Distinguished policy makers, prominent academics, think tank experts, and practitioners from the Organisation for Economic Cooperation and Development (OECD), the ASEAN +3 Macroeconomic Research Office (AMRO), the Asian Development Bank, the Asian Development Bank Institute (ADB/ADBI) and the Economic Research Institute for ASEAN and East Asia (ERIA) convened a two day event in Jakarta to discuss issues at the fore of recent economic development in Asia. The 7th OECD-AMRO-ADB/ADBI-ERIA Asian Regional Roundtable on Macroeconomic and Structural Policies, a T20 Japan Associated Event, took place from 18-19 June 2019 at ERIA’s offices. Dr Amalia Adininggar Widyasanti, Senior Advisor to the Minister of National Development Planning for Economic Synergy and Financing, looked at what the region should do to respond to an unending trade war, noting that the ‘trade war’ is actually multiple trade wars.

1. How Should the Region Respond to an Unending
Trade War?
Amalia Adininggar Widyasanti, PhD
Senior Advisor to the Minister of National Development Planning for Economic Synergy and Financing

2. Multiple Trade Wars are happening…
First round of trade war
initiated by increase of
import tariff for certain
products from any
country….. 26 January 2018
Increase in import tariff
of washing machines
(20%) and solar panels
(30%)
Initial Trump Policies to
protect its market
8 Maret 2018
Increase in import tariff
of Steels (25%) and
Aluminum (10%)
.
.
.
.
These were followed by retaliation
policies from other countries
6 July 2018: Trump
imposed 25% tariff for
imported products from
China, as many as 818
product lines, with a
valued of USD 34 billion
Products affected:
aerospace, information
and communications
technology, robotics,
industrial machinery, new
materials, and
automobiles
Second round of trade war
was implemented through
increasing of import tariff
for Chinese products

3. Multiple Trade Wars are happening…
• US imposed 25% tariff to imports from China with a value of US$200 billion, started
from 10 May 2019.
•Products affected: internet modem, router, data transmission tools, printer circuit
board, furniture, lightening, automotive spare parts, vacuum cleaner, as well as other
building materials (5700 products)
•China announced tariff increase as much as 5%-25% for made in USA products since 1 Juni
2019.
•Products affected, for example: sorghum, soybean, meat, aeroplane, and cars.
Third round of trade war was implemented through
increasing of import tariff for Chinese products

4. 4
Multiple Trade Wars are happening…….
In recent weeks, the tension between US and China is
moving up into the technology …..
US put Huawei into a black list, by prohibiting US companies to
do business with Huawei since June 2019.
China is considering to limit its exports of rare earth to US,
which is used as input materials for producing iPhone and
electric cars
Trump declared national
emergency in technology
Fourth round of Trade Wars

5. Mexico
5
Retaliation is happening too….
6 July 2018, Mexico imposed tariff of 25% on
pork, in which its tariff in June was 20%.
European Union
In 22 June 2018, EU imposed tariff of 25% on 180
imported products from US (a value of $3.4
billion), such as: motor vehicles, jeans, ships,
whiskey, and agricultural products
China Russia
7 July 2018, China imposed tariff of 25% on 545
jenis imported products from US, such as: cars,
soybean, and lobster ($34 billion).
In 6 July 2018, Russia imposed tariff of 25%-
40% to imported products from US, such as:
construction tools and energy related
products.
Canada
In 7 July 2018, Canada imposed tariff of 10% for
imported products from US, with a value of $ 12.5
billion. Products affected: chocolate, chilli sauce, yogurt,
meat, coffee, orange juice, and maple syrup.

6. The Trend of Protectionism is rising
6
Source: Global Trade Alert
1325
1232 1217
1458
1520
1408 1358
1214
1443
1634
388
0
200
400
600
800
1000
1200
1400
1600
1800
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total Number of New Protective Interventions in Each Year
SECTORS MOSTLY AFFECTED

7. The Trend of Protectionism is rising
7
Countries Contributing to Harmful Interventions Countries Affected by Harmful Interventions

8. 8
The Impact of New Trade Agenda
Disclaimer: Views and opinions expressed in this paper are the author’s own and not reflected
or represented the institution policy and decision.

