Interview: SD Darmono
How can private, local firms help address investment obstacles and boost foreign direct investment (FDI)?
SD DARMONO: Before entering any country, foreign investors must learn about its local regulations, cultures, habits, markets and politics. In Indonesia’s case, they can seek the guidance of the Indonesia Investment Coordinating Board. The whole investment ordeal, however, can take time and may be expensive. Companies must often go through a risky process of trial and error. Foreign investors are therefore encouraged to partner with local, private firms and brokers before entering a market. Many foreign investors come to Indonesia to develop major assets, some of which may cover thousands of hectares. Most of the licences, permits, logistics and costs required to start such investments can be better explained and carried out by private, local partners. This is where we, as companies, come in. We have to be ready to do our job in aiding the investment process. This can translate into higher FDI.
To what extent is the “one-stop shop” concept driving a more business-like approach to bureaucracy?
DARMONO: Many of Indonesia’s top political leaders are businessmen, including President Joko Widodo, Vice-President Jusuf Kalla and Minister of Coordinated Affairs Sofyan Djalil. They know and understand what businesses need and are able to influence and guide bureaucrats to faster and more efficient processes. Such changes may take time, but the sooner they are adopted, the faster bureaucratic procedures will be, deeply benefitting local and foreign businesses. The one-stop shop idea is a result of such business-oriented politicians, and will surely help ease investment procedures.
What are the growth prospects for industrial estates in the eastern regions?
DARMONO: The eastern parts of Indonesia are promising growth areas for industrial estates, although not necessarily for manufacturing or electronics – the market for those sectors is mostly located in Java. Most areas in eastern Indonesia are rich in mineral resources and plantations. Specialised industrial estates should thus find great opportunities in those areas, especially with the right target demand and investment for their projects. As Widodo’s maritime development plan is rolled out, those areas will become easier to reach and thus more attractive to investors.
What impact might President Widodo’s maritime development plans have on industrial growth?
DARMONO: The impact of Widodo’s maritime development project will be tremendous and open many doors. It is an enormous and ambitious plan, so one must start slow and progress in realistic stages. Nevertheless, it is a vital one for a country where nearly twothirds of its territory is ocean. Indonesia is still generally speaking an untapped and promising market, which can mean lots of opportunities for foreign and local investors. The current priority must be inter- and intraisland infrastructure and transport logistics. The maritime development plan is a first step, and is being welcomed and supported by politicians from all parties, most local and foreign business, and world leaders such as China’s Xi Jinping and India’s Narendra Modi. Should the Widodo administration develop the maritime-axis as intended, the repercussions in the local economy and political scene could be substantial.
To what extent is more awareness needed regarding further development of cities?
DARMONO: With nearly 250m people, Indonesia has the world’s fourth-largest population and is expected to grow to almost 300m by 2050. According to the World Bank, the world will need 10,000 new cities by then, and Indonesia alone will need around 500. This will clearly create many business opportunities, but we also need to be aware of this future scenario in order to prepare in terms of regulation, technology and human capital. Indonesia as a whole would do well to have a more defined focus on long-term city development.
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