Web: BKPM promoting Omnibus & IA-CEPA for investment.

On the 16th November 2020, the Australia Indonesia Business Council, BKPM, Indonesian Embassy in Australia, and the Indonesia Australia Business Council undertook a webinar; “A dialog with the chairman BKPM; Omnibus Law and Indonesia – Australia comprehensive Economic Partnership agreement (IA-CEPA) Impacts on Investment”.  The chairman of the BKPM spoke in Indonesian, with the webinar translation facilities. The chairman left the webinar after his presentation, with his deputy to continue with discussions etc. The remainder of the webinar was held in English. Most of the speakers did not have slide presentations.  This webinar was very much about promoting investment and trade into Indonesia. Emmanuel Setyawan of the AIBC Victoria acted as moderator. Some time was devoted to the politically correct greetings and niceties.

H.E. Kristiarto Legowo, Indonesian Ambassador in Canberra provided opening remarks. Trade between Indonesia and Australia was worth $296.6 million in the first 3 quarters of 2020, with a significant part of that from the mineral and associated MET’s sectors. The omnibus law is designed to encourage investment in Indonesia, while the IA-CEPA reflects the ongoing improved relations between Indonesia and Australia upon which trade can build upon.

H.E. Bahlil Lahadalia, chairman of BKPM [ principal government investment body] provided a number of slides outlining Indonesia’s international trade patterns, and the path for Australian’s to invest in Indonesia. One slide shows Australian investment in Indonesia from 2015 to September 2020 worth US$2.07 billion, with the largest sector being mining at US$978.43 mill. The omnibus law was briefly outlined with the objective to improve investment in Indonesia through coordinating and centralizing the many diverse regulations. The omnibus law requires the further issuance of many implementing regulations.

Phil Turtle, National President of AIBC, opened the discussion section with some question to the BKPM

·       What low hanging fruit is available for Australian investors into Indonesia? Answer; - The IA-CEPA is designed to provide greater certainty for bilateral investors. The omnibus law has an impact on simplification of licensing, employment laws, outlining shareholder restrictions, changing the negative investment list into a priority investment list, improve BKPM processing of applications etc. No mention of low hanging fruit.

·       The priority list is being considered at present by the BKPM in collaboration with other ministries. The IT and new battery sectors are commonly discussed.

Grorge Iwan Marantika, National President of IABC spoke briefly on the hope that the omnibus law will bring further reform through many sectors.

·       George raised questioned to the BKPM on the future of the digital and service sectors. Answer; - the BKPM is still in discussion on priority sectors. There is a common understanding that the Indonesian language would prevail for legal agreements, and religion would remain a factor in the education sector.

Q&A prompted by viewing audience; -

·       If there is a differences between the IA-CEPA and Omnibus law, how will these difference be resolved? BKPM answer there would be a preference favouring the encouragement of investment.

·       The IA-CEPA is designed to give Australian investors an equal footing to domestic Indonesian investors. Australians should hurry to take advantage, before similar facilities are agreed with other countries.

·       The omnibus law invites Australian investors to collaborate with Indonesian State-Owned companies and institutions, and undertake JV with Indonesian partners.

·       Antidumping regulations are amid ongoing discussions.

·       Can invest as little as $200-300K in Indonesia, but BKPM would prefer to deal with investments of more than US$10 million.

·       The omnibus law sets out 6 main sectors to emphasize.

·       The omnibus law introduces VAT on domestic coal sales, but not on exports. Will imported coal be subject to VAT? – question to be researched by BKPM and separate response by email.

Overview; - This short 1 hr high profile webinar was mainly about setting out “good intentions” to precede any real action, that might come after the omnibus implementing regulations are issued and fully digested.