9. Full Paper can be downloaded at:
9
https://www.bi.go.id/en/publikasi/jurnal-
ekonomi/Pages/BEMP-Volume-20-Number-2,-October-
2017.aspx
https://www.gtap.agecon.p
urdue.edu/access_member
/resources/res_display.asp?
recordID=5435

10. Economic Growth vs Trade Growth
-30,0
-20,0
-10,0
0,0
10,0
20,0
30,0
-2,0
0,0
2,0
4,0
6,0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Figure 1. Dynamics of Global Economic Growth
and Global Trade Growth
GDP Growth
the fall of
commodity
prices
Asian
economic
crisis
Source: Oxford Economics and Trademap (authors’ modification)
Historically, there is a
close link between
Economic Growth and
Trade Growth
10

11. The New Trade Pattern ……
Ratio of world merchandise trade volume growth to world
real GDP growth, 1981-2016
Source: adopted from Word Trade Report 2017, WTO
• There are some changes in global trade
pattern
• The relationship between global growth
and global trade is getting weaker
• It is tended that policymakers attempt to
address higher restrictions on imports. In
this situation, trade cannot help boost
growth and may even constitute a drag on
the recovery.
11

12. The Global Trade Agenda….
Source: Trademap (modified by author)
• Trump’s presidency and his trade agenda has added to higher uncertainties to the global trade.
• He pledged to impose tariff on Chinese imports as much as 45% and on goods imported from Mexico as much as 35%
• In early April 2017, Trump announced the 16 countries that were put in his trade hit list.
[CELLRANG
E], 21,4%[CELLRANGE], 6,0%
[CELLRANGE], 5,2%
[CELLRAN
GE], 13,2%
[CELLRANGE], 2,0%
[CELLRANGE], 1,9%
[CELLRANGE], 3,2%
[CELLRANGE], 2,1%
[CELLRANGE], 1,7%
[CELLRANGE], 12,6%
[CELLRANGE], 0,9%
-10
-5
0
5
10
15
20
25
Share to US Imports and Average Growth of US
Imports from Each Country
-365,9 -72,0
-67,2
-65,9
-36,1
-33,6
-29,8
-29,7
-26,0
-25,5
-19,9
-17,4
-15,4
-14,7
-14,3
-14,1
-400,0 -350,0 -300,0 -250,0 -200,0 -150,0 -100,0 -50,0 0,0
China
Japan
Germany
Mexico
Ireland
Viet Nam
Italy
Korea
India
Malaysia
Thailand
Canada
France
Taipei
Switzerland
Indonesia
US Trade Deficits with 16 Main Import Sources
(USD Billion)
12

13. Research Objective
This paper studies the possible impact of new trade agenda into the Indonesian and Japanese
economy that may occur through trade channels; and provides some policy recommendation to
mitigate such global risk for Indonesian and Japanese economy.
(i) Trump Trade Agenda when implementing 45 and 35
percent tariff to China and Mexico;
(ii) Trade Hit List when imposing tariff to the 16 countries in
the trade hit list. Impacts of both scenarios are examined
in short run and long run.
Two scenarios of new trade agenda:
13

14. Results 1:
Trump Trade Agenda
(45 percent import tariff for China and 35 percent import tariff for Mexico)
Short Run Long Run
Change in GDP (%)
1 Indonesia 0.0 0.3
2 EU_25 0.0 0.1
3 Japan 0.0 0.1
4 USA -0.4 -0.7
5 China -0.5 -2.7
6 Mexico -0.8 -12.1
7 RestofASEAN 0.1 0.7
8 RestofASIA 0.0 0.2
9 RestofWorld 0.0 0.3
TOTAL WORLD 0.0 -0.2
Change in Welfare (EV)
Total Welfare (World) -54000.3 -133807.1
SHORT RUN:
• The Trade Agenda does not significantly
effect the global economy nor Indonesian
and Japanese economy in the short run.
• Countries that will be worse-off in the
short run from the trade agenda is USA,
China and Mexico
LONG RUN:
The Trade agenda will create a worse-off to the
global economy, as the world GDP will be
declining and the total welfare loss of the global
economy will be higher.
14

