Transformation on the cardsAugust 01, 2005 Muhammad Lutfi Self-made businessman Muhammad Lutfi, the new chief of Indonesias investment co-ordinating board, talks to Tony Sitathan about his plans to transform the agency and his hopes for making the country a safe investment haven.Muhammad Lutfi is the new head of the Indonesias investment co-ordinating board (Badan Koordinasi Penanaman Modal BKPM). He replaces Theo Toemion, who was officially dismissed by Indonesian president Susilo Bambang Yudhoyono.He comes to the BKPM at a time of rapid change for trade and business in Indonesia, with a new draft investment law in the pipeline.Some critics have said that Mr Lutfi came on board as the head of BKPM on Mr Yudhoyonos coat-tails, having been a campaign adviser during the presidential elections. Mr Lutfi, however, prefers to be seen in light of his own achievements.He is a self-made businessman who started an oil trading company at the age of 24. He later diversified into dealing with other commodities as well as starting a plant producing calcium hydrate, which separates copper from gold.He then listed his company, Mahaka Group, of which he was the CEO and president. He has made forays into the media, owning Republika, a local daily newspaper, as well as launching a lifestyle TV station called Jak TV in Jakarta.He is a former chairman of Indonesias Young Entrepreneur Organization and is a staunch supporter of small and medium-sized businesses and entrepreneurs in Indonesia.Once he was appointed as the head of BKPM, he officially resigned as CEO and president from all his companies, although he continues to be a stakeholder in them.Q What is the mandate of BKPM?A This is an institution that has been tackling the issuing of permits and licences for doing business in Indonesia. We co-ordinate investment-related activities. Almost all FDI has to go through this office, with the exception of the oil and gas sector and certain areas of financial investments.Q Since BKPM is now under the Ministry of Trade, has its mandate changed and are there now limitations on what it can do?A We are still a government-led organisation and under the constitution, my responsibility is to the president of the country. I report directly to the president. However, I need to co-ordinate the policies of this office with one of the economic ministries, although this has not been spelled out in the constitution. I am not too worried about this new mandate for BKPM and me. We still have our investment co-ordinating functions so that we can provide a safe haven for investing.The only difference is that the approach will be different. From a top-down institution, it will become a bottom-up institution, especially with other ministries. I am looking to transform BKPM in the future to be more service-minded and service-oriented.Q How would you transform BKPM?A Right now, the role of BKPM is more about the administration of investments rather than actively sourcing for investments. That role will be changed in the future and that is what I intend to do.We also need to formulate a blueprint for the active solicitation of FDI. We are knocking on international doors at the moment. For instance, the president of Indonesia is going to sign the strategic investment action plan with the Japanese government when he meets Japans prime minister Junichiro Koizumi next week.We are also planning to sign an economic partnership agreement with Malaysia. We want to be serious about working with investors.Q Can you tell us more about the new investment law that is being drafted?A The new investment law is seen as a master umbrella for all investments in Indonesia. Under that umbrella, you can see equal treatment of international investors and local investors, which was different in the past. We also protect investments against nationalism and we want to look at ways to repatriate foreign funds and to create the right investment incentives, like tax holidays and tax breaks for new investments that qualify for such tax benefits.The new draft investment law is supported by of all walks of life, from the state-owned enterprises to private businesses and the government sectors. I am hoping that it will be discussed in parliament by September this year. The other important thing for the new law is that it should simplify and expedite the processes of licensing and doing business in Indonesia.And, more importantly, the new law should transform BKPM from an administrative routine government body to become more service-oriented. We want to be an ombudsman for investors, where we look on investors as our friends and their problems become our problems.Q Do you expect to see a jump in FDI figures this year, compared to the declines of recent years?A For the first quarter of 2005, on a year-on-year basis, the economy has grown by 6.35%. (Many have said that part of this is consumption but that only a