Prabowo Cabinet: Import Policy Deregulation and Business Facilitation

Prabowo Cabinet: Import Policy Deregulation and Business Facilitation

The recent announcement by a key minister in Prabowo Subianto's cabinet regarding import policy deregulation and the simplification of business procedures marks a potentially significant shift in Indonesia's economic strategy (Kosasih, 2020). This move could signal a renewed effort to attract foreign direct investment and stimulate economic growth, addressing concerns about stagnation that have persisted in recent years (Gopalan et al., 2016). Bureaucratic reforms, particularly those emphasizing transparency and efficiency, have long been identified as crucial for Indonesia to realize its ambitious economic goals, including its aspiration to become one of the world's leading economies by 2045 (Emba, 2025; Utomo et al., 2018). Despite the previous administration's efforts to improve the investment climate, challenges related to complex regulations, bureaucratic inefficiencies, and corruption have continued to impede progress (Dwiputrianti, 2020). The new administration's focus on deregulation aims to dismantle these barriers, streamlining import processes and reducing the costs associated with doing business in Indonesia. Such changes are intended to promote greater competitiveness and position Indonesia as a more attractive destination for international capital, fostering innovation and technology transfer.

The impetus behind this policy shift likely stems from a combination of domestic and international factors. Internally, there's a growing recognition that structural reforms are necessary to unlock Indonesia's economic potential, particularly in the face of global economic uncertainties (Kusuma & Anisah, 2022). By reducing import restrictions, the government aims to lower input costs for domestic industries, thereby enhancing their export competitiveness (Sanjaya, 2021). Moreover, simplifying business procedures can reduce opportunities for rent-seeking and corruption, fostering a more level playing field for both domestic and foreign investors. Internationally, the move can be seen as a response to increasing competition for foreign investment among Southeast Asian nations. Countries like Vietnam and Thailand have been actively pursuing reforms to attract investment, and Indonesia needs to keep pace to maintain its position as a leading investment destination in the region. To remain competitive in the digital age, businesses need to be more adaptable and innovative (Faj'ri et al., 2024). Deregulation can help to foster a more dynamic and competitive business environment, which is essential for driving innovation and economic growth.

The specific details of the deregulation plan remain crucial to its ultimate success. It is important to note that regulatory reform has been an ongoing theme in Indonesia, particularly since President Joko Widodo's administration, where it was viewed as part of the broader legal reform agenda (Wijaya, 2021). The degree to which these changes will affect various sectors of the economy will depend on the specific regulations that are targeted for reform. Key areas to watch include the simplification of customs procedures, the reduction of import tariffs on raw materials and intermediate goods, and the streamlining of licensing and permit requirements. The effectiveness of these reforms will also depend on the government's ability to ensure consistent and transparent implementation across different regions and government agencies. Addressing the lingering challenges in the legal sector can create an environment where communities can obtain legal certainty (Sinaga, 2022). While deregulation can bring significant benefits, it also carries potential risks.

One concern is that reducing import restrictions could harm domestic industries that rely on protectionist measures. It is essential to implement these reforms in a way that minimizes disruption to local businesses, providing them with adequate time to adjust to the new competitive landscape. This would help ensure that domestic industries are not unfairly disadvantaged and can remain competitive. Another potential risk is that deregulation could lead to increased environmental degradation if not accompanied by robust environmental safeguards (Mahoro & Samekto, 2021). Furthermore, it is also important to consider the potential impact on employment, particularly in sectors that may be vulnerable to increased import competition.

The success of this initiative will hinge on the government's ability to effectively communicate the benefits of deregulation to the public and to address any concerns that may arise. This requires a comprehensive strategy that includes stakeholder consultations, public awareness campaigns, and mechanisms for addressing grievances. Ultimately, the success of Prabowo's cabinet's import policy deregulation and business facilitation efforts will depend on its ability to create a more efficient, transparent, and competitive business environment that benefits both domestic and foreign investors, while also promoting sustainable and inclusive economic growth, and learning from previous bureaucratic reform initiatives (Khoiriah & Qashmal, 2022) (Gedeona & Trilestari, 2021). Administrative reforms can enhance a government's legitimacy in the eyes of its citizens (Seno, 2020). After the fall of the New Order regime in 1998, Indonesia changed from a centralized government system to decentralization (Hayuningtyas et al., 2020). Several changes in state administration, the revitalization of high state institutions and elections conducted in an effort to build clean and good governance (Aisy et al., 2021; Akbal & Umar, 2019; Hayuningtyas et al., 2020). Changes in the Indonesian administration system have occurred during the political reforms in 1998 which impacted on public administration (Insani et al., 2021). . In emerging markets such as Indonesia, regulatory diffusion can falter in establishing efficient governance, impeding privatization and liberalization of key sectors (Purra, 2010).

References

Aisy, S. R., Hakim, H. A., Krisnan, J., Hardyanthi, T., & Masithoh, M. Q. D. (2021). Customary criminal law in the Eastern of Indonesia: the special autonomy Province of Papua. Borobudur Law Review, 3(2), 148. https://doi.org/10.31603/burrev.5553 

Akbal, M., & Umar,  the W. (2019). The Role of Supervision in Actualizing Good and Clean Governance. 161. https://doi.org/10.32698/hum0212 

Dwiputrianti, S. (2020). Public Accountability through Merit Values on Civil Service Management in Central Java Province. Iapa Proceedings Conference, 275. https://doi.org/10.30589/proceedings.2020.410 

Emba, E. (2025). Indonesia's expanding bureaucracy erodes civil service integrity. https://doi.org/10.59425/eabc.1738447200