15. 18,4%
81,0%
11,2%
20,2%
China Mexico Indonesia Japan
Share of Country’s Exports to
USA
Country Market Concentration Index
(2015)
China 0.07
Mexico 0.55
Indonesia 0.06
Japan 0.09
Results 1:
Trump Trade Agenda
(45 percent import tariff for China and 35 percent import tariff for Mexico)
Mexico relies much on the US market for its exports. Around 81
percent of its exports are directed to US. The high dependency
of Mexico on the US market has made it very vulnerable to any
shock from the US economy
15

16. Results 1:
Trump Trade Agenda
(45 percent import tariff for China and 35 percent import tariff for Mexico)
Country Short Run Long Run
Indonesia 298.2 49.0
Japan 3676.3 438.0
USA -2605.5 2626.8
China -16538.4 -5435.5
Mexico -4286.5 586.8
Countries
Capital Stocks Terms of Trade
Short Run Long Run Short Run Long Run
1 Indonesia 0 0.6 0.4 0.3
3 Japan 0 0.3 0.7 0.8
4 USA 0 -1.1 1.8 1.7
5 China 0 -4.8 -3.3 -3.1
6 Mexico 0 -20.3 -13.7 -12.7
• Eventhough, US trade balance is positive in the long
run (but not in the short run), but Trump’s trade
agenda will definitely hurt the economy of China,
Mexico, and USA in the long-run
• Again, Mexico will suffer most from the trade
agenda in the long run
Change in Trade Balance of Some Countries
in Short Run and Long Run
Percentage Change of Capital Stock in Each Country in the Long Run
For Indonesia and Japan, the market opportunities created
from trade diversion and trade creation effects can generate a
capital accumulation in the long run, and provide a positive
growth of the long run.
16

17. Result 2:
Trade Hit List
(15 percent import tariff for countries in the trade hit list)
• The trade hit list agenda will not give any significant effect
to the global GDP in the short run, including Indonesia and
Japan
• However, the trade hit list agenda will disadvantage the
global economy and all countries in the trade hit list for the
long run.
Country Short Run Long Run
GDP
Invest
ment GDP
Capital
Stock
1 Indonesia 0.0 -0.5 -0.6 -1.2
2 Germany 0.0 -0.2 -0.5 -1.1
3 Japan 0.0 -0.4 -0.4 -0.9
4 USA -0.2 -0.5 -0.7 -2.0
5 China -0.1 -0.7 -0.9 -1.8
6 Mexico -0.3 -0.4 -5.5 -9.5
7 Ireland -0.3 -0.6 -2.4 -3.8
18 RestofWorld 0.0 -0.5 0.1 0.2
Total World 0.0 -0.5 -0.5 -1.2
When Indonesia and Japan get trade restriction from the US,
its export to US will decline. This will be transmitted to the
Indonesian and Japan economy through trade channel,
affecting private demand to go down. When private demand
goes down, it will affect imports to decline and the industrial
outputs will also be affected.
17

18. Impact of Trade War
18
WTO Study suggests that
Trade Wars will cause :
Worst scenario, in 2020:
* Decrease from the baseline projection
World
GDP 2%* 17%*Global
Trade
This is similar to the finansial crisis condition in 2009:
World
GDP 2% 12%Global
Trade
1. Unuseful international tariff aggreement
2. Every country will apply unilateral tariff
Sumber : https://www.wto.org/english/news_e/pres19_e/pr837_e.pdf

19. 19
Impact of Trade War
Increasing of global uncertainties
U.S.-China tariffs, that have been both
implemented and proposed, could cut
global economic output by 0.5% in 2020
Taxing all trade between the world’s two
largest economies would cause some $455
billion in gross domestic product to evaporate
International Monetary Fund Managing
Director Christine Lagarde:

20. 20
Nouriel Roubini, is a professor at NYU’s Stern School of Business and was senior economist for
international affairs in the Clinton White House’s Council of Economic Advisers. He has worked for the
IMF, the US Federal Reserve and the World Bank.

