Suryo Sulisto, Chairman, Indonesian Chamber of Commerce and Industry (KADIN): Interview

 Interview: Suryo Sulisto

What aspects of the labour law should be improved to create a more favourable business environment for investors?

SURYO SULISTO: First and foremost, the government must take a more active role in protecting investors. Laws and regulations regarding protests and strikes need to be enforced. The government must also make sure that the tripartite negotiation system is used as it was intended: to bring all three parties to the table before protests begin. Currently, the government lacks a coherent vision on how to handle labour issues. Labour costs are rising more rapidly in Indonesia than in many other places. We need more flexible hiring and firing practices and an effective benefits scheme that includes unemployment. We also need to hold on to the freedom to outsource by explaining why it is beneficial to employees and not just to employers. There are many misconceptions about the issue of outsourcing that need to be cleared up. Ultimately, unions and workers need to understand that companies will stop operations and lay people off if it becomes more profitable to set up elsewhere.

How do you assess Eastern Indonesia’s potential and what can be done to boost investment there?

SULISTO: Eastern Indonesia has a lot of potential that has yet to be developed. In the fisheries sector, production from Eastern Indonesia accounted for 70% of national output, but the region still lacks the facilities to reach its true potential. In terms of agriculture, the government has planned to develop the Merauke Integrated Food and Energy Estate (MIFEE) in Papua in 2015 on a 200,000-ha area, with plans to have 1 ha of land produce 5 tonnes of rice per harvest. One of the main obstacles preventing further development in Eastern Indonesia is the lack of infrastructure. There are 19 commercial seaports in the region out of a total of 111 seaports throughout Indonesia. We also need to synchronise laws at the national and local level. Investors need assurances that regulations will not change over a short period of time. Lastly, the potential of this region must be promoted. Eastern Indonesia has been off the radar, and many investors are unaware of the vast opportunities there. Australia, especially, stands to benefit due to the proximity.

How can Indonesia, and in particular Indonesian companies, capitalise on the 2013 chairing of the Asia-Pacific Economic Cooperation (APEC)?

SULISTO: Indonesia and domestic firms can capitalise on APEC’s leadership role by focusing the world’s attention on key issues, including: bridging capacity gaps between countries; improving connectivity through infrastructure and ICT; increasing trade between countries; promoting bilateral and sub-regional trade agreements rather than region-wide agreements like the Trans-Pacific Partnership; guaranteeing food security and turning Indonesia into a regional food provider; and assuring sustainable economic growth by shifting to an economy based more on value-added industry.

What initiatives should be undertaken to reduce the gaps in income equality?

SULISTO: According to the World Bank’s data, Indonesia’s Gini coefficient stood at 36.8 in 2009. Although there are no official figures since 2009, analysts predict that Indonesia’s Gini index has gotten worse, perhaps surpassing 40 – the number that indicates serious inequality that can lead to social unrest and political instability. Initiatives that can be implemented to gradually reduce the income gap include: removing obstacles to capacity building; encouraging small and medium-sized businesses to develop; improving human development, especially in health and education; and monitoring regional income inequality to ensure that underdeveloped regions receive special funds to benefit local populations. The government should also improve the capacity of regional governments. Finally, we develop new infrastructure across the country to provide a solid foundation for further improvement.