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Todung Mulya Lubis, Senior Partner, Lubis, Santosa & Maramis, on enhancing the country’s business environment
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Please don’t panic. And don’t judge the government by slower economic growth, the weakening rupiah and continuing corruption. Of course, those are reasons to be cautious, but it does not mean Indonesia should be written off. After all, Indonesia is still the largest country in the ASEAN, the fourth-most-populous nation in the world and unbelievably rich in natural resources. It is only a matter…
Analysis

Indonesia moves forward with ASEAN integration

Posted OBG AdminPosted in Uncategorized

As the dominant political and economic power in the ASEAN bloc, Indonesia’s participation in the ASEAN Economic Community’s (AEC) planned integration this year will have significant ramifications for domestic growth, trade flows and immigration. Although AEC integrations is expected to significantly bolster the region’s attractiveness to foreign investment, simultaneously reducing non-trade barriers…
Analysis

Oil prices impact Indonesia's trade balance

Posted OBG AdminPosted in Uncategorized

Following a few challenging years that saw Indonesia’s trade balance fall into the red for the first time in years, the country’s trade deficit is rapidly shrinking in the wake of a decline in global oil prices. Although it reached nearly $2bn in 2014, the deficit still stood at less than half its 2013 level, while modest surpluses in early 2015 indicate the nation is beginning to benefit from…
Analysis

Foreign banking regulations in Indonesia seek to protect local institutions

Posted OBG AdminPosted in Uncategorized

In an effort to protect its domestic banking industry from foreign competition, the Indonesian government has imposed restrictions on foreign banks operating in the country, introducing ownership restrictions in 2012, and drafting new regulations that would oblige foreign banks to become locally incorporated entities. The nation’s banking sector has been criticised as too liberal compared to its…
Analysis

Indonesia's trade ties with Japan have expanded in recent years

Posted OBG AdminPosted in Uncategorized

Indonesia’s trade ties with Japan have shown tremendous growth in recent years, with Japan now its second-largest source of investment and second-largest trade partner, despite a decline in investment in 2014. Bilateral ties are expected to grow on the back of new opportunities in manufacturing, defence and energy, although a persistent trade imbalance between the two has led Indonesia to begin reconfiguring…
Analysis

Subsidy cuts create fiscal space to boost infrastructure spending in Indonesia

Posted OBG AdminPosted in Uncategorized

In 2014 Indonesia elected a new president, Joko Widodo – a development of significant interest to both national and regional stakeholders, as well as global investors and economists. A self-made businessman whose background and policies have resonated with Indonesians, Widodo ran on a platform that included cracking down on corruption, improving the quality of life outside the country’s major urban…
Analysis

Indonesia's government focuses on FDI and reducing the current account and trade deficits

Posted OBG AdminPosted in Uncategorized

A key goal of Indonesia’s new president, Joko Widodo, is to boost GDP growth to 7% during his tenure, after it fell to a five-year low of 5.02% in 2014. He will face several challenges in this endeavour. Oil and gas revenues have declined on the back of a drop in prices, while falling global prices for other commodities have translated into weaker demand for Indonesian exports. At the same time,…
Analysis

Indonesia's prudent policies get a helping hand from global markets

Posted OBG AdminPosted in Uncategorized

In a momentous development for the country, the newly elected president, Joko Widodo, followed through on campaign promises to do away with fuel subsidies in Indonesia. In addition to a 30% petrol price hike unveiled in November 2014, the new administration announced it would eliminate the majority of support beginning in 2015, ending a 48-year-old programme that cost the government billions of dollars…
Analysis

Indonesia's remittance services improving

Posted OBG AdminPosted in Uncategorized

Though not as significant as in the Philippines, remittances to Indonesia from overseas foreign workers (OFWs) are crucial for thousands of families in the country. Remittances have shown strong growth in recent years, providing valuable opportunities for Indonesia’s sizeable excess labour force. Strong recent growth and new banking regulations have been a boon to the industry, leading to the proliferation…
Analysis

Competition between China and Japan should benefit Indonesia

Posted OBG AdminPosted in Uncategorized

The rising attractiveness of Indonesia as a regional destination for foreign direct investment (FDI) has been highlighted by its growing trade relationship with China, with leaders from both nations announcing over $60bn in potential new investments and financing in early 2015. Indonesia’s planned wave of national infrastructure projects is expected to gain from competition between China and Japan…