Jakarta – Indonesian President Joko Widodo on Wednesday ordered his ministers to increase efforts to cut regulations that hurt foreign direct investment, aiming to shield Southeast Asia's largest economy from a global economic slowdown.
Indonesia must anticipate a global slowdown and "a growing possibility of global recession" amid the U.S.-China trade war, the president said.
"I ask all economic related ministries to make an inventory of regulations that hinder or slow investment and let's meet in a week to talk about how to streamline them," he told a meeting with some ministers in his cabinet.
Widodo, who won an election in April for a second term, has promised more investment opportunities to create jobs and growth, but has also repeatedly expressed frustration at the country's tortuous bureaucracy.
The president said a World Bank report presented to his administration showed that out of 33 companies which relocated out of China amid the trade war, 23 had chosen Vietnam and the others had picked Malaysia, Thailand and Cambodia.
"Nobody came to Indonesia. Underline this. We have a problem," he said, describing further that it takes 2 months to process a new investment in Vietnam, as opposed to years in Indonesia.
The president questioned the progress of state energy firm Pertamina's talks with Saudi Aramco over a joint investment for an oil refinery, giving this as an example of stalled foreign investment decision.
Pertamina in June extended its negotiations with Aramco for the Cilacap refinery by another three months. The negotiations have been extended several times since the two first agreed to form a joint venture for this project in 2016.
Indonesia is targeting economic growth of 5.3% this year, though Finance Minister Sri Mulyani Indrawati last month revised down her forecast to 5.08% due to slowing global growth.
While household consumption, which accounts for more than half of gross domestic product (GDP), had held up well so far this year, investment growth had weakened.
Indrawati is preparing a bill overhauling Indonesia's tax system that will include a corporate tax cut to entice investors. The government is also working on a relaxation of rules on restrictions in foreign ownership. (Reporting by Agustinus Beo Da Costa Writing by Gayatri Suroyo; Editing by Kim Coghill)