21. Trade Channels to Growth
Trade
Channel 1:
Capital accummulation
Channel 2:
Innovation Incentives
(market size, competition, and knowledge
spillovers)
Channel 3:
Institutional Framework
Growth
Source: WTO (modified by Author)
21

22. 22
Trade of Electronic Goods is exposed to a deep Global Supply Chain:
Trum untuk produk elektronik akan mengganggu ekspor elektronik global
Vietnam China
USA
16,3%
13,2%
USD 13,0 M
USD 10,5 M
16,8%
USD 93,2 M
Trade Pattern of Electronic Goods
(HS 85), 2016
Indonesia Singapore
19,1%
USD 1,6 M
15,1%
USD 1,2 M
16,5%
USD 18,9 M 6,3%
USD 7,3 M
Thailand
17,4 %
USD 5,2 M
9,7 %
USD 2,9 M
Malaysia
17,8%
USD 10,4 M
15,0%
USD 8,7 M
15,9%
USD 9,3 M
China is the hub of electronics trade
in the global market
Sumber: TradeMap, diolah

23. 23
What is in reality?
Mexico dan Vietnam are gaining …
Mexico and Vietnam is now
preferred by the investors
Trade diversion are from China
to Mexico

24. 24
Trade Diversion to Vietnam…
….due to its competitive advantages …. Vietnamese products can substitute Chinese products

25. What is important?
The new trade agenda – represented by Trade Trump Agenda and Trade Hit List Agenda -- will create
disadvantages to global economy in general, as well as to Indonesian and Japanese economy. The new trade agenda will be
transmitted to other countries economy through trade channels.
25
Indonesia:
1. Indonesia should focus on attracting more investment to induce capital accumulation in the long
term, as the simulation results show that capital accumulation can support the long term growth and
mitigate the global risks.
2. Furthermore, increasing total factor productivity can be another focus of Indonesia, such as:
intensifying infrastructure development, enhancing regulatory efficiencies in particular for businesses,
as well as focusing on re-industrialization.

26. Policy Recommendation
26
Regional:
1. Regional cooperation is the key to reduce the risks of Trade War to the regional economy.
ASEAN and RCEP will be a good vehicle to enhance cooperation for minimizing the global risks.
2. Policy coherence in regional economy is a must. A country cannot be asked to liberalize the
markets, while the other countries are having inward-looking policies.
3. Modified regional value chains that is inline with the technology advancement. The trend of
on-shoring has limited the development of regional value chains.

27. IMPORTANT NOTE
Long-run anticipative policies is important to
reduce the risks from the VUCA world
It’s better to prepare than to cure it
27

28. 28
Indonesia continuously open up its
investment regime

29. Indonesia’s becoming more competitive
29
2018 2019
32
44
2017 2018
45/140
47/135 • Indonesia is ranked 45th
among 140 countries, up 2
places from 2017
• Its excels in macroeconomic
stability, market size and
business dynamics indicator
among East Asia and Pacific
region
• Indonesia is ranked 32nd
among 63 countries, up 11
places from 2018
• This accomplishment notably
due to improvements in:
• Government efficiency
• Infrastructure
• Business conditions
The Global Competitiveness Index (WEF) IMD World Competitiveness Ranking (IMD)

