New Salary System to Improve Investment: BKPM

TEMPO.CO, Jakarta - Investment Coordinating Board (BKPM) head Franky Sibarani said the fourth economic policy package would boost investment in the labor-intensive sector, since the salary increase formula in the package would be a tool for investors to calculate labors salary as a production cost component.

Franky revealed that investors in the labor-intensive sector had expressed the concern over the salary increase in Indonesia, as it would hamper them to project the investment cost.

“With the latest policy, [investors] wouldn’t hesitate to invest in Indonesia,” Franky said in Jakarta on Sunday, October 18, 2015.

Franky added that the salary system in the fourth economic policy package would enforce previous economic packages that provide incentives for the labor-intensive sector. In addition, Franky hopes that the latest economic policy package will improve Indonesia’s competitiveness in attracting investors.

Franky revealed that investors had shown a high level of interest in the Indonesian labor-intensive sector. The BKPM recorded that the permit applications in the labor-intensive sector in the period of January-June 2015 had increased by 19.74 percent compared to those in the same period of last year.

In terms of realization, the investment in the labor-intensive sector in the first semester of 2015 was still lower than other sectors prioritized by the BKPM, particularly the tourism sector. Data from the BKPM showed that the investment realization in the labor-intensive sector in the first semester of 2015 stood at Rp28.57 trillion (US$2 billion), decreasing by 20 percent when compared to the same period last year at Rp35.86 trillion (US$2.5 billion).

AMIRULLAH