The Importance of Government Investment Management

Oct 13, 2025 by windailys.com 41 views

The Government's Authority in Managing Investment: Understanding Foreign Capital Divestment in Indonesia

Introduction

Investment management is a crucial factor in encouraging economic growth in Indonesia. The Ministry of Finance, as the General Treasurer of the State, plays a key role in managing government investment through Government Investment Management (PIP). One example is the purchase of divestment shares from foreign capital. However, this process does not always run smoothly. There is a case of purchasing shares of PT. NNT which triggered a debate between the Minister of Finance and the Indonesian Parliament and the Supreme Audit Board (BPK). This debate arose because of the purchase of shares of PT. NNT is carried out using state money without the approval of the DPR, even though the purchase has been planned in the APBN and is not an emergency such as the BLBI case.

The Importance of Government Investment Management

The government's authority in managing investment is essential in ensuring the country's economic growth. The Ministry of Finance, as the General Treasurer of the State, has the responsibility to manage government investment through PIP. This includes the purchase of divestment shares from foreign capital. However, this process is not without challenges. The case of purchasing shares of PT. NNT highlights the need for clear regulations and guidelines in managing government investment.

Provisions Regarding Divestment of Foreign Shares in Investment Companies in Indonesia

Provisions regarding foreign capital divestment are first regulated in PP No. 17 of 1992 concerning Requirements for Ownership of Shares in Foreign Investment Companies. This rule sets the divestment period of 30 years, which must be done after the company produces commercially. Then, Law No. 25 of 2007 concerning Investment Changing these provisions. Foreign capital divestment is now determined based on the agreement of the parties contained in the contract of work. Specifically for the mining sector, the divestment provisions are regulated in Article 97 PP No. 24 of 2012.

Authority of the Minister of Finance

UU no. 17 of 2003 concerning State Finance, Article 6 paragraph (1), clearly gives the authority to the Minister of Finance to purchase foreign capital divestment shares. This provision highlights the importance of the Minister of Finance in managing government investment. The Minister of Finance has the responsibility to ensure that government investment is managed in a way that benefits the country's economy.

Requirements and Procedures for Divesting Government Shares

Permenkeu No. 183/PMK.05/2008 concerning Requirements and Procedures for Divesting on Government Investment Regulates the requirements and procedures for divesting government shares. Before divesting, the government is required to conduct in-depth analysis, including:

Stock assessment analysis
Portfolio analysis
Analysis of Debt Letters Assessment
Risk Analysis
Feasibility analysis

Recommendation

To ensure the divestment process runs smoothly and in accordance with Indonesia's economic conditions, some recommendations need to be considered:

Adjustment of divestment settings with an economic climate.
More detailed explanations regarding operational definitions in regulations to avoid problems later on.
Accuracy and caution in agreeing to the contract of work.

Conclusion

The government's authority in managing investment is essential in ensuring the country's economic growth. The Ministry of Finance, as the General Treasurer of the State, has the responsibility to manage government investment through PIP. However, this process is not without challenges. The case of purchasing shares of PT. NNT highlights the need for clear regulations and guidelines in managing government investment. By paying attention to the recommendations provided, the government can be more optimal in managing investment and ensuring that foreign capital divestment provides concrete benefits for the Indonesian economy.

Research Methods

The research methods used in this study are normative juridical, namely by analyzing the legal norms listed in the legislation related to the government's authority in investment and shares divestment. This method is chosen because it allows for a comprehensive analysis of the legal provisions related to government investment management.

Limitations of the Study

This study has some limitations. Firstly, the study only focuses on the provisions regarding foreign capital divestment in Indonesia. Secondly, the study only analyzes the legal norms listed in the legislation related to the government's authority in investment and shares divestment. Therefore, the study may not provide a comprehensive understanding of the government's authority in managing investment.

Future Research Directions

Future research directions may include:

Analyzing the impact of foreign capital divestment on the Indonesian economy.
Examining the role of the Minister of Finance in managing government investment.
Investigating the challenges faced by the government in managing government investment.

References

PP No. 17 of 1992 concerning Requirements for Ownership of Shares in Foreign Investment Companies.
Law No. 25 of 2007 concerning Investment.
UU no. 17 of 2003 concerning State Finance.
Permenkeu No. 183/PMK.05/2008 concerning Requirements and Procedures for Divesting on Government Investment.

Note: The references provided are a selection of the relevant legislation and regulations related to government investment management in Indonesia.
Frequently Asked Questions (FAQs) about Government Authority in Managing Investment

Q: What is the government's authority in managing investment?

A: The government's authority in managing investment is essential in ensuring the country's economic growth. The Ministry of Finance, as the General Treasurer of the State, has the responsibility to manage government investment through Government Investment Management (PIP).

Q: What is the role of the Minister of Finance in managing government investment?

A: The Minister of Finance has the responsibility to ensure that government investment is managed in a way that benefits the country's economy. The Minister of Finance has the authority to purchase foreign capital divestment shares, as stated in UU no. 17 of 2003 concerning State Finance, Article 6 paragraph (1).

Q: What are the provisions regarding foreign capital divestment in Indonesia?

A: Provisions regarding foreign capital divestment are first regulated in PP No. 17 of 1992 concerning Requirements for Ownership of Shares in Foreign Investment Companies. This rule sets the divestment period of 30 years, which must be done after the company produces commercially. Then, Law No. 25 of 2007 concerning Investment Changing these provisions. Foreign capital divestment is now determined based on the agreement of the parties contained in the contract of work.

Q: What are the requirements and procedures for divesting government shares?

A: Permenkeu No. 183/PMK.05/2008 concerning Requirements and Procedures for Divesting on Government Investment Regulates the requirements and procedures for divesting government shares. Before divesting, the government is required to conduct in-depth analysis, including:

Stock assessment analysis
Portfolio analysis
Analysis of Debt Letters Assessment
Risk Analysis
Feasibility analysis

Q: What are the challenges faced by the government in managing government investment?

A: The government faces several challenges in managing government investment, including:

Lack of clear regulations and guidelines
Limited resources and expertise
Difficulty in assessing the value of government shares
Risk of losses due to market fluctuations

Q: What are the benefits of foreign capital divestment in Indonesia?

A: Foreign capital divestment can bring several benefits to Indonesia, including:

Increased foreign investment
Improved economic growth
Creation of jobs and opportunities for local communities
Increased competitiveness of Indonesian businesses

Q: How can the government ensure that foreign capital divestment provides concrete benefits for the Indonesian economy?

A: The government can ensure that foreign capital divestment provides concrete benefits for the Indonesian economy by:

Conducting thorough analysis and due diligence
Ensuring that the divestment process is transparent and fair
Providing support and incentives for local businesses and communities
Monitoring and evaluating the impact of foreign capital divestment on the economy

Q: What are the future research directions in the field of government authority in managing investment?

A: Future research directions may include:

Analyzing the impact of foreign capital divestment on the Indonesian economy
Examining the role of the Minister of Finance in managing government investment
Investigating the challenges faced by the government in managing government investment
Developing new policies and regulations to support government investment management

Q: What are the implications of this study for policymakers and practitioners?

A: This study has several implications for policymakers and practitioners, including:

The need for clear regulations and guidelines in managing government investment
The importance of conducting thorough analysis and due diligence in foreign capital divestment
The need for support and incentives for local businesses and communities
The importance of monitoring and evaluating the impact of foreign capital divestment on the economy.