30. Indonesia Regulatory on FDI Has Become Less Restrictive
30
FDI restrictiveness is an index gauging the restrictiveness of a country’s foreign direct
investment (FDI) rules by looking at four main types of restrictions: foreign equity
restrictions; discriminatory screening or approval mechanisms; restrictions on key
foreign personnel and operational restrictions.
FDI Regulatory Index 2018
Sectors Indonesia OECD Average
Media 0,798 0,154
Business Services 0,579 0,063
Primary Sector 0,457 0,095
Transportation 0,426 0,210
Distribution (Trade) 0,365 0,018
Telecommunications 0,260 0,083
Financial Services 0,167 0,032
Electricity 0,107 0,116
Manufacturing 0,065 0,018
Overall 0,313 0,065
0,331
0,371
0,417
0,445 0,459
Indonesia
Vietnam
Phillipines
Malaysia
China (Ppl Rep.of)
2006
0,321
0,417 0,422
0,442 0,447
Indonesia
Phillipines
China (Ppl Rep.of)
Myanmar
Saudi Arabia
2013
0,252 0,257
0,313
0,372 0,374
Malaysia
Rusia
Indonesia
Saudi Arabia
Phillipines
2018
FDI Regulatory Restrictiveness Index (FDI Index)
Source : OECD
5 5 3
0 = closed 1 = open
Indonesia’s rules on foreign direct investment become
less restrictive compared to the past 5 years and its
rank on FDI Restrictiveness index climb up from 5 to 3
Almost all the sectors in Indonesia are more open to FDI
compared to OECD’s countries average with Media
being the most open one

31. Indonesia’s economy still believed to remain robust by international community
amid the weakening global economy tension, as reflected from its sovereign rating
31
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
S&P Moody's Fitch
BB-/Ba3
BB/Ba2
BB+/Ba1
BBB-/Baa3
BBB/Baa2
Indonesia Foreign Currency Long Term Debt Rating
Investment
grade
rating
BBB
BBB
Moody’s (13 April 2018)
An increasingly credible and effective policy framework conducive
to macroeconomic stability together with a build-up of financial
buffers, prudent fiscal and monetary policy
Standard and Poor’s (31 May 2019)
S&P had raised Indonesia’s sovereign credit rating to ‘BBB’ citing the
country’s strong economic growth prospects and supportive policy
dynamics
BBB
Japan Credit Rating Agency (26 April 2019)
JCRA revised its outlook and highlighted factors of the changes from
the government of Indonesia, namely:
1. formulated and promoted large scale infrastructure
development plan to eliminate infrastructure shortage
2. Succeeded in expanding infrastructure and human capital
expenditures,
3. the possibility of an enhanced economic growth through
continued reform initiatives
BBB
Moody’s (14 March 2019)
Fitch Ratings released Indonesia's debt rating remained in BBB
position with a stable outlook

32. Indonesia are Viewed as a Promising
Overseas Business Prospect
32
Source : JBIC
Indonesia’s Top Reasons as a Promising Countries :
1. Future growth of potential local market
2. Current size of local market
3. Inexpensive source of labor
4. Supply base for assemblers
5. Concentration of Industry
China
India
Thailand
Indonesia
1
2
3
4
5
Vietnam
Promising
Countries/Regions over
the Medium Terms
Survey Report on Overseas Business Operations 2018 published by Japan
Bank for International Cooperation (JBIC), ranked Indonesia as the 5th most
promising country over the medium term
The survey conducted in order to research and analyze the current status
and future prospects for the overseas business development of the
Japanese manufacturing industry

33. 33
The government provide incentives
for business to promote investment
opportunities

34. Indonesia Continues to Relax the Negative Investment List
34
Relaxation on Foreign
Investment’s Share
(Become 100% since 2016)
2014’s DNI
• Cold Storage (33%)
• Sport Center (49%)
• Film production Lab (49%)
• Crumb Rubber (49%)
• Restaurant (51%)
• Medicinal raw material (85%)
• Toll Road Business (95%)
• Establishment of
Telecommunication Equipment
Testing Institutions (95%)
Removal of Recommendation
• Hotels (Non-Stars, One-Star, Two-
Stars)
• Motel; Recreation,
• Arts and Entertainment Business;
• Billiards,
• Bowling and Golf Courses.
Opening 20 Business Fields
for Foreigners
• Health support services (67 %)
• Transportation of people by land
(49%);
• The film industry including film
circulation (100%))
• Installation of high/extra high
power utilization (49%))

