MONEY MATTERS

Indonesia 2018 | ECONOMY | INTERVIEW

Thomas Trikasih Lembong is the Chairman of BKPM. He was a former Minister of Trade of Indonesia from 2015-2016. Prior his appointment in the cabinet, he had a long professional career. He was a Co-Founder, Chief Executive Officer, Managing Partner, and Partner at Quvat Management Pte Ltd and also served as President Commissioner at PT Graha Layar Prima Tbk (BlitzMegaplex) since 2012. He was previously employed with Principia Management Group and the Equity Division of Morgan Stanley (Singapore) Pte. Ltd, among others. He received a bachelor's degree in architecture and urban design from Harvard. He also was elected Young Global Leader by the World Economic Forum in 2008.

Thomas Trikasih Lembong
BIOGRAPHY
Thomas Trikasih Lembong is the Chairman of BKPM. He was a former Minister of Trade of Indonesia from 2015-2016. Prior his appointment in the cabinet, he had a long professional career. He was a Co-Founder, Chief Executive Officer, Managing Partner, and Partner at Quvat Management Pte Ltd and also served as President Commissioner at PT Graha Layar Prima Tbk (BlitzMegaplex) since 2012. He was previously employed with Principia Management Group and the Equity Division of Morgan Stanley (Singapore) Pte. Ltd, among others. He received a bachelor’s degree in architecture and urban design from Harvard. He also was elected Young Global Leader by the World Economic Forum in 2008.

What key areas might speed up the implementation of private-public partnerships (PPPs) and bolster their appeal to private investors?

After three years of hard work on economic reforms, we are finally seeing the results of those reforms. However, Indonesia needs private investors to involve in hundreds of billions of dollars projects to develop infrastructure and natural resources. As President Widodo said, all major projects will be offered to the private sector. State-owned enterprises would partner with private investors only if there wasn't enough interest among such players, with funding from the national budget as the last resort. Tourism is one of the top industries for private sector participation, as it requires consumer-oriented thinking to make leisure destinations attractive. Moreover, privately owned projects are led by investors that ensure they are realistic and bankable. Private investment is needed to create prosperous tourism destinations.

What would be your message to foreign investors on the issue of stability and predictability in the legislative framework?

One of the main obstacles to investment is related to regulations: excessive regulation and lengthy licensing procedures are compounded by constantly changing regulations, which are often poorly conceived and misguided. This is the biggest issue for investment by far. We need to tackle our policymaking process. Today, ministers tend to sign regulations that come as a surprise, and as a result these are often revised and then canceled. President Widodo is pushing for regulations to be promulgated through many public consultations and a transparent process, so that when laws are implemented they do not come as a shock. Additionally, the quality of regulations will be higher and will incorporate broader input from all stakeholders. Public consultation is merely a formality at the moment. An overhaul of the policymaking process could be quite revolutionary, and it should address the issue of unstable and constantly changing regulations.

How can BKPM help to nurture greater entrepreneurship to drive economic development?

We have to create a great deal of policy space for experimentation. As President Widodo has mentioned several times, innovation requires experimentations. Innovation comes naturally by people trying many new things of most things failed. In e-commerce and digital start-up, the failure rate will be 70-90%. Google, Amazon, and Facebook are the 10% that have succeeded. Imagine if the American government had not given innovators the freedom to experiment and to fail safely. The bureaucracy still has the mindset that our job is to regulate. In fact, nothing could be further from the truth; regulation is a necessary evil. We need to set forth some basic rules of engagement; however, beyond that, we should not seek to regulate everything.

Does BKPM see a role for itself in the growth in the IT sector?

In regards to the development of digital economy, first, we should start by not assuming that wireless data, 3G, 4G, and soon 5G networks will naturally blanket the entire country. We have a fairly unhealthy telecom sector at the moment; just one company captures more than 90% of the entire industry profits. This will not lead to evenly spread high-quality wireless data networks. That is the first prerequisite for the digital revolution or industrial revolution 4.0. There are also plenty bad policies we have to fix at the moment. Fintech is a perfect example to point out that unless we take a deregulation-oriented and freedom-oriented approach to e-commerce and the digital economy, our own people will leave the government behind. Services are the most easily transferred to the internet and once on the internet, we will not be able to regulate them. People will find all kind of services, the best services available, anywhere in the world. Not only will we not able to regulate them, we will not even know it is happening, nor can we stop it. It will all take place overseas and offshore because we killed it onshore with regulation, with bad policy.