Policy reforms to continue in Indonesia, Ministers tell WEF
Indonesia will stick to its policy reforms as it seeks to boost its manufacturing and industrial sectors, two cabinet ministers told the World Economic Forum in Davos on Wednesday.
Speaking at the Indonesian Lunch Dialogue, Finance Minister Bambang Brodjonegoro and Trade Minister Thomas Lembong told business leaders and investors that despite global economic headwinds, Indonesia remained on track to post strong economic growth this year.
The government, they said, was pushing ahead with economic reforms and dismantling protectionism.
Organized by the Lippo Group, Royal Golden Eagle and Bank Mandiri, the lunch dialogue was moderated by John Riady, editor at large of the Jakarta Globe. (The Globe is affiliated with the Lippo Group.)
Other members of the panel were Professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore; Budi Sadikin, president director of Bank Mandiri; and Anindya Bakrie, vice chairman of the Indonesian Chambers of Commerce and Industry (Kadin).
“We can see the current global economic slowdown as a problem, or an opportunity,” Thomas said . “True we are in an emerging market downturn, but President Joko Widodo has said that this is an opportunity to push reforms.
“On the trade side, we are trying to execute one of the sharpest policy U-turns in Indonesian history,” he added. “We are want to dismantle protectionism and smoothen our integration into the regional and global supply chains.”
He said that more industries would be removed from the so-called negative investment list in the coming weeks. “What we have agreed to in the cabinet is to go for something ambitious and an announcement will be made in two to three weeks,” the trade minister said.
Bambang said Indonesia was facing challenging economic times as a result of the dramatic fall in oil prices and the slowdown in China. “The government’s focus this year will be on infrastructure and promoting foreign direct investments and we are confident that we will achieve 5.3 percent GDP growth this year,” he said.
John Riady, editor at large for the Jakarta Globe (left), Bambang Brodjonegoro, Indonesia's Finance Minister (second from left), Budi Gunadi Sadikin, the president director of Bank Mandiri (third from left), Thomas Lembong (second from right), were posing after attending the lunch dialogue at the World Economic Forum in Davos. (Photo courtesy of Salween Group) Other members of the panel were professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, Budi Sadikin, president director of Bank Mandiri and Anindya Bakrie, vice chairman of the Indonesian Chamber of Commerce and Industry (Kadin). From left: John Riady, editor at large of the Jakarta Globe; Finance Minister Bambang Brodjonegoro; Bank Mandiri president director Budi Gunadi Sadikin; Prof. Kishore Mahbubani of the Lee Kuan Yew School of Public Policy; and Anindya Bakrie of the Indonesian Chambers of Commerce and Industry (Kadin) at the World Economic Forum in Davos, Switzerland, on Wednesday. (Photo courtesy of Salween Group)
Budi told the audience that the banking sector was much healthier and stronger than in the past and that the country would ride out the global economic slowdown. “Indonesia is unlucky because of the volatility in the financial markets but we have survived,” he said.
He added that Indonesia still offered enormous opportunities for foreign investors as the economy was resilient and the middle class was growing.
In his comments, Anindya noted that Indonesia’s fundamentals such as political and social stability, strong consumer spending and a demographic dividend set the country apart from other emerging economies.
“One challenge for all of us is whether we can continue to grow despite the low oil price, the slowdown in China and [Islamic] radicalism,” he said. “We have been here before but we cannot afford to be complacent.”
Peace, stability and cooperation among the members of the Association of Southeast Asian Nations, said Mahbubani, is what sets the region's economies apart from others in the world. He added that the doom and gloom at this annual meeting was overblown.
“It's clear we are sailing through troubled waters now,” Mahbubani said. “The question is whether we are going to enter more rough waters [or] calm seas around the corner.”
The answer, he said, is that 10 years from now both China and India would be much stronger and bigger economies and this would be boon for Asean.
“The reason why we are relatively calm about Southeast Asia is because we have created something called Asean,” he said. “It can be boring but it has created peace in the region and the guns are silent and that is a big deal.”
With the full implementation of the Asean Economic Community at the start of this year, Mahbubani said all economies in the region, including Indonesia, must open up various sectors if they wanted to move ahead.
“If Indonesia makes a big leap forward and implements the AEC, I guarantee that Indonesia will do better,” he said.