35. Tax Holiday
• Reduction of corporate income tax by
100%
• Minimum investment: IDR 100 Billion, but
only get 50% reduction
• Up to 20 tax years
• 18 pioneer industries
• Can be harmonized with the
implementation of Online Single
Submission (OSS)
Indonesia Provides Various Incentives for Investment
35
Fiscal Incentives
As of 2016, 324 regulations have been
revoked while 75 have been revised
Reducing Regulatory and
Licensing Burden
Establishment of SEZs throughout
Indonesia to reduce the logistics cost
and facilitate trade
Improvement in Infrastructure
(Electricity, Transportation, Trade, and Other Logistics)
Indonesia provides a one-stop
licensing service through Pusat
Pelayanan Terpadu Satu Pintu
Firms investing IDR 100 billion can
obtain a business permit/license
within 3 hours
Online Single Submission (OSS)
business licensing system further
improves the electronic system of
registration and licensing
The government has expedited land
acquisition and certification
Improvement in access to electricity
in the country, especially for
industries that rely on heavy
machinery and steady supply of
electricity
The PLB has facilitated trade while
generating much needed revenue
Tax Allowance
• A net income reduction of 30%
• Accelerated depreciation and
amortization
• imposition of income tax on dividends to
foreign taxpayers by 10%
• Compensation for losses that are longer
than 5 years but not more than 10 years

36. Indonesia’s Ranking in the World Bank’s Ease of Doing
Business Index
36
135
123 122
115
126 129 128
120 120
106
91
72 73
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Notes: Lower values indicate a higher ranking. Yearly rankings may not be comparable due to changes in the survey's methodology, except for the period 2015–2018 when
the rankings used the same methodology.
Source: World Bank (2019).
Given these incentives, Indonesia has also moved up in the
World Bank’s ease of doing business ranking

37. 37
THANK YOU

38. 38
Appendixes

39. Indonesia Provides Many Incentives for Investment
39
Fiscal Incentives
The process of granting tax holiday facilities can be harmonized with the implementation of Online Single Submission (OSS).
Tax Holiday

40. 5 – 10 years
Indonesia Provides Many Incentives for Investment
40
Fiscal Incentives
Tax Holiday
PMK 130/2011
Reduction of corporate
income tax by 100%
PMK 159/2015
Reduction of corporate income tax
by 10%-100%
PMK 35/2018
Reduction of corporate income tax by 100%
Regulation
Facility
Time Period
5- 15 tax years, or up to 20 tax
years with the discretion of
minister of finance
Investment value:
• IDR 500 billion up to IDR 1 Trillion ( 5 tax years)
• IDR 1 Trillion up to IDR 5 Trillion (7 tax years)
• IDR 5 Trillion up to IDR 15 Trillion (10 tax years)
• IDR 15 Trillion up to IDR 30 Trillion ( 15 tax years)
• ≥ IDR 30 Trillion (20 tax years)
Additional time
period
Additional reduction in
corporate income tax by
50% for the next 2 years
Additional reduction in corporate income tax by
50% for the next 2 years
5 industries
IDR 1 Trillion IDR 1 Trillion (except
communication industry, IDR 500
Billion)
IDR 500 BillionMinimum
Investment
Pioneer Industries
Coverage
8 industries 17 industries
PMK 150/2018 (NEW)
Reduction of corporate income tax by 100%
Investment value:
• IDR 100 billion up to IDR 500 billion (5 tax years,
50% reduction)
• IDR 500 billion up to IDR 1 Trillion ( 5 tax years)
• IDR 1 Trillion up to IDR 5 Trillion (7 tax years)
• IDR 5 Trillion up to IDR 15 Trillion (10 tax years)
• IDR 15 Trillion up to IDR 30 Trillion ( 15 tax years)
• ≥ IDR 30 Trillion (20 tax years)
Additional reduction in corporate income tax by
50% for the next 2 years
IDR 500 Billion
18 industries -> adding more industries
Facility
Time Period
Additional time
period
• Expansion of the business sector that can be given tax holiday facilities become 18 pioneer industries or 169 KBLI (ISIC)
• Minimum investment to get tax holiday: IDR 500 billion

