Tech Giants Said To Be Reluctant To Invest In Indonesia Due To Rampant Bribery

Indonesia faces the risk of losing investment momentum from global technology giants due to high business costs, a high-cost economy, and rampant bribery. Despite the intense attention of global technology CEOs like Elon Musk, Jensen Huang, and Jeff Bezos, significant investment has shifted to neighbouring countries like Malaysia, Thailand, and Vietnam. Teuku Rifki, an economic observer and researcher at the Indonesian Institute of Sciences (LPEM UI), stated that a number of foreign investors believe the main obstacle lies not in a lack of market potential, but rather in complex bureaucracy and corrupt practices.

In fact, rent-seeking remains the biggest obstacle in the permitting process. This means that large companies intending to enter Indonesia are highly vulnerable to extortion.

"More than 60% of large firms in Indonesia admit to having to pay bribes or 'gifts' just to obtain construction permits," Rifki said at the Digital Economy & Telco Outlook 2026 event on Wednesday (November 26, 2025). The report also shows extreme inequality compared to the global average of only 14%. In fact, bribery for similar permits in Malaysia is recorded at 0%. This efficiency gap is a logical reason why capital flows more rapidly to neighboring countries.

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Rifki also explained that the prevailing pattern of corruption is ironic because it specifically targets the most productive companies. Companies with advanced technology, a high-skilled workforce, and an export orientation are the entities most frequently targeted for extortion. "It turns out that the prevalence is higher among exporters who are extorted," he explained. The impact of these structural barriers is very real. When investors are reluctant to open businesses due to high risks, job creation stalls and people's purchasing power stagnates.

Furthermore, legal uncertainty is also a factor why many foreign investors prefer arbitration clauses in Singapore over domestic courts. "Perhaps it's not widely known, but many international companies investing in Indonesia require arbitration in Singaporean courts in their contracts. No one wants arbitration in Indonesian courts. Because the legal uncertainty is very high," Rifki said. Rifki hopes the government will immediately take strategic steps to reverse the situation and re-attract global investors. 

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ASEAN Business Costs Digital Economy Outlook Foreign Investment Risk Indonesia Corruption Bribery Legal Uncertainty LPEM UI Tech Giants