China Chamber Writes to Prabowo on Business Climate Concerns

TEMPO.CO, Jakarta - The China Chamber of Commerce in Indonesia has sent a letter to President Prabowo Subianto urging the government to improve Indonesia’s business climate, citing growing concerns among Chinese investors over regulations, law enforcement, and policy uncertainty.

In the letter, the chamber said Chinese companies have invested heavily in Indonesia, contributed to economic growth, created jobs, supported industrial development, and fulfilled social responsibilities. However, companies are increasingly facing operational difficulties.

The organization complained that businesses operating in Indonesia are burdened by overly strict regulations, excessive law enforcement, and corruption and extortion involving certain authorities.

“These problems have severely disrupted normal business operations, directly undermined long-term investment confidence, and caused widespread concern among Chinese-invested enterprises regarding the current business environment and their future development in Indonesia,” the letter stated.

First, the chamber complained about repeated increases in taxes and fees, including multiple hikes in mineral resource royalties. It also highlighted intensive tax audits, some involving claims worth tens of millions of US dollars, which it said had created panic among companies.

Second, the organization criticized the government’s foreign exchange retention policy for natural resource exporters, which requires companies to deposit 50 percent of export earnings in state-owned banks for at least one year. According to the chamber, the policy creates high uncertainty and could severely affect company liquidity and long-term operations.

Third, the chamber raised concerns over drastic reductions in nickel ore mining quotas. Since the beginning of the year, quotas for major mines have reportedly been cut by more than 70 percent, with total reductions reaching 30 million tons. The cuts, it said, have disrupted downstream industries such as new energy materials and stainless steel production.

Fourth, the chamber said forestry law enforcement has become excessively strict. It cited a record US$180 million fine imposed by Indonesia’s Special Task Force for Forest Management on Chinese-invested companies accused of lacking valid forest area borrow-and-use permits, known locally as IPPKH.

Fifth, the organization said several major projects had been suspended following government intervention. Authorities accused large hydropower projects financed and built by Chinese companies of damaging forest areas and worsening floods, resulting in work stoppages and sanctions.

Sixth, the chamber criticized tighter supervision of foreign worker visas. It said work permit approvals have become increasingly complicated, with higher costs, stricter requirements, and restrictions such as designated work locations that limit the mobility of technical and managerial personnel.

“In addition, relevant government departments are considering further measures, including new export duties on certain products, the abolition of incentives for electric vehicles, and reduction of tax relief for special economic zones,” the letter stated.

The chamber also highlighted increases in benchmark mineral prices for nickel ore, cobalt, iron, and other minerals. It said the revised pricing rules had triggered a 200 percent surge in nickel ore costs.

According to the chamber, Chinese companies are now facing rising production costs, mounting operational losses, and supply chain imbalances that are beginning to affect future investment, exports, and employment.

The organization urged the Indonesian government to maintain a stable, transparent, fair, and predictable business environment, stabilize policy expectations, standardize law enforcement practices, and protect the legal rights of foreign investors.

It also called on authorities to listen more closely to business concerns, revise unreasonable policies and enforcement practices, and improve communication mechanisms between the government and companies to accelerate problem-solving.

"We are confident that with Your Excellency's attention and facilitation, China-Indonesia economic and trade cooperation will continue to develop steadily and soundly, and Chinese-invested enterprises will continue to contribute greater strength to Indonesia's national development and the friendly cooperation between the two countries."

Read: Indonesia Launches Investor Complaint Channel to Boost Investment

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