41. Indonesia Provides Many Incentives for Investment
41
Fiscal Incentives
Tax Allowance

42. Indonesia Provides Many Incentives for Investment
42
Reducing Regulatory and Licensing Burden
First reform package—aimed at reducing regulatory and licensing burden and at
improving Indonesia’s competitiveness—reflects the priorities of the new
administration when it took office. Indeed, President Jokowi ordered a 50% reduction
in regulations by 2019, which directly impacted about 20 ministries and
implementing agencies.
The simplification of regulations focused on a few key principles
• Make it easier to register and obtain a license to operate a business improve
public services to help businesses
• Provide legal certainty
• Accelerate dispute resolution processes
• Introduce new regulations to reflect the changing realities of operating a business
in Indonesia
As of 2016, 324 regulations have been revoked
while 75 have been revised
• The PTSP Pusat, inaugurated at BKPM on 26 January 2015, endeavors to make
business registration and licensing more efficient and accessible to businesses.
• The service center covers all licensing and non-licensing services of the
government and regional governments, and accommodates integration between
institutions and regions, thereby making the licensing process easier and
eliminating the problem of fragmented standards for each region.
Indonesia provides a one-stop licensing service through
Pusat Pelayanan Terpadu Satu Pintu
• As part of the introduction of PTSP Pusat, investors with a minimum investment of
IDR 100 billion or a workforce of more than 1,000 people can obtain their initial
permits within 3 hours and start their business activities shortly afterward.
• The 3-hour service is given to companies that have already obtained a license and
want to expand capacity.
• BKPM also serves companies that supply raw materials to core companies that get
the 3-hour service.
Firms investing IDR 100 billion can obtain a business permit/license
within 3 hours
• Facilitates business licensing through an integrated electronic system that
synchronizes various licensing permits in the country.
• Expected to further simplify the process of obtaining business permits as several
key permits (location, environmental, and building permits) can be obtained an
hour after submitting all required data in the OSS.
Online Single Submission (OSS) business licensing system further
improves the electronic system of registration and licensing
The government has embarked on innovations such as adding working days and time
to facilitate the process of land registration and certification, opening more outlets to
provide registration and certification services, and introducing electronic registration
systems.
The government has expedited land acquisition and certification

43. Indonesia Provides Many Incentives for Investment
43
Improving Infrastructure—Electricity, Transport, Trade, and Other Logistics
First reform package—aimed at reducing regulatory and licensing burden and at
improving Indonesia’s competitiveness—reflects the priorities of the new
administration when it took office. Indeed, President Jokowi ordered a 50% reduction
in regulations by 2019, which directly impacted about 20 ministries and
implementing agencies.
The simplification of regulations focused on a few key principles
• Make it easier to register and obtain a license to operate a business improve
public services to help businesses
• Provide legal certainty
• Accelerate dispute resolution processes
• Introduce new regulations to reflect the changing realities of operating a business
in Indonesia
Establishment of SEZs throughout Indonesia to reduce the logistics cost
and facilitate trade
• The installed electricity capacity in Indonesia reached 53 gigawatts in 2015, with sold energy reaching 220 terawatt-hours. The current electrification ratio is 95.4% and is
expected to increase to 99% by 2019.
• Electricity consumed between 23:00 and 08:00 is supplied at a discount of up to 30%. The government also provides deferment and discounts for firms that face cash flow
difficulties to pay for electricity consumption.
Improvement in access to electricity in the country, especially for industries that rely on heavy machinery and steady supply of electricity
• In April 2017, the value of goods stored in the PLB warehouse was recorded at IDR
1.16 trillion from 20 international suppliers, 34 international distributors, and 97
local distribution companies.
• Contributed to state revenues with an import duty amounting to IDR 10.28 billion,
Article 22 import tax amounting to IDR 27.13 billion, and import VAT of IDR 120.09
billion.
• The average lead time to import of 1.8 days was much faster than normal for
imports in general.
• Decreasing dwell time (idle time when goods stay in the port) by transferring
several activities in the preclearance and custom clearance stages from the port to
PLB.
The PLB has facilitated trade while generating much needed revenue