Jokowi will struggle to boost foreign investment

Subject

Indonesia's efforts to encourage more foreign direct investment.

Significance

President Joko ‘Jokowi’ Widodo, recently re-elected, last week reiterated pre-poll promises to reduce corporate tax, revise labour laws and remove constraints on foreign ownership. Indonesia has a reputation for a stymieing regulatory environment and foreign direct investment (FDI) inflows declined last year.

Impacts

• Attracting investment in the upstream oil and gas industry will be a tough challenge, due to confusion over gross-split contracts.
• Jakarta will try to design regulations that benefit startups in the digital economy.
• The tourism industry will grow, as the government aims to develop ten key sites to become as popular as Bali.