Taiwan Trade Office: Indonesia's Complex Permitting Process Hinders Investment

TEMPO.CO, Jakarta - The Taipei Economic and Trade Office (TETO), Taiwan's de facto embassy, views Indonesia's complex regulatory environment as a barrier to investment. According to William Hsu, Director of Press and Information at TETO, Indonesia remains an attractive investment destination for Taiwan despite these challenges.

"Indonesia sometimes takes too long to issue permits; there are too many regulations," Hsu stated during an interview at the Tempo office on Thursday, May 22, 2025.

He noted that the entire investment process in Indonesia, from capital inflow to factory establishment, can span up to two years. In contrast, neighboring countries like Vietnam and Thailand typically complete this process within three to six months.

Hsu argues that the Indonesian government needs to expedite its investment rules. One way to do this, he suggests, is by creating a one-stop licensing system for foreign investors. This would make the licensing process much more efficient.

Another pressing issue, Hsu explained, is the absence of a direct trade agreement or Free Trade Agreement (FTA) between Indonesia and Taiwan. This limitation forces Taiwanese capital to be routed through third-party countries such as Singapore and Hong Kong, restricting direct investment.

Because of this, he added, the direct flow of money from Taiwan to Indonesia is not very large. Data from the Central Statistics Agency shows that Taiwan's investment in 2024 was US$344.8 million. This amount is much lower when compared to, for example, China, which invested US$8,106 million, or the United States, which invested US$3,696 million.

However, based on indirect investment value, Hsu asserts that Taiwan ranks among the top five. He cited numerous manufacturing plants across Central Java, including sports shoe, garment, textile, and machinery factories.

In a separate interview with Tempo, Minister of Investment and Industry Rosan Roeslani acknowledged the lengthy investment permitting process in Indonesia, despite the existence of the Online Single Submission (OSS) system. Rosan clarified that while permitting applications are submitted to the Ministry of Investment, the process involves collaboration with 18 other partner ministries. "This process is often time-consuming," Rosan admitted on Thursday, January 30, 2025.

Praga Utama contributed to the writing of this article.

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