Govt meets Chinese investors after business climate complaints

By Calvin Purba

The Indonesian government on Tuesday met with a delegation of Chinese investors to discuss concerns over deteriorating business conditions faced by Chinese companies operating in the country.

The meeting was attended by Energy and Mineral Resources Minister Bahlil Lahadalia, Investment and Downstreaming Minister/Investment Coordinating Board (BKPM) head Rosan Roeslani, Finance Minister Purbaya Yudhi Sadewa, and representatives of around 30 Chinese mining-related companies.

Bahlil said the meeting aimed to coordinate discussions on challenges faced by Chinese investors in Indonesia.

 “We held a coordination meeting to discuss the challenges they are facing. We want the companies to survive while the state also receives revenue. There were nearly 30 companies involved,” Bahlil said on Tuesday.

He described the meeting as routine and denied it was specifically triggered by a recent letter sent by the China Chamber of Commerce in Indonesia to President Prabowo Subianto.

Purbaya, however, acknowledged that the discussion followed the letter and said the government would seek solutions for issues that fall within its authority.

 “We are listening, and if we can solve the problems, we will solve them,” Purbaya said. “The China Chamber of Commerce sent the letter to the President.”

Previously, Chinese-invested companies operating in Indonesia submitted a letter to Prabowo expressing concern over what they described as worsening business conditions, including tighter regulations, stricter law enforcement and rising operational costs.

The letter, which was also copied to the Chinese Embassy in Indonesia, was jointly signed by Chinese-invested enterprises and the China Chamber of Commerce in Indonesia.

The companies said they had contributed to Indonesia’s economic development through investment, industrial projects and job creation, but warned that recent policies and enforcement measures were weakening investor confidence.

Among the issues raised were repeated increases in taxes and royalties, intensified tax audits and fines amounting to tens of millions of US dollars.

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The companies also criticized Indonesia’s planned foreign exchange retention policy, which would require natural resource exporters to place 50% of export proceeds in domestic state-owned banks for at least one year, saying the measure could hurt liquidity and long-term operations.

Chinese investors further highlighted significant cuts in nickel ore production quotas this year, with some large mines reportedly seeing reductions of more than 70%, or around 30 million tons. They said the cuts were disrupting downstream nickel, stainless steel and electric vehicle supply chains.

The letter also cited stricter forestry law enforcement, including a reported US$180 million fine imposed on Chinese-invested firms over forestry permit violations, as well as the suspension of hydropower projects accused of damaging forest areas and contributing to flooding.

Additional concerns included tighter scrutiny of foreign worker visas, increasing restrictions on expatriate mobility, and discussions over potential export duties, reduced electric vehicle incentives and lower tax incentives for special economic zones.

In the nickel sector, the investors said revisions to Indonesia’s benchmark nickel ore pricing formula had increased overall ore costs by around 200% after cobalt, iron and other associated minerals were included in pricing calculations.

The companies warned that rising costs and regulatory uncertainty could affect future investment, exports and more than 400,000 jobs linked to Indonesia’s nickel industry.

The letter urged the Indonesian government to maintain a stable, transparent and predictable business environment, standardize law enforcement practices and improve communication between regulators and investors.

Editing by Reiner Simanjuntak