While such an increase in size undoubtedly has its merits, experts, academics and even citizens have questioned its urgency and effectiveness. President Prabowo’s administration now has the responsibility to ensure that the “bloated cabinet” does not hinder investments, especially foreign direct investment (FDI).

Investment in Indonesia is governed by Law No. 25/2007 on Investment (as amended) and implementation is coordinated by the Minister of Investment/Investment Coordination Board (BKPM). The BKPM is also responsible for coordinating investment policies between ministries and agencies and is notably known for administering the Single Online Submission (OSS) system for applying for licenses.

Ministries and agencies other than the BKPM are responsible for further regulating, administering and supervising the norms, standards, procedures and criteria regarding investment and licensing for sectors that fall within their assigned government functions . In practice, these ministries and agencies are more commonly called “technical ministers”. For example, the Minister of Public Works is responsible for regulating, administering and supervising investments and permits in the construction, public works, water resources and public roads sectors.

The increase in cabinet size means that more departments and agencies serve as legislators. Power and authority are now distributed among several ministries and agencies, for example in the case of a split of the Ministry of Law and Human Rights into 3 autonomous ministries, namely the Ministry of Justice, the Ministry of Human Rights and the Department of Immigration and Correctional Services. Ministry of Services. Ministries and agencies are legislators in that they inherit the power and authority to enact laws on specific issues by virtue of delegation from the hierarchy.

More legislators means more laws and regulations, which ultimately leads to “hyperregulation,” a condition characterized by too many poorly coordinated and poorly enforced regulations. Hyperregulation already exists in Indonesia, as exemplified by former President Joko. “Jokowi” Widodo’s 2020 report noted the existence of 8,451 central government regulations and 15,985 regional government regulations. Most of these regulations are contradictory and overlapping and poorly coordinated, making investing and doing business in Indonesia relatively difficult compared to jurisdictions like Singapore. , Malaysia and Thailand.

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In 2020, Indonesia was ranked as the most complex investment and business jurisdiction by the TMF Group Global Business Complexity Index 2020. Among other factors, this was largely attributed to hyper-regulation. Therefore, regulatory reforms were initiated by President Jokowi’s administration through the introduction of the Omnibus Job Creation Law in 2020, which gradually led the country in the right direction. This also led to an increase in FDI and a significant improvement, with Indonesia falling to 16th place in the 2024 edition of the same report.