‘Indonesia is transforming business climate with reforms’

One of the first things Indonesian Ambassador John Aristianto Prasetio did upon starting his post in Korea was streamlining the visa application process at the embassy.

Prasetio also talked to his government to make it easy for Korean banks to open branches in Indonesia.

“As a businessman, I like competition,” he told The Korea Herald. “These are some of the small steps I have taken as a new ambassador, but which would have big impacts down the road.” 

Aided by his efforts, the application process has become quicker, with only a couple of hours needed online to register for a visa, and Korea’s Shinhan Bank has opened branches in Jakarta. Prasetio said it was “all about the branding of Indonesia” as a country on the move, where doing business is easier and the bureaucratic red tape is minimized.

“Taking into account Korea’s ‘ppali-ppali (hurry hurry)’ culture, I wanted to set a new benchmark in branding my country as a business-friendly place to Korean entrepreneurs and travelers,” the envoy said. “Using my private sector background, my focus has been on strengthening networks with Korean partners.”

Finishing off five years of his ambassadorship, Prasetio will return to Indonesia at the end of January. He said he would “take it easy for a while,” before returning to the private sector.

Before Korea, Prasetio was the chairman of CBA Consulting Group and a board member of Bank Permata as well as an advisory panel member of Procter and Gamble Indonesia, Crowe Horwath Indonesia and Mitsui Indonesia.

Marking the 10th anniversary of Strategic Partnership, Indonesian President Joko Widodo, popularly known as “Jokowi,” came to Korea last May. The two governments signed 11 memorandums of understanding covering infrastructure development, maritime cooperation, renewable energy and creative industries.

The strategic partnership is a “sign of commitment” by the two political leaderships to meet annually and explore areas for further trade and investment, according to Prasetio.

“The partnership opens doors for foreign companies to come and invest in the country, particularly in priority sectors identified by the government,” he said.

During Widodo’s visit, a project for developing a 20 kilometer light rail transit system in Jakarta was granted to Korea, to pave the way for the hosting of 2018 Asian Games with Palembang. The Korea Gas Corp. signed an MOU with Indonesian enterprises to construct 363 kilometers of gas pipelines in South Sumatra and Bali, a $600 million project.

In the creative industries, the Korea Creative Content Agency -- a state agency affiliated with the Ministry of Culture, Sports and Tourism and responsible for nurturing national cultural contents -- opened an office in Jakarta last October. 

“Indonesia is one of the top three markets for Hallyu after China and Japan,” the envoy said, adding that Korean television dramas are feverishly in vogue in Indonesia and K-pop concerts are frequently sold out.

Prasetio pointed to the acute shortage of cinema screens in his country, an archipelago of 17,000 islands with a rapidly growing population of 260 million people. Mentioning there were only 1,000 screens in Indonesia, Prasetio lauded CJ CGV’s opening of 100 screens there as “a smart move.”

Although the market share of Korean smartphones and other electronic products is substantial in Indonesia, the automotive industry is largely dominated by Japanese companies, he said, encouraging investment in automobile and steel production.

“President Jokowi came into office in 2014 with a strong commitment to reform,” he said. Widodo put an end to the government subsidy for gasoline to encourage public transportation use, and also to weed out bureaucratic inefficiencies and malfeasance emanating from the smuggling of cheap oil. While the fuel subsidy largely benefited the rising middle classes, the reform was to help lift the bottom rung of society, in a country where more than 20 million people are still in poverty. 

“It was a politically risky decision but he launched it within one month of coming into office,” according to the diplomat. “Jokowi has proven his tremendous leadership, and people have fervently supported him thanks to his humble and clean image. He has this ability to convince the public and thwart populist policies.”

The president also introduced the “tax amnesty” policy, intended to bring back into the country wealthy individuals’ substantial, unreported assets overseas. If the well-heeled brought back their assets within the deadline and reported to the government, they would pay 2 percent tax on the amount, while they would be taxed at 4 percent if they merely reported their hidden assets.

“Jokowi decided not to witch-hunt the past,” the envoy said. “It requires a big heart for a leader to come up with this kind of program. It was a big, big move.”

This year marks the 50th anniversary of the Association of Southeast Asian Nations. Prasetio said Indonesia -- the largest country in ASEAN in terms of population and economy, accounting for 45 percent and 40 percent, respectively -- is deeply committed to the regional bloc’s integration. 

“Indonesia considers the ASEAN Economic Community very important for its own development, but as a developing economy, our focus is still on nurturing our inclusive national growth by way of building infrastructure,” he pointed out, adding Indonesia had sizeable infrastructure deficits relative to Singapore, Malaysia and Thailand.

“Unlike Thailand and Myanmar, which are more concerned with regional connectivity as part of continental ASEAN, Indonesia is preoccupied with raising inter-island connectivity, such as trans-Sumatra and trans-Java linkages.”

Acknowledging great demand in building and renovating airports, Prasetio said Korean companies could reap dividends by connecting the islands through sea toll projects, while low-cost carriers could target smaller destinations as part of the growing bilateral tourism.

The ASEAN, originally launched for each country’s economic development on the basis of regional peace and security, still faces political hurdles, according to the ambassador.

“Economic cooperation has been going well, but political unity is more difficult, with problems in the South China Sea dispute,” he said. “ASEAN member states are divided between the pro-Philippines camp and pro-China camp, putting into test our political unity. The question is how long the situation can last, cooperating economically without political cohesion.”

By Joel Lee (joel@heraldcorp.com)