Indonesia to Implement Policy Package to Strengthen Lackluster Economy

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As Indonesia continues to struggle with an economy that refuses to strengthen adequately, President Joko Widodo has launched a policy package intended to jumpstart economic growth in the country.

The Indonesian economy has been faltering for some time now, with the country’s currency (the rupiah) falling to its lowest level since the 1997-98 Asian Financial Crisis at the beginning of 2015.

The country has set a target of seven percent GDP growth by 2017, and aims to achieve this through increased infrastructure spending and attracting more foreign investment. However, despite some positive steps, this year’s first quarter GDP growth of 4.71 percent raised worries that the government’s plans are not being implemented quickly enough. First quarter growth was the slowest year on year growth since the third quarter of 2009.

There have been positive signs for the economy, such as Indonesia leading Southeast Asia in foreign direct investment in 2015, and it is hoped the President’s economic policy package will be able to build upon these successes.

Related-Reading-Icon-Asean LinkRELATED: Indonesian FDI Highest Among ASEAN Members in First Half of 2015

The new economic plan consists of three steps:

Step One:

  • Encourage national industrial competitiveness through deregulation and de-bureaucratization
  • Encourage law enforcement
  • Improve business confidence
  • 89 of 154 regulations will be reviewed in order to eliminate duplication and strengthen the coherence and consistency of the regulations
  • Reduce the number of irrelevant regulations that hamper the competitiveness of national industries
  • Conduct permit simplification
  • Improve working procedures of licensing
  • Improve service quality
  • Improve electronic-based services

Step Two:

  • Accelerate national strategic projects by removing problems in the implementation and completion of the projects, to include:
    • Permit simplification
    • Completion of spatial layout and land supply
    • Accelerating the procurement of government goods and services
    • Discretion in resolving barriers and legal protection

Step Three:

  • Increase investment in the property sector. The government will achieve this by doing the following:
    • Issue a policy to encourage the construction of housing, particularly for low-income people
    • Open up greater investment opportunities in the property sector
Professional Service_CB icons_2015 RELATED: Entry Strategy Advisory from Dezan Shira & Associates


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