Fragmented Institutions in Promoting Investment in Indonesia: Does Interactive Governance Make a Difference?

In many countries, investment promotion is fragmented across multiple government agencies. This can lead to duplication or overlapping, ineffective efforts, a lack of coordination, and confusing guidance for potential investors who are interested in foreign direct investment in the host country. Interactive governance is a process that brings together different stakeholders to address complex problems. It can be used to overcome the challenges posed by fragmented institutions in investment promotion. This paper examines the use of interactive governance in promoting Foreign Direct Investment in Indonesia. Looking at multiple institutions actively taking part in promoting investment abroad, this paper has identified some fragmented institutions that have similar responsibilities for investment promotion shared between the Ministry of Investment and several other government agencies. This study lists various governmental and private organizations that have actively played their role in promoting investment abroad. The primary hypothesis of this study is that interactive governance can improve coordination and reduce duplication in multiple public and private institutions in investment promotion. The secondary hypothesis is that interactive governance can create more favorable investment promotion tasks shared within public government institutions that have more resources to do it. The study is linked to theory by drawing on the literature on interactive governance and investment promotion. The paper concludes that interactive governance could be used as an effective way to overcome the challenges posed by fragmented institutions in promoting investment. It can help to improve coordination, reduce ineffective efforts, and create a more favorable investment climate for potential investors.