Jokowi takes the wheel as Indonesia Inc slows down
Play
Indonesian President Joko “Jokowi” Widodo on Tuesday promised to establish a special task force to ensure that the series of economic policy packages issued since last September are fully implemented. The plan is timely, coming amid growing concern over
Since the new economic measures involve numerous ministries and government agencies, miscommunication threatens their implementation. No doubt aware of this, the president has decided to chair the task force in order to help smooth out any obstacles.
However, given Jokowi’s busy schedule, the decision-making process could be a long one. To avoid such delay, the president should pick a senior minister to act as his deputy, so that technical issues and problems related to implementation of new economic policy could be resolved as quickly as possible.
Besides the launch of the task force, Jokowi also vowed speedy completion of all 203 implementation regulations – about 10 of which are still outstanding – necessary for the full execution of deregulation measures, stimulus programmes and fiscal incentives contained policy packages.
Economists have cited slow implementation of the policy packages as one reason for Indonesia’s economic slowdown seen in the first quarter.
Indonesia’s gross domestic product (GDP) grew by 4.92 per cent year-on-year in the January-March period, below the market expectation of 5.05 per cent and lower than the 5.04 per cent growth rate in the fourth quarter of last year.
A decline in exports and new investment partly contributed to the economic slowdown, even though most of the incentives and deregulation measures stipulated in the policy packages are intended to support export-oriented companies and boost investment.
The economic policy packages have so far also failed to reduce high unemployment, although they include a number of fiscal and stimulus measures intended to support labour-intensive businesses, such as footwear and garment manufacturers.
Many small and medium enterprises are also failing to benefit from the stimulus packages since they are unable to meet the strict requirements.
Hopefully, the launch of the task force and the issuance of the required regulations for policy implementation will help non-oil and gas exports grow as planned. This way, the measures could compensate for a persistent drop in the export of minerals and other commodities.
More importantly, an improved investment climate and easier business procedures would help Indonesia achieve not only high but also sustainable growth, so that the 7 per cent growth rate targeted by Jokowi by 2019 might be achievable.
