Economy
From The Report: Indonesia 2020
View in Online Reader

Indonesia is the only G20 economy in South-east Asia and is home to the world’s fourth-largest population. While it possesses a variety of natural resources, taking full advantage of this endowment is challenging due to constraints such as an archipelagic geography, an infrastructure deficit and workforce inefficiencies. Reforms aimed at addressing some of these shortcomings are on the table, though they face growing resistance, especially amid the Covid-19 crisis. Real GDP growth was 5.03% in 2019. Prior to the outbreak of Covid-19, an uptick in GDP was expected in 2020. At a policy meeting in February, Perry Warjiyo, governor of Bank Indonesia, predicted Covid-19 would have a V-shaped effect on economic growth in 2020, with a baseline growth rate of 5.1% that could rise to 5.2% with fiscal policy support. However, as the pandemic quickly worsened and numerous countries enacted strict lockdown measures, this was revised down to 2.3% in April. This chapter contains interviews with Sri Mulyani, Minister of Finance; Perry Warjiyo, Governor, Bank Indonesia; and Wimboh Santoso, Chairman, Financial Services Authority.

Articles from this Chapter

Overview

Adapt and evolve: Policy changes and reforms announced in early 2020 are given greater attention in the midst of the global pandemic
OBG
plus

Indonesia is the only G20 economy in South-east Asia and is home to the world’s fourth-largest population. While it possesses a variety of natural resources, taking full advantage of this endowment is challenging due to constraints such as an archipelagic geography, an infrastructure deficit and workforce inefficiencies. Reforms aimed at addressing some of these shortcomings are on the table, though they face growing resistance, especially amid the Covid-19 crisis. Development Strategy Since…

Interview

Attractive destination: Sri Mulyani, Minister of Finance, on measures to encourage investment and inclusive economic growth
OBG
plus

Interview:Sri Mulyani Where have recent tax reforms improved the business and investment climate, and what further measures can increase the tax-to-GDP ratio? SRI MULYANI: We must consider both tax policy changes and tax administration reforms. On the policy side, tax incentives are given to businesses to support their expansion and encourage new investment, particularly in strategic sectors that support economic development. For example, tax incentives in the manufacturing sector help to…

Analysis

Industrial gains: Proposed regulatory changes and tax breaks are aimed at enhancing the attractiveness of special economic zones
OBG
plus

Indonesia has pledged to make special economic zones (SEZs) a policy priority. The zones are seen as a way to boost industrial activity and job creation, particularly in more remote, less developed regions. The goal is to draw more than $50bn in investment into SEZs over the next decade, and methods include enhancing the incentives available and allowing public and private sector entities to propose SEZ plans. The strategy is seen as a timely one, as it aims to capitalise on supply-chain…

Interview

On all fronts: Perry Warjiyo, Governor, Bank Indonesia (BI), on supporting financial inclusion and foreign investment through innovation
OBG
plus

Interview:Perry Warjiyo Which measures had the greatest impact on the country’s economic trajectory over 2019? PERRY WARJIYO: Despite unfavourable global conditions in 2019, we managed to ensure stability through low inflation and stable exchange rates. This was done by lowering the policy rate, loosening liquidity and stabilising the rupiah. We also maintained a loose macroprudential policy stance. This policy mix was directed at increasing supply and demand for bank intermediation and…

Interview

Untapped potential: Wimboh Santoso, Chairman, Financial Services Authority (OJK), on benefitting from new technologies and existing resources
OBG
plus

Interview:Wimboh Santoso How can technology help enhance efficiency and improve banking penetration? WIMBOH SANTOSO: We see the digitalisation of the financial services industry, including the banking, insurance and capital markets segments, as a method of ensuring its sustainability. It is also a tool to increase local and international competition. Digitalisation increases ease of access for institutional and retail clients. We are working on enhancing digital capacity as a frontline policy…

Analysis

Recruitment drive: Major changes to the labour law are being debated, with the goal to harness higher volumes of foreign investment
OBG
plus

With President Joko Widodo, better known as President Jokowi, voted in for a second term in 2019, the focus in early 2020 was on key structural reforms – the kind of changes which could be difficult to adjust to but at the same time create new opportunities in sectors that are seen as underperforming, such as manufacturing. Draft versions of omnibus laws have been proposed to reform key areas such as tax, regulation, and, controversially, labour laws. Despite opposition from labour unions,…

Analysis

The hunt for Asian unicorns: Innovative tech start-ups are emerging across South-east Asia
OBG
plus

The innovative tech scene in South-east Asia has garnered international attention. A jolt occurred in the international tech industry in early 2018, when the Singapore-based ride-hailing app Grab announced that it would take control of the Southeast Asian operations of its US-based competitor, and global first-mover, Uber. The purchase, which gave Uber a 27.5% stake in Grab, put the spotlight on the increasing competitiveness of tech start-ups across the region. Similar to larger companies,…

Analysis

The hunt for Asian unicorns: Innovative tech start-ups are emerging across South-east Asia
OBG
plus

The innovative tech scene in South-east Asia has garnered international attention. A jolt occurred in the international tech industry in early 2018, when the Singapore-based ride-hailing app Grab announced that it would take control of the Southeast Asian operations of its US-based competitor, and global first-mover, Uber. The purchase, which gave Uber a 27.5% stake in Grab, put the spotlight on the increasing competitiveness of tech start-ups across the region. Similar to larger companies,…