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Here is also something going on in Indonesia:
Just passed the Investment Law overhaul. So what's in it?
*Reducing banned sectors to 6 from >300
*Centralize business permit w/ Investment Coordinating Board
*Foreigners can own freehold apt
*Scrap dividend tax if invested locally
Just passed the Investment Law overhaul. So what's in it?
*Reducing banned sectors to 6 from >300
*Centralize business permit w/ Investment Coordinating Board
*Foreigners can own freehold apt
*Scrap dividend tax if invested locally
Labor law is one that has been rather contentious in Indonesia:
Reduce max serverence pay by employers to 19 months from 32 months.
Another one is regarding land: centralize authority over land & permits to solve the issue of overlapping claims.
Reduce max serverence pay by employers to 19 months from 32 months.
Another one is regarding land: centralize authority over land & permits to solve the issue of overlapping claims.
Regarding land, it should be positive as decentralization has been a headache & centralizing it should make Indonesia more competitive for investment.
On labor, I also think while existing workers get less protection, it may bring in more jobs & that should help overall economy.
On labor, I also think while existing workers get less protection, it may bring in more jobs & that should help overall economy.
I'm interested in details of this negative list reduced to six & what that means in practice. So far, developments are going in two directions:
a) Facing issues of financing gap, gov is pressuring the central bank + local funds to buy government debt as foreigners turn away.
a) Facing issues of financing gap, gov is pressuring the central bank + local funds to buy government debt as foreigners turn away.
And of course foreign investors, who are a big deal in Indonesia as they own 1/3 of gov debt, are churning auctions as they see the developments of gov trying to take over BI as very negative.
Best to not do desperate measures & instill confidence in management vs tinkering.
Best to not do desperate measures & instill confidence in management vs tinkering.
b) It is finally passing the Investment Law reform to address the root of Indonesia problem: which is not enough investment to absorb labor & hence perpetual financing gap.
We'll find out next week on the implementation but it is a positive direction.
Too much of a mixed bag.
We'll find out next week on the implementation but it is a positive direction.
Too much of a mixed bag.
Meaning, they could have done without all this tinkering with monetary policy and pressuring local firms etc to buy debt & play up the Investment Reform overhaul, which in itself is a very convincing investment thesis for Indonesia.
Instead, we are here.
Instead, we are here.
If I were advising the government of Indonesia, I'd do the following:
*Drop the whole changing BI mandate effort - counter productive & bad for business; foreign portfolio investors turned off & FDI investors questioning management
*Beat the drum on the investment reform bill.
*Drop the whole changing BI mandate effort - counter productive & bad for business; foreign portfolio investors turned off & FDI investors questioning management
*Beat the drum on the investment reform bill.
