of experience in Indonesian legal services, we have experienced various significant changes in the Indonesian legal landscape, especially in matters relating to investments and ease of doing business," he said in a Virtual Seminar titled Law and Regulations Outlook 2022: Recovery in Business and Investment which was virtually held in Jakarta, Wednesday (16/2/2022).

The event brought stakeholders from the business sector and the government together onto one stage to discuss various steps which need to be taken in response to changes made by the administration so that development targets can be achieved together.

In his remarks, Sartono, Managing Partner of Dentons HPRP, said that this discussion was held to commemorate the 32nd anniversary of the foundation of the Hanafiah Ponggawa and Partners law firm, also known as “Dentons HPRP”, in February 2022.

Meanwhile, in his Keynote Speech, Coordinating Minister for Economic Affairs, Airlangga Hartarto said that the government is maintaining  a balance in handling the pandemic and economic recovery. Indonesia's economic growth in 2021 was in line with the government's projection, which was 3.69 percent on an annual basis. The government is optimistic that growth in 2022 will be higher.

To support the investment climate, the Governmeingnt has been accelerat infrastructure development and facilitating business licensing by implementing online single submission (OSS) – a digital business licensing system. The government continues to improve OSS and strengthen its corresponding human resources, at both ministerial and regional government levels. The government is also focused on complying with the provisions set out by the Constitutional Court surrounding the Job Creation Act.

Regarding the importance of regulatory support for national strategic projects, Telisa Falianty, an economist at the University of Indonesia, said that there are five challenges, namely: access to markets, sectoral regulations, infrastructure, export conditions and import duties, and the availability of foreign workers.

"Meanwhile, in general, there are three types of prevailing problems. The problems in 190 investment cases, based on BKPM data, consist of 34.9 percent land acquisition problems, 32.6 percent licensing problems, 17.30 percent taxation/policy regulatory issues, while the remaining 15.2 percent is various other problems," she explained.

Responding to the identified obstacles, Riyatno, BKPM’s Deputy of Investment Cooperation, said that the government had formed an Investment Acceleration Task Force based on Presidential Decree No. 11/2021. The government also helped facilitate the completion of problematic projects in accordance with applicable laws and regulations.

The task of the Investment Acceleration Task Force is to propose projects or sectors/commodities that have the characteristics of rapidly generating/adding foreign exchange, creating employment, and developing regional/local economies, as well as accelerating the implementation of cooperation between large scale businesses and micro, small and medium enterprises.

At the same event, Giovanni Mofsol Muhammad, Partner of Dentons HPRP, added that from 2019 to 2021, especially since the start of the pandemic, the Government had been vigorously issuing regulations, including those which accelerate the realization of national strategic projects.

Regulations that have been driving national strategic projects since the pandemic began include Presidential Decree No. 109/2020 regarding the Acceleration of Implementation of National Strategic Projects, which exempts land and building rights acquisition fees for strategic projects, as well as electronic completion of permits and non-permits. There is also the Finance Minister’s Regulation Number 30/2021 regarding Procedures for Providing Central Government Guarantees for the Acceleration of Implementation of National Strategic Projects, which provides guarantees for political risks.

In addition, there is Government Regulation (PP) No. 19/2021 on the Implementation of Land Procurement for Development in the Public’s Interest. This PP provides considerable ease for small-scale land acquisition and an electronic land acquisition system. Then there is PP No. 42/2021 on the Ease of National Strategic Projects. This Regulation allows the provision of Government Guarantees, as well as accelerating the procurement of goods and services.

Shinta Kamdani, 3rd Deputy Chair for Maritime, Investment and International Relations Affairs of the Indonesian Chamber of Commerce and Industry (KADIN), touched upon the four key factors in the success of public-private partnerships (PPP) working on national strategic projects, namely political will and strong legal basis, transparency and a solid legal framework, readiness of PPP projects and the effectiveness of government oversight mechanisms, and an clear and open communication strategy.

Regarding the Job Creation Act, she believes it will be able to drive the economy because the Omnibus Law updates many previous regulations at once, to make them simpler and provides legal certainty to support investment.

“However, it is necessary to take into account the challenges and obstacles in the transition period. The implementation of this law also faces some obstacles, including the longer RBA transition time in areas that are not yet in sync because there are no relevant regulations in place, delaying the adoption of the Job Creation Law in local regulations creating a lack of synchronicity, the imbalance of digital OSS services in the regions and delays in the integration of Ministerial/Institutional services with the local governments on OSS," she explained.

Andry Setiawan, Managing Director of the Indonesia Investment Authority (INA), explained that the strategic target of the INA is to attract foreign and local investment funds to maintain sustainable development, bring in foreign expertise to develop economic productivity and innovation, accelerate and catalyze the growth of national priority sectors, generate value for money and socio-economic benefits for Indonesia along with financial benefits, obtaining optimal risk-adjusted returns and taking investment diversification steps to reduce risk.

Erwin Kurnia Winenda, Partner of Dentons HPRP, discussed investment from the capital market perspective. In 2021, the Indonesian capital market had performed quite well in the ASEAN region, being the second-largest in terms of IPOs. This achievement, according to him, cannot be separated from the regulatory rapid response, especially the OJK, in facilitating the constraints on market participants during the COVID-19 pandemic.

Dentons HPRP, also known as Hanafiah Ponggawa & Partners, has been active in Indonesian corporate law since 1990 and is now positioned as one of the 5 largest law firms in Indonesia.

Press release in Bahasa Indonesia can be downloaded here.

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