15-year economic plan called MP3EI

Raj Kannan, President Director of Tusk Advisory talks about 15-year economic plan called MP3EI.

How are the issues being approached?

We were hired to help the government to implement the 15-year economic plan called MP3EI. MP3EI had 3 pillars: one was connectivity, which was basically infrastructure, second was regulatory reform, getting the regulation into place, and the third was human capital, which is basically our saying that by 2030, Indonesia is going to be a middle income country, you cannot be a country with that level of economic growth without your people being able to support that.

It is a great program. Under that program, especially the second pillar, the regulatory reform, we found that almost every region has thousands of local bylaws, called Perdas, which were either against higher law, constitution, or are not investor-friendly. So, during the time we were working in implementing MP3EI, together with the government, we were part of the team that annulled about 1800 bylaws. Now, you may have seen in the papers recently that the president, together with his advisors, have actually annulled over 3000 of such laws. Because the government has now come to realization that these local bylaws have become like a KPI for the local government, saying how many bylaws can the government issues, and, some of them, as you say, even state that if investors want to set up a factory in a region, the investors have to hire the people from that region only. Those local bylaws are not investor-friendly.

Those are things the current government is very focused on. In fact, the notion “leading from the front” is an important message for the foreign investors coming in, particularly under the current president, since the government is not only serious in terms of saying they are serious, but they are demonstrating the are.