Resident Prabowo Subianto has just installed a work cabinet called “red and white” after the colors of the national flag. The cabinet, made up of 48 ministers, five government agency heads and 56 deputy ministers, is the largest in Indonesia since the 1998 reforms, and is the largest cabinet in Indonesia since the mid-1960s under President Soekarno’s old order Dwikora II. It is larger than the Cabinet (132 people).
While there are likely benefits to such a scale-up, experts, academics, and even the public question its urgency and efficiency. President Prabowo’s government is now responsible for ensuring that a “bloated cabinet” does not impede investment, particularly foreign direct investment (FDI).
Investments in Indonesia are governed by the Investment Law No. 25/2007 (as amended), the implementation of which is coordinated by the Minister of Investment/Investment Coordination Board (BKPM). BKPM is also responsible for interministerial investment policy coordination and is best known for managing the Online Single Submission (OSS) system for applying for licenses.
Ministries other than the BKPM are responsible for further regulating, controlling and supervising investment and licensing norms, standards, procedures and standards for sectors that fall within the scope of their assigned government tasks. These ministries are actually commonly referred to as “ministers of technology.” For example, the Minister of Public Works is responsible for regulating, managing, and supervising investments and licenses in the construction, public works, water resources, and public roads sectors.
Increasing the size of the cabinet means that more ministries will be represented by members. Power and authority are currently distributed across multiple ministries, for example, when the Department of Law and Human Rights is split into three independent departments: the Ministry of Justice, the Ministry of Human Rights, and the Ministry of Immigration and Corrections. Ministry of Services. Ministries are parliamentary in that they inherit power and authority to legislate on specific matters through hierarchical delegation.
More legislators means more laws and regulations, ultimately leading to “overregulation,” or too many regulations that are poorly coordinated and unenforced. “Jokowi” Widodo’s 2020 report on the existence of 8,451 central government regulations and 15,985 local government regulations states that most of these regulations contradict and overlap with each other and are poorly coordinated, making Singapore This makes investing and doing business in Indonesia relatively difficult compared to other jurisdictions. , Malaysia and Thailand.
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Back in 2020, TMF Group’s Global Business Complexity Index 2020 ranked Indonesia as the most complex jurisdiction for investing and doing business. This is mainly due to overregulation. Therefore, the then-President Jokowi administration initiated regulatory reforms in 2020 through the introduction of an omnibus law on job creation, gradually leading the country in the right direction. This also led to an increase and significant improvement in FDI, with Indonesia dropping to 16th place in the 2024 edition of the report.
