Focuses on promoting European business interests and representing its European member companies, while simultaneously works to support the improvement of trade and investment climate in Indonesia, EuroCham Indonesia, based in Jakarta, we scheduled an interview with Mr. Samuel Siahaan, Executive Director of EuroCham Indonesia to understand more about the economic freedom in Indonesia.
Can you give us a general background on about you and EuroCham?
Working as an Executive Director from October 2017, I could say that 40 percent of EuroCham member is foreign Small Medium Enterprises (SME) that aim to enter the European market. There is also European SMEs which aim to enter the Indonesian market. The highest number of member in Eurocham is coming from Germany. For Germany members, they are very active in the energy and logistics sector.
Mentioning about the energy, there is a monopoly in Indonesia. How about EuroCham members with interest in entering this particular sector in Indonesia? Is there any difficulty?
Up until now, we have five European companies in EuroCham that show their interest in entering the renewable energy sector in Indonesia. They have been very active in lobbying inhibiting regulations, especially in the energy supply. If I am not mistaken, there is still a regulation that restricting the purchasing of the solar cell or other renewable energy through the State Utility (PT Perusahaan Listrik Negara (Persero) (PLN)). This is one of the factors that hindrance competitiveness amongst green energy producers. In this case, EuroCham helps to open the green energy market through lobbying actions to the Government of Indonesia (GoI).
Is there any positive response from the GoI?
Yes, the GoI’s response is quite positive. However, based on the commentaries from prospective actors who show interest in renewable energy, the benchmark price that determined in the regulation by the GoI is still below the standard. So there is an inclination from the State Utility for holding back this particular sector, while there is a market pressure for opening this sector.
Regarding the market pressure, does it mean that EuroCham also conducts coordination with the Ministry of Energy and Mineral Resources of The Republic of Indonesia (ESDM)?
In EuroCham, we have numerous working groups. Working Groups are the backbone and the main communication tool of the chamber. The companies in their respective working groups meet and outline the most pressing business problems for European companies in Indonesia; moreover, they make recommendations, which could take shape as a Focus Group Discussion, official letter, or other forms of recommendations on how the Indonesian Government can improve the country's business environment. In accordance to that, EuroCham will also inform and coordinate with the Indonesian Chamber of Commerce and Industry (KADIN) and The Employers’ Association of Indonesia (APINDO) in order to ensure the synergy between involved organizations.
In your opinion, how are the economic freedom, investment, and ease of doing business in Indonesia?
In some sectors which there are no longer obstacles to doing business, the market is indeed open, in example wheat commodity; everyone can trade and import it without any limitations in terms of its playing field. In other words, we could observe the openness of a market from its existing regulations. Indeed, the Indonesian market is still inefficient due to its hesitation in local actors in competing with foreign actors. There are still many sectors that not open to foreign business.
Foreign investment is usually complementary and not in competition with national employers. They exist in sectors which are overlooked by the local. So in the end, their existence is going to improve the quality and the supply of goods and services in Indonesia.
In your opinion, what is the most difficult market or sector to enter?
It’s the downstream fuel sector, and of course the electricity and other agriculture sectors that still heavily regulated under the import regulation in purpose to protect local and small producers in Indonesia, and sea transportation.
Regarding EuroCham, how do you perceive the work of the chamber of commerce?
No matter what, foreign company or business cannot directly engage with government agencies. In any country, it is necessary that there is a good relationship between businesses and the regulator. We, as a chamber of commerce, are able to convey the interests of its members and underline how these interests do not harm or intervene with our national interests towards the GoI.
EuroCham’s activities facilitate monitoring of investment climate improvement and implementation of reforms as well as support improved facilities for advocacy vis-à-vis the Government of Indonesia. Directly representing more than 170 European companies and organizations in Indonesia, many being the major investors in their respective sector, EuroCham aims to have the broadest possible representation of European business in Indonesia within its membership. EuroCham’s membership consists of mainly large, but also medium and small enterprises from a wide variety of industry sectors.