Earlier in February of 2024, Indonesia have proceeded with its major election which resulted in the victory of H. Prabowo Subianto, the previous Ministry of Defense, as the President and Gibran Rakabuming Raka, the Mayor of Surakarta and the previous President Joko Widodo's first-born son, as the Vice-President. Both candidates have been inaugurated as the official President and Vice President as of the 20th of October 2024.
The Prabowo-Gibran Administration's Vision and Missions
The now elected Presidential candidates H. Prabowo Subianto and Gibran Rakabuming Raka ("Prabowo-Gibran Administration") originally issued an official campaign document issued during their campaign period titled "Vision, Missions, and Programs of H. Prabowo Subianto and Gibran Rakabuming Raka" (herein, referred to as "Vision and Missions"). Under their Vision and Missions, the Prabowo-Gibran Administration has set out the following plans during their term of office:
- Establishment of the State Revenue Agency (Badan Penerimaan Negara) ("SRA") to replace the Directorate of General of Tax ("DGoT") and Directorate General of Customs and Excise ("DGoCE").
- Conduct further Down-streaming and Industrialization Policies, by increasing the number of natural resources subject to these policies.
- Utilize Marine Resources more efficiently through the Blue Economy Program; enhancing port and logistics management as well as enforcing maritime boundaries through a "Good Neighbor" Policy.
- Promoting a Green Economy Policy, oriented around the principles of low carbon production, resource efficiency, and social inclusivity, to contribute to existing efforts of environmental preservation and net zero emissions, as well as the establishment of the Climate Change Control and Carbon Trading Management Agency (Badan Pengelola Pengendali Perubahan Iklim dan Tata Niaga Karbon) ("BP3I-TNK")
- Policies centered around promoting Foreign Investment, with goals to grow Indonesia's GDP by 7-8% during the Term of Office, 1 and to obtain IDR 1,900 - IDR 2,000 trillion from the realization of investments. 2
- Manpower Policies, involving revision of the outsourcing system for Indonesian workers working abroad, and tightening the entry for foreign workers working in Indonesia.
- Continuing the Construction of Indonesia's New Capital (Ibu Kota Nusantara or "IKN")
Increase and Amendments in Ministerial Bodies Post-Presidential Election
The Prabowo-Gibran Administration had previously prepared the Amendment to the Law No. 39 of 2008 on State Ministry ("State Ministry Law") as a Bill for which has been approved and to be implemented as law in the near future ("Bill of Amendment"). The goal of this regulation is to amend the legislative power of the Government to establish new Ministerial-level entities, as well as to split existing ones into new entities.
On the 20th of October 2024, the Prabowo-Gibran Administration has then followed-up on this action by increasing the previous number of Ministerial Bodies established by the previous Jokowi-Ma'ruf Amin Administration of 34 (thirty-four) to 48 (fourty-eight).3 Of the 48 ministries, some have been renamed (e.g. the Ministry of Communications and Informatics has now been renamed to the Ministry of Communications and Digital Affairs) or has been split into 2 (two) or more ministries, with some now having a Coordinating Minister fulfilling the role of bridging the ministries in the previous structure. For convenience in understanding the foregoing, kindly see below our illustration on the following 3 (three) examples:
a. Splitting of the Ministry of Education, Culture, Research, and Technology ("MoECRT")
b. Splitting of the Ministry of Enivronment and Forestry ("MoEF")
c. Splitting of the Ministry of Law and Human Rights ("MoLHR"), with a Coordinating Minister for Law, Human Rights, Immigration, and Corrections
Opportunities and Advantages for Foreign Businesses in Indonesia
The Prabowo-Gibran Administration has demonstrated their commitment to attempting to make the Indonesian Government more efficient, and it can be observed that this directly aligns with their commitments as mentioned above in their Vision and Missions (e.g. industrialization and down-streaming, increasing Indonesia's GDP, Green Economy Policy). These commitments will require foreign investments to be able to proceed effectively, as Indonesia's industries are still visibly immature and require proper guidance through expertise from companies based overseas. Primarily, Indonesia's commitments to Net Zero has resulted in massive imports of Battery Electric Vehicles ("BEVs"), and this will further translate into the realization of other goals contributing to Net Zero goals through focus on the implementation of renewable energy sources nation-wide (as per Presidential Regulation No. 98 of 2021 on the Implementation of Carbon Economic Value for Nationally Determined Contribution). Furthermore, the development of the IKN will be shifted to be heavily reliant on third-party investments, with announcements from the Government that the State Budget allocated to it will be significantly reduced (from IDR 42.5 trillion in 2024 to IDR 143.2 billion in 2025).
Closing Thoughts
With the inauguration of the Prabowo-Gibran Administration, it can be observed that their new term of office will effect major changes in Indonesian policies over the course of the next 4 (four) years. Observably, with the new Bill of Amendment, they are now given new legislative power to enact new ministerial bodies to align with their Vision and Missions. Therein, it is undoubtable that the Prabowo-Gibran Administration will follow through with their Vision and Missions' goals. With the establishment of new governing bodies, there will be leeway for these new governing bodies to establish their own new policies which may provide new avenues and opportunities for foreign-based investment to grow.
Primarily, we can observe that the Prabowo-Gibran Administration will continue focusing on policies centered around "transfer of technology and knowledge" to assist in building the local industry (i.e. down-streaming and industrialization), wherein foreign actors will be required in future to assist by way of investment and building the local workforce. Foreign business actors should take heed to new opportunities where possible to figuratively "jump in" where they are able, as the Indonesian Government may have long term plans to limit foreign manpower in order to ensure that the Indonesian workforce is prioritized in its' growth.
Footnotes
2. Taken from: https://www.cnnindonesia.com/ekonomi/20240828111208-532-1138449/bkpm-incarinvestasi-rp2000-t-di-tahun-pertama-prabowo/.
3. Taken from: https://www.presidenri.go.id/siaran-pers/presiden-prabowo-subianto-umumkan-kabinetmerah-putih-periode-2024-2029/
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