Jokowi’s Outline of Indonesia Economic Reform
President Joko “Jokowi” Widodo outlined his economic reform priorities at the G20 Summit in Brisbane, Australia, on Saturday, November 15, in order for Indonesia to “avoid the middle-income country trap” and accelerate growth over the next 5 years.
“These efforts will be carried out simultaneously. This is our way to overcome and avoid the ‘middle-income country trap’, as well as the eradication of corruption that is the scourge development of Indonesia,” he said.
Jokowi faces a tough challenge in boosting the growth of Southeast Asia’s largest economy, as GDP growth has slowed to its lowest in 5 years. The G20 economy expanded 5.01% on-year in the third quarter, down from 5.12% in the previous quarter.
Rappler reported Indonesia’s economy grew at its slowest pace for 5 years in the third quarter, official data showed Wednesday, November 5, underlining the challenge for new President Joko Widodo to get Southeast Asia’s top economy back on track.
As part of his priority programs to face this challenge, The Jakarta Globe written, Jokowi promised in G20 forum to boost the country’s tax-to-gross domestic product ratio from below 13 percent at present to 16 percent. There also will be a tax system revamp; completing an integrated one-stop national service for investment and business licensing in six months; cut the fuel subsidies and divert the funds for infrastructure financing, as well as to support human resources development and people’s welfare.
“We will do all of these efforts simultaneously. This will be our method to tackle with, and avoid the ‘middle-income country trap,’ aside from eradicating corrupt practices that have overridden developments in Indonesia,” said the former businessman-turn-president.
He added Indonesia’s average economic growth of 5.8 percent during the past eight years had depended a lot on the growing middle-income class, who make up a quarter of the country’s population. In order to keep the economy growing, he said he would maintain the purchasing power of the middle income people – as a pillar of the country’s growth, while improving the low income families.
For the implementation of Business Licensing improvement, as reported by Rappler, Jokowi dropped in unannounced at the office of the Investment Coordinating Board (BKPM) to check on the existing process for issuing business permits, on October 28 – just a week after his inauguration. He said he found some permits that should be issued within 3 days still took up to 12 days sometimes, and gave BKPM 3-6 months to integrate its investment licensing processes.
While in the following week, on November 4, he told the country’s governors they should implement one-stop business licensing services within one year, or else the central government would remove their province’s Special Allocation Fund (DAK) or reduce their General Allocation Fund (DAU).
Cited from Rappler and The Jakarta Globe