Entrepreneurial Government for Foreign Direct Investment

(Non Oil and Gas and Finance Sector) through e-Government

Mochamad Heru Riza Chakim

, Budiana Ruslan

and Mulyati

Univeritas Rahardja Jl. Jenderal Sudirman, Babakan, Kec. Tangerang, Kota Tangerang, Banten, 15117, Indonesia

Sekolah Tinggi Ilmu Administrasi Bagasasi Jl. Cukang Jati No. 5, Gatot Subroto Bandung, Jawa Barat, 40273, Indonesia

Keywords: Entrepreneurial Government, Foreign Direct Investment, Online Single Submission (OSS), e-Government,

Phenomenology.

Abstract: This paper examines entrepreneurial government through e-government so that it can increment Foreign

Direct Investment (FDI). The Online Single Accommodation (OSS) application propelled by the Indonesian

government through Badan Koordinasi Penanaman Modal (BKPM) is one frame of e-government to extend

outside speculation in Indonesia. This study uses a qualitative approach with the Phenomenology method, by

trying to explore the influence of the e-government phenomenon on Entrepreneurial Government. Especially

related to the ease, convenience and certainty of financing in submitting foreign investment in Indonesia

through the OSS application. The results of the study show that during the Covid 19 pandemic, foreign

investment still can absorb 142,930 Indonesian workers. Furthermore, the largest contributor to the realization

of Foreign Investment came from the Basic Metal, Metallic, Non-Machinery and Equipment Industry sector,

amounting to Rp. 23.5 trillion or (22.1%), and for the project location with the largest investment realization

in West Java, Rp. 18.3 trillion or (17.2%). The biggest contributor to the realization of FDI investment in

Singapore with an investment value of Rp. 35.9 trillion or (33.8%).

1 INTRODUCTION

Support through accommodative policies and

community mobility in the world has encouraged

economic recovery in many countries. The

development of several indicators indicates that

improvement is still ongoing. The pressure to push

the transaction deficit through the trade balance

surplus continues. Even though the inflow of foreign

investment portfolio inflows was restrained due to

increasing global financial market uncertainty,

Indonesia managed to keep the balance of

transactions deficit between 1-2% of Gross Domestic

Product (GDP) in 2021.

The phenomenon of foreign capital flows has

been widely studied theoretically. Mundell Fleming

theory, Good market approach theory, and economic

growth theory are economic paradigms for

developing foreign investment portfolios for

economic growth. One of the triggers for economic

growth is that new investments are needed as

additional reserves or capital stock. For this reason, a

monetary policy is needed that facilitates increasing

the productivity of national production through a

decrease in the exchange rate so that goods prices are

cheaper and purchasing power increases. Previous

research has shown that investment and GDP

influence each other.

The government as a trusted agent for the

development of foreign investment portfolios plays an

important role. Investor confidence in managed public

services requires high accountability. Electronic

government is a solution for developing public services

that will facilitate and reduce the negative impacts

(corruption) caused. The initial belief in the credibility

of public services according to Carter and Bélanger

(2005) is divided into two. First, trust in the

government, and second trust in the website.

Assurance of user data confidentiality and

convenience is indicated as a problem in Foreign

Direct Investment. Entrepreneurial steps in this

problem are needed. The search for opportunities by

exploring and exploiting available resources is

carried out with e-government (Snodgrass, 2014).

The concept of entrepreneurial government

through e-government so that it can increase Foreign

Direct Investment (FDI) has not been much

researched. The theoretical building carried from the

reinventing government paradigm of state

administration is the main basis for seeking

Heru Riza Chakim, M., Ruslan, B. and Mulyati, .

Entrepreneurial Government for Foreign Direct Investment (Non Oil and Gas and Finance Sector) through e-Government.

DOI: 10.5220/0011241500003376

In Proceedings of the 2nd International Conference on Recent Innovations (ICRI 2021), pages 145-150

ISBN: 978-989-758-602-6

145

government business opportunities. The innovation

angle is a differentiator for the principle of

reinventing government using e-government.

