Government Policy on Multinational Companies (MNCs) & Their Influence on the Cirebon

History of Cirebon and Multinational Companies (MNCs).

Cirebon is one of the areas in West Java, Cirebon has two government centers, the Regency and the City, the location of this area is on the north coast of the island of Java. The area that is often called the city of shrimp has a lot of history, starting from the center of the Cirebon kingdom, the place where Islam was spread, to the history of its 3 palaces. In addition, the area adjacent to the beach has a factory from the British American Tobacco company which is no longer active. The more familiar building known as the BAT building has now turned into a tourist spot and photo spot for tourists visiting the Cirebon area.

British American Tobacco is a cigarette company based in London, England. This company is still actively operating, even though the factory branch in Cirebon has long since released its shares. Historically, Cirebon’s BAT building not only belongs to a single company but has changed hands on several occasions, Initially, the Indo-Egyptian Cigarettes Company owned this building, then in 1923 the company merged and was taken over by a British-American company called the British American Tobacco Company, and in the hands of this company the factory became the largest white cigarette producer in Indonesia, but unfortunately in when the second world war broke out the company had to stop its operations and start its activities again in 1949 even though it had to change its name to British American Tobacco Manufacture (Indonesia) Limited.

After a few years, in 1963-1964 the progress of the multinational company in Cirebon had to stop because the Indonesian government took over, but with the issuance of Law number 1 of 1967 concerning “foreign investment” during the New Order era, ownership of this factory was returned to BAT again as the original owner, and in 1979 the company sold 30% of their shares to the Indonesian people and since then the company changed its name back to PT BAT Indonesia.

Policies of the Government of Indonesia and the Regional Government of Cirebon on Investment & MNCs.

The Indonesian government’s policies towards multinational companies (MNCs) and foreign investors in recent years have returned to the surface and become a hot topic of conversation. We can see the government’s serious efforts toward the investment sector on 5 October 2020, when Law (UU) No. 11 of 2020 talks about Job Creation, which this law focuses more on the investment sector. The Indonesian government hopes that the passing of this law will create a higher quality business and investment climate in the future so that a quality climate will undoubtedly open up new jobs in Indonesia. The seriousness of the Indonesian government does not only stop at making policies, but the government also establishes an Indonesia Investment Authority. This institution aims to gain the trust of investors.

With the seriousness of the Indonesian government in investing, the Cirebon district government followed suit, on November 3, 2021, the Cirebon Regency Government through the One-Stop Investment and Service Agency, gave an award to several companies, both domestic investment and foreign investment, this award is given as a form of appreciation from the Cirebon district government to several companies that report investment activity reports on time in 2021. H.Imron who is the regent of Cirebon revealed that in addition to being a form of appreciation, this award can be used as evaluating the company while investing. Several companies that received awards for timely reporting of investment activities in Cirebon include PT Indofood CBP Sukses Makmur, PT Vincent Sheppard Indonesia, PT Daiwaboo Industrial Fabrics, PT Embe Plumbon Textile, and many more.

The Effect of Policy on the Current Condition of Cirebon.

With the existence of an ecosystem and regulations from both the Indonesian government and the Cirebon regional government which are very fresh for these investors, the condition of the Cirebon area in recent years has become a target for investors wishing to invest in the area, based on the data, currently, Cirebon has 852 companies, Which consists of 687 domestic investment companies and 165 are foreign investment companies. In addition, if we visit Cirebon at this time, we can easily find international standard shops, for example, McD, KFC, Starbucks, HnM, and others,  where all of these stores are the application of forms of investment.

With this policy, Cirebon has also created an investment task force, which aims to make investors feel more secure, and comfortable and also facilitated when investing their capital in the Cirebon area.

The Future

If we look at the history of the Cirebon as explained above, in fact, this area is no stranger to investment, even when Indonesia was still colonized by the Dutch this area witnessed investment that took place in West Java with the establishment of the BAT building. Until now, both the Cirebon regency and Cirebon city have felt that investment is coming into their regions, the investment climate conditions in these two regions have been reported to be continuously improving, and even the district of Cirebon itself is willing to set up a task force on investment to guarantee investors who want to enter. Cirebon’s efforts are in line with recent efforts of the Indonesian government to attract investment to Indonesia.

Under these conditions, it’s hoped that in the future a lot of other investments will enter Indonesia and also Cirebon, however, there’s a necessity for selection from the Indonesian government and also the Cirebon government for incoming investment because not all investments are good. The investments that are present should have a good impact on the community and on the government, therefore, don’t let us from falling for the investments that are present, we still need to keep sorting and selecting.

Even though it seems that we need investment to enter an area, both the central and regional governments must have greater or equal power as investors, all this with the aim that we, as hosts, still have power in negotiating and not depends on the investors.

Sulthan Haidar Dziban
Sulthan Haidar Dziban
Student at Universitas Islam Indonesia