BKPM Chairman: The World Economy Is Declining But We Keep Growing

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  • Franky Sibarani, Head of the Investment Coordinating Board (BKPM). TEMPO/Wisnu Agung Prasetyo

    Franky Sibarani, Head of the Investment Coordinating Board (BKPM). TEMPO/Wisnu Agung Prasetyo

    TEMPO.CO, Jakarta - The year 2015 is still being shadowed by global inertia, which unquestionably is having an impact on the domestic economy. This is why the government is pushing investment as the main engine of economic growth, which is expected to reach seven percent in five years time.

    Franky Sibarani, chairman of the Investment Coordinating Board (BKPM) said that one of his programs is to accelerate the implementation of the One Window Integrated Licensing program. In addition, he is also ensuring that the provincial mid-level wages (UMP) be evaluated every five years.

    With a number of such improvements, Franky is convinced this year's investment will increase by 14 percent compared to last year because investors' confidence in the government is still high. He was recently interviewed by Tempo reporters Jayadi Supriadin, Iwan Kurniawan and Wishnu. Excerpts:

    President Jokowi has set a growth target of seven percent in the next five years. What will be the priority sectors in order to achieve this target?

    Overall, the BKPM regards infrastructure as the main priority. The second is the agriculture sector, followed by maritime and labor-intensive industries. The government is not only looking at growth but also at equitability. That's why in our National Medium-Term Development Plan (RPJMN), we are focussing on the equitability of 13 industrial areas outside of Java. So, we're not only looking at the industries, but also at airports, seaports and special economic zones outside of Java. Specifically in terms of infrastructure, the BPKM will focus on electricity, agriculture and maritime industries. In the manufacturing sector, we are pushing labor-intensive and export-oriented industries, and lastly industries which produce raw materials or import-substitution products.

    Are the investors attracted to the programs offered by the government?

    Most of the interested ones are local investors, but a number of foreign investors are attracted to the maritime and labor-intensive industries, textile, garments and footwear, furniture and foodstuffs, including upstream products like fiber. All this is what should be pushed by the government. They're still resisting, but in the past four years, the problem has been with the UMP. Some investors are to relocate to Central Java and East Java, but it's not that easy. Some are reviewing their plans whether to expand their factories, while others want to move their investment to Vietnam.

    What's the solution to the UMP-related protests that often disrupt the industries? 

    The determination of the UMP actually involves the three related parties: the workers, the businesses and the government. Unfortunately, the deliberations took eight to nine months, which was finally beaten by a demonstration of a workers union that wasn't even there. Often, there would be miscommunication, like the dispute with the workers of company A, but when actually the protesting workers came from companies B, C, D and E.

    So, how will the BKPM attempt to mediate this UMP problem? Recently, even LG was planning to close its factories.

    The BPKM is not a regulator. It basically provides certainty to the investors, particularly who are already over here. In line with the president's instructions, we plan to carry out three things: simplifying the licensing (process), resolving issues at their bottlenecks and improving the investment climate. We begin by prioritizing the One Window Integrated Licensing program, which hopefully will improve the investment climate, gradually.

    What about the plan to establish a UMP to be revised every three to five years?

    That idea emerged in an investor forum connected to labor-intensive industries. We immediately coordinated with the ministries of industry and labor. I agreed on its formulization so that the UMP is not revised every year. The BKPM recommended every five years, but of course, there's a process to all this. (*)

    Read the full interview in this week's edition of Tempo English Magazine