The World Bank issued an EODB report recently about and in it, they said Indonesia had moved its way up the rankings from 106 to 72 in terms of the ease of doing business in the country.
This is no small achievement and here’s why.
Since October 20, 2014, President Jokowi, Vice President Kalla and other pivotal members of the cabinet have drawn up numerous measures aimed at improving almost all sectors of the economy and leading the country in the right direction.
And there is still much to come.
Indonesia is certainly not an easy country to manage, and the challenges are many; ethnic, religious, political, and geographical to mention just a few. However, a strong national wind of unity is blowing through all aspects of life and people are supporting their government in a way not seen in a long time.
Over the last three years, the country has experienced impressive improvements. Several international agencies have released reports confirming this to the international community as well. The World Bank, for example, in addition to its EODB report has also recorded the country’s growth in the first two years of Jokowi’s rule (2014-2016) at a healthy rate of 5%l which looks set to continue through 2017 with further improvements highly likely into 2018.
Other economic indicators, such as the inflation rate, dropped from 4.49% (recorded in September 2014) to 3.72% in September 2017. This rate is well within the targeted 4%. And is projected to drop even further in the year ahead.
Indonesia is also seeing strong improvements in its external sectors. The current account deficit in Q2, 2017 for example, reached 2% of GDP, compared to 2.3% in 2016.
Also, Indonesia’s foreign debt ratio against foreign exchange reserves stood at 46.8, improving dramatically from 53 in 2014, and still well within 60 percent of GDP as stipulated in Indonesian law.
Jokowi has also been working hard to reform the country’s economy by increasing Indonesia’s competitive edge through new policies and regulations.
This has resulted in significant economic growth when compared with average worldwide economic growth.
One way this was done was through the introduction of a series of economic policy packages. At the time of writing, the government has launched a staggering 16 economic policy packages, the results of which can be summarised as:
- 9 regulations revoked to ease economic constraints;
- 31 regulations revised to amend/revoke several chapters being counterproductive to the economy;
- 49 new regulations introduced to accommodate and enhance new policies;
- 35 regulations merged to ease and simplify licensing and regulations;
- 89 regulations to adjust old regulations deemed not relevant to the current condition and market situation.
These measures have proven to be very successful, as many indicators and reports show. In addition to the latest EODB 2018 report, Indonesia’s Global Competitiveness Index (GCI) improved from 41 in 2016 to 36 in 2017 out of 137 countries.
Another example well worth mentioning is UNCTAD’s Global Foreign Direct Investment report for 2016-2018 where Indonesia now ranks number 4 after the US, China and India.
In February 2017, Moody’s Investors Service changed the country’s investment outlook from stable to positive. And in March, it was Japan Credit Rating’s (JCR’s) turn to upgrade the country’s credit rating to positive. Fitch Ratings did the same thing just over 3 months later in July.
Last but not least, Standard & Poor’s upgraded the country’s investment outlook to investment grade (BBB-). This proves that international investors are much more confident in the country and sets the path for further growth of investment.
Foreign investment in Q3 of 2017 reached USD 23.8 billion, while domestic investment stood at IDR 194.7 trillion.
Solid growth all around. And no doubt a result of the policies and strategies set up and executed by the government of Jokowi.
