Further reforms will promote a more inclusive and resilient Indonesian economy

Indonesia OECD

(OECD, 2018)

This article is brought to you in association with OECD.


A steady economic expansion in Indonesia is boosting living standards, curbing poverty and offering millions of people greater access to public services. Reforms that boost growth, improve the business environment for small and medium-sized enterprises and increase government revenues will allow investment in infrastructure and increased spending on health and social services, which would ensure a brighter future for all Indonesians, according to two new reports from the OECD.

The latest OECD Economic Survey of Indonesia looks at the current expansion, as well as the challenges facing the country moving forward. The Survey projects growth of 5.2% this year and 5.3% in 2019, and lays out an agenda for making the economy more resilient and more inclusive.

The Survey, presented in Bali by OECD Secretary-General Angel Gurría and Indonesian Finance Minister Sri Mulyani Indrawati, highlights the importance of policies to increase resilience as global risks rise. It also underlines the potential for tax reforms that increase government revenues to meet financing needs in a growth and equity-friendly manner, as well as how tourism can contribute to sustainable regional development.

“As the OECD launches the latest Economic Survey of Indonesia today in Bali, our heartfelt sympathies go out to the Government and the people of Indonesia over the tragic loss of life from the earthquake and tsunami in Central Sulawesi. This Economic Survey promotes policies designed to improve Indonesia’s resilience to global risks. Efforts already underway to recover from this natural disaster and rebuild for the future offer a powerful illustration of resilience in action,” Mr Gurría said.

“The Indonesian economy is growing at healthy rates, and a demographic dividend will further boost growth in the coming years,” Mr Gurría said. “The challenge going forward will be to create the conditions to ensure that future generations have the opportunities for a better life. Infrastructure, education, health and job quality still pose important challenges that must be addressed to ensure that Indonesia achieves sustainable and inclusive growth.”

To make the economy more resilient and inclusive, the Survey calls for improved targeting of social assistance, deepening domestic financial markets, better transparency and governance of state-owned enterprises, reforms to employment regulations to bring more workers into formal employment and further simplification of business regulations.

To raise greater revenues to meet spending needs, the Survey proposes Indonesia increase investment in tax administration, make greater use of information technology to strengthen monitoring and facilitate compliance, broaden the tax base for both income tax and value-added taxes, and work with local governments to increase revenues from recurrent property taxes.

To develop a stronger and more sustainable tourism sector, the Survey points out the need to include infrastructure in new development plans, expand tourism skills training and consider opening new areas for appropriate tourism use.

Improving conditions for SMEs and entrepreneurs will also be key for future economic development, according to the first-ever OECD SME and Entrepreneurship Policy Review of Indonesia 2018. Mr Gurría presented the Review in Bali with Minister of Cooperatives and SMEs Anak Agung Gede Ngurah Puspayoga and Minister of National