Preparing a good governance system for the creation

of a clean, good and authoritative investment climate

is one of the government's agendas (Kim, 2017).

The much-touted stage for handling change for

the remote coordinate venture to Indonesia was

authoritatively propelled on 9 July 2018 OSS as e-

government. This thinking contends that the Online

Single Submission Application (OSS) is one of the

key components of expanding foreign direct

investment streams to Indonesia. Concur with

(Schneider, 1995), Walters and Wadsworth (2021)

said "empowering rather than serving", becomes a

soul that has to be cultivated among the state device.

2 LITERATURE REVIEW

2.1 e-Government

E-government according to Holmes (2001) defines

"Electronic government, or e-government, is the use

of information technology, particularly the internet,

to deliver public services in a much more convenient,

customer-oriented, cost-effective, and all-together

different and better way." Holmes' opinion provides a

point of view that e-government is a public service.

In contrast, Richard (2005) sees e-government as a

“tool” for governance (“After decades of growing

disenchantment about public participation in policy

development and democratic process, the public

perceives the internet and new technologies as a key

element in making deliberative democracies work

better”). Meanwhile, the World Bank headed by

Randeep Sudan considers e-government as a

regulator to improve government performance and

accountability (2015).

2.2 Entrepreneurial Government

Entrepreneurship in the public sector can be seen

from two major scientific perspectives. The

perspective of EG's public administration is

supported by research conducted by Osborne in 2007.

Meanwhile, from a business point of view, Peter

Drucker was hired in 1964 through the concept of

entrepreneurship. The strategy of combining these

two perspectives was initiated by Bidne et al. and

Matthew & Patrick (Bidne et al., 2012; Matthew and

Patrick, 2013). The concept of Value For Money

(VFM) for the public sector is based on the overall

financing cycle and quality improvement. VFM must

be in line with increasing the competitiveness,

transparency and integrity of all key Business Actors

during the procurement process. Entrepreneurial

government (EG) occurs whenever a civil servant is

alert and acts on potential savings, thereby driving

procurement systems and structures to which the actor

attaches value for money. Studies of successful EGs

have revealed a large number of common traits,

including creativity and innovation; Take a risk;

facilitating and synthesizing, persuasive (Boyett, 1997;

Ramamurti, 1986; Zerbinati and Souitaris, 2005).

2.3 FDI in Indonesia

Based on the 2015-2019 Investment Strategic Plan,

the Government of Indonesia sets investment priority

sectors, namely infrastructure, agriculture, industry,

maritime, tourism, Special Economic Zones (SEZ)

and Industrial Estates, as well as the digital economy.

These sectors are very open to FDI, of course, taking

into account the investment guidelines contained in

Presidential Regulation no. 44 of 2016 concerning the

List of Business Fields Closed and Business Fields

Open with Requirements in the Investment Sector.

Badan Koordinasi Penanaman Modal (BKPM) is

present as a Non-Ministerial Government Institution

whose task is to coordinate policies and services in

the investment sector based on the provisions of laws

and regulations.

For foreign investors who want to invest in

Indonesia, they must establish a company based on

the business fields listed in the Indonesian Standard

Classification of Business Fields KBLI (Klasifikasi

Baku Lapangan Usaha Indonesia). This foreign

company is in the form of a PT (Limited Company)

which is owned by at least two shareholders, either

individuals or companies. Furthermore, as mentioned

above, investors must pay attention to the guidelines

for closed and open business fields with requirements

for foreigners as stated in Presidential Regulation no.

44 of 2016. If the line of business is not listed in the

list, it means that foreign share ownership can be up to

100%. The minimum value of the foreign investment

in Indonesia is IDR 10 billion (excluding land and

building prices). The minimum amount of paid-up

capital to a bank in Indonesia is IDR 2.5 billion.

3 METHOD

This study uses a qualitative approach with the

Phenomenology theory method. Phenomenology is

the study of structures of consciousness as

experienced from the first-person point of view. The

ICRI 2021 - International Conference on Recent Innovations

146

central structure of an experience is its intentionality,

its being directed toward something, as it is an

experience of or about some object. An experience is

directed toward an object under its content or

meaning (which represents the object) together with

appropriate enabling conditions (Creswell and

Creswell, 2018). Phenomenology as a discipline is

distinct from but related to other key disciplines in

philosophy, such as ontology, epistemology, logic,

and ethics. Phenomenology has been practised in

various guises for centuries, but it came into its own

in the early 20th century in the works of Husserl,

Heidegger, Sartre, Merleau-Ponty and others.

Phenomenological issues of intentionality,

consciousness, qualia and first-person perspective

have been prominent in recent philosophy of mind

(Barua, 2017; Bogachov, 2021; Suner, 2020; Zhu,

2020). This study tries to explore the effect of the e-

government phenomenon on Entrepreneurial

Government (EG). Especially regarding the ease,

convenience and certainty of financing in applying

for FDI in Indonesia through OSS application.

4 RESULT AND DISCUSSION

Information from the BKPM portal states that total

realization of foreign and domestic investments in the

Third Quarter of 2020, the largest contributor by

sector was Rp 32.1 T (15.3%) namely the

Transportation, Warehouse and Telecommunication

sector and based on project location West Java

Province recorded the largest realization of Rp 28,4 T

(13.6%) increased especially in the basic metal, metal

goods, non-machine and equipment industrial sector

by US$ 1.6 billion (21.6%).

During the Covid-19 pandemic, foreign

investment still can absorb 142,930 Indonesian

workers. Furthermore, the largest contributor to the

realization of foreign investment came from the Basic

Metal, Metallic, Non-Machinery and Equipment

Industry sector, amounting to Rp. 23.5 trillion or

(22.1%), and for the project location with the largest

investment realization in West Java, Rp. 18.3 trillion

or (17.2%). The biggest contributor to the realization

of FDI investment in Singapore with an investment

value of Rp. 35.9 trillion or (33.8%).

The rate of investment realization outside Java is

greater than Java, which is Rp. 110.4 trillion (52.8%),

while in Java it was Rp. 98.6 trillion (47.2%), this is

in line with infrastructure development outside Java,

which was a priority for President Jokowi in the first

period of his current administration. Starting to see

results, investors are starting to look outside Java as

their investment destination.

The top five realizations of FDI investment by

business sector are Basic Metals, Metals, Non-

Machinery and Equipment Industries (US$ 4.5

billion); Electricity, Gas and Water (US$ 3.2 billion);

Transportation, Warehouse and Telecommunications

(US$ 2.4 billion); Housing, Industrial Estates and

Offices (US$ 1.7 billion); and the Chemical and

Pharmaceutical Industry (US$ 1.5 billion). If all

industrial sectors are combined, it can be seen that

this sector contributes US$ 9.7 billion or 46.3% of the

total FDI. The top five realizations of FDI investment

based on project locations are West Java (US$ 3.5

billion), DKI Jakarta (US$ 2.7 billion); North Maluku

(US$ 1.8 billion); Banten (US$ 1.4); and East Java

(US$ 1.3 billion). The top five realizations of FDI

investment based on country of origin are: Singapore

(US$ 7.2 billion), R.R China (US$ 3.5 billion); Hong

Kong, China (US$ 2.5 billion); Japan (US$ 2.1

billion); and South Korea (US$ 1.1 billion).

Distribution of Project Locations In the January –

September 2020 period, the realization of investment

in Java was Rp. 307.5 trillion and the realization of

investment outside Java was Rp. 304.1 trillion. When

compared to the same period in 2019, there was a

6.9% slowdown in investment in Java and an increase

in investment outside Java by 12.2%.

Absorption of Indonesian Workers The realization

of absorption of Indonesian workers (TKI) in January

- September 2020 reached 861,581 people consisting

of TKI in the domestic investment project as many as

448,934 people (52.1%) and in the foreign investment

project as many as 412,647 people (47.9%).

Investment realization by Region in the period

January to September 2020 is:

a. Sumatra region with investment realization of

Rp 144.2 trillion (23.6%), consisting of

domestic investment of Rp 82.5 trillion and

foreign investment of US$ 4.3 billion.

b. Java region with investment realization of Rp

307.5 trillion (50.3%), consisting of domestic

investment of Rp 164.0 trillion and foreign

investment of US$ 10.0 billion.

c. Kalimantan region with investment realization

of Rp 51.9 trillion (8.5%), consisting of

domestic investment of Rp 33.1 trillion and

foreign investment of US$ 1.3 billion.

d. Sulawesi region with investment realization of

Rp 53.3 trillion (8.7%), consisting of domestic

investment of Rp 16.4 trillion and foreign

investment of US$ 2.6 billion.

e. Bali and Nusa Tenggara regions with a realized

investment of Rp 20.1 trillion (3.3%),

Entrepreneurial Government for Foreign Direct Investment (Non Oil and Gas and Finance Sector) through e-Government

147

consisting of domestic investment of Rp 11.9

trillion and foreign investment of US$ 0.7

billion.

f. Maluku and Papua regions with the realized

investment of Rp. 34.6 trillion (5.7%),

consisting of domestic investment of Rp. 1.9

trillion and foreign investment of US$ 2.3

billion.

Table 1: Foreign Investment by Country.

Table 2: FDI by Province.

Table 3: Foreign Investment by Sector.

Table 4: FDI based on KBLI.

4.1 Accountability and Entrepreneurial

Government

OSS is an application used for all registration

processes and business licensing applications as well

as other licensing applications that are included in

business licensing services according to Government

Regulation Number 24 of 2018 concerning

Electronically Integrated Business Licensing

Services. OSS is a web-based application that

functions to assist the process of submitting

complaints and permits further action to be carried

out by the decision-maker role, this OSS (Online

Single Submission) web application provides

information such as business application data,

existing licensing data, regional agency data, local

licensing data, etc.

OSS application is a form of creativity and

innovation from the government of the Republic of

Indonesia, which facilitates investors in submitting

FDI in Indonesia with ease, convenience and

ICRI 2021 - International Conference on Recent Innovations

148

certainty of financing, so with this OSS application

can be said as Entrepreneurial Government according

to the theory proposed by Salisu (2020) and Shouran

et al. (2019).

4.2 Government Policy for Economic

Information from the portal of the Ministry of

Information of the Republic of Indonesia states that

the government and all related parties have worked

together to create a comfortable investment climate

for investors to invest in Indonesia. One of the

measures taken by the Government is the release of

an Economic Policy Package that outlines

deregulation, debureaucratization, as well as law

enforcement and business certainty.

There are at least 204 deregulation regulations,

consisting of 48 presidential level regulations and 154

ministerial/institutional level regulations. 17 draft

government regulations have been prepared, 11 draft

presidential regulations, 2 draft presidential

instructions, 63 draft ministerial regulations, and 5

other ministerial regulations to support the

implementation of these policies.

To realize its commitment to be more open and

competitive to foreign investors, the Government of

Indonesia through this Economic Policy Package has

made a 3-hour investment service for certain

industrial estates to facilitate capital inflows to

Indonesia. In Indonesia today, the total number of

procedures that previously amounted to 94

procedures has been reduced to 49 procedures.

Likewise, the previous licenses amounted to 9

permits, now there are 6 permits. Previously, the total

time required was 1566 days, now it is shortened to

132 days. The efforts that have been made by

Indonesia to create a favourable investment climate

have proven successful and have made Indonesia an

important investment destination.

5 CONCLUSIONS

From the characteristics of the OSS application

launched by BKPM, OSS can be said to be one of the

Entrepreneurial Governments, the Government of the

Republic of Indonesia. And from the data that has

been published by BKPM state even though during

the Covid 19 Pandemic, foreign investment still can

absorb 142,930 Indonesian workers. Furthermore, the

largest contributor to the realization of Foreign

Investment came from the Basic Metal, Metallic,

Non-Machinery and Equipment Industry sector,

amounting to Rp. 23.5 trillion or (22.1%), and for the

project location with the largest investment

realization in West Java, Rp. 18.3 trillion or (17.2%).

The biggest contributor to the realization of FDI

investment in Singapore with an investment value of

Rp. 35.9 trillion or (33.8%). So it can be concluded

that an Entrepreneurial Government which provides

convenience, comfort and certainty of financing can

increase foreign investment in a country.

Limited research was conducted in Indonesia and

only examined one example of e-Government. For

future research, data collection is done by interview,

focus group discussion, using ethnography

methodology. In the theoretical context, further

research is expected to be carried out by coding the

data through the grounded theory method, to obtain

the latest conceptual framework related to the

implementation of e-government in EG.

REFERENCES

Barua, A. (2007). Husserl, Heidegger, and the

Transcendental Dimension of Phenomenology.

Indo-Pacific Journal of Phenomenology.

https://doi.org/10.1080/20797222.2007.11433942

Bidne, D., Kirby, A., Luvela, L. J., Shattuck, B., Standley,

S., & Welker, S. (2012). The Value for Money

Analysis : A Guide for More Effective PSC and PPP

Evaluation. The National Council for Public-Private

Partnerships.

Bogachov, A. (2021). Heidegger and Phenomenology.

Westerlund, F. (2020). Heidegger and the Problem of

Phenomena. London: Bloomsbury. Sententiae.

https://doi.org/10.31649/sent40.01.116

Boyett, I. (1997). The public sector entrepreneur - a

definition. International Journal of Entrepreneurial

Behaviour & Research. https://doi.org/10.1108/

13552559710175383

Carter, L., & Bélanger, F. (2005). The utilization of

e-government services: citizen trust, innovation and

acceptance factors. Wiley Online Library. Information

Systems Journal.

Creswell, J. W., & Cresswell, D. (2018). Research design :

Qualitative, quantitative, and mixed methods

approaches. In Research design.

Dahan, M., & Sudan, R. (2015). Digital IDs for

development: Access to Identity and services for all. In

Connections. https://openknowledge.worldbank.org/

bitstream/handle/10986/22297/Digital0IDs0fo0and0se

rvices0for0all.pdf?sequence=1&isAllowed=y

Holmes, D. (2001). EGov: EBusiness Strategies for

Government. Nicholas Brealey Pub. https://books.

google.co.id/books?id=Q7O7wAEACAAJ

Kim, J. (2017). Cyber-security in government: reducing

the risk. Computer Fraud and Security.

https://doi.org/10.1016/S1361-3723(17)30059-3

Entrepreneurial Government for Foreign Direct Investment (Non Oil and Gas and Finance Sector) through e-Government

149

Matthew, K., & Patrick, K. (2013). Value for money

auditing and audit evidence from a procurement

perspective: A conceptual paper. International Journal

of Advances in Management and Economics.

Ramamurti, R. (1986). Public Entrepreneurs: Who They

Are and How They Operate. California Management

Review. https://doi.org/10.2307/41165207

Richard, E. (2005). Tools of governance. In Digital

Democracy: Discourse and Decision Making in the

Information Age. https://doi.org/10.4324/978020398

4031-14

Salisu, J. B. (2020). Entrepreneurial training effectiveness,

government entrepreneurial supports and venturing

of TVET students into IT related entrepreneurship –

An indirect-path effects analysis. Heliyon.

https://doi.org/10.1016/j.heliyon.2020.e05504

Schneider, I. (1995). Osborne, D. and Gaebler, T. 1992.

Reinventing Government. New York, NY. Journal of

Leisure Research. https://doi.org/10.1080/00222216.19

95.11949751

Shouran, Z., Priyambodo, T. K., & Rokhman, N. (2019).

eGovernment transformation: Literature review.

International Journal of Scientific and Technology

Research.

Snodgrass, H. E. (2014). Social networking and

entrepreneurial success in Central Appalachia: A

multiple-case study. In Dissertation Abstracts

International Section A: Humanities and Social

Sciences.

Süner, A. (2020). Sartre’s Dessin, Literature and the

Ambiguities of the Representing Word.

Phenomenology and the Cognitive Sciences.

https://doi.org/10.1007/s11097-019-09623-8

Walters, D., & Wadsworth, E. (2021). Determinants of

effective action on workplace safety and health in

global companies - The case of global network

container terminal operators. Marine Policy, 124,

104374. https://doi.org/https://doi.org/10.1016/j.mar

pol.2020.104374

Zerbinati, S., & Souitaris, V. (2005). Entrepreneurship in

the public sector: A framework of analysis in European

local governments. In Entrepreneurship and Regional

Development. https://doi.org/10.1080/089856204200

0310723

Zhu, K. (2020). Merleau-Ponty - The Phenomenology of

Perception, Empiricism and Intellectualism. Learning

& Education. https://doi.org/10.18282/l-e.v9i3.1595

R. Riyanto, “Training Autonomous Vehicles in Carla

model using Augmented Random Search Algorithm,”

J. Appl. Data Sci., vol. 2, no. 2, pp. 27–35, 2021, doi:

10.47738/jads.v2i2.29.

T. wahyuningsih, “Text Mining an Automatic Short

Answer Grading (ASAG), Comparison of Three

Methods of Cosine Similarity, Jaccard Similarity and

Dice’s Coefficient,” J. Appl. Data Sci., vol. 2, no. 2, pp.

45–54, 2021, doi: 10.47738/jads.v2i2.31.

G. Thelen, “Leadership in a Global World Management

Training Requirement Using The Example of The

Asian Studies Program at University of Applied

Sciences (HTWG) Konstanz,” Int. J. Appl. Inf. Manag.,

vol. 1, no. 3, pp. 125–135, 2021, doi:

10.47738/ijaim.v1i3.14.

xiaode pu, “The Influence of Supply Chain Relationships

on The Adoption of Open Standards Inter-

Organizational Information Systems: A Conceptual

Framework,” Int. J. Appl. Inf. Manag., vol. 1, no. 3, pp.

91–98, 2021, doi: 10.47738/ijaim.v1i3.7.

N. Tomura, “Construction of The E-Government Case

Study of Japan and Estonia,” Int. J. Appl. Inf. Manag.,

vol. 1, no. 3, pp. 145–151, 2021, doi:

10.47738/ijaim.v1i3.16.

A. Jahir, I. Setiawan, and A. D. Arta, “Decision Support

System to Determine the Achievement of Students

Using Simple Multi-Attribute Rating Technique

(SMART),” IJIIS Int. J. Informatics Inf. Syst., vol. 2,

no. 2, pp. 39–47, 2019, doi: 10.47738/ijiis.v2i2.12.

T. Hariguna, W. M. Baihaqi, and A. Nurwanti, “Sentiment

Analysis of Product Reviews as A Customer

Recommendation Using the Naive Bayes Classifier

Algorithm,” IJIIS Int. J. Informatics Inf. Syst., vol. 2,

no. 2, pp. 48–55, 2019, doi: 10.47738/ijiis.v2i2.13.

I. Santiko and I. Honggo, “Naive Bayes Algorithm Using

Selection of Correlation Based Featured Selections

Features for Chronic Diagnosis Disease,” IJIIS Int. J.

Informatics Inf. Syst., vol. 2, no. 2, pp. 56–60, 2019,

doi: 10.47738/ijiis.v2i2.14.

Y. N. Chi, “Modeling and Forecasting Long-Term Records

of Mean Sea Level at Grand Isle, Louisiana: SARIMA,

NARNN, and Mixed SARIMA-NARNN Models,” J.

Appl. Data Sci., vol. 2, no. 2, pp. 1–13, 2021, doi:

10.47738/jads.v2i2.27.

ICRI 2021 - International Conference on Recent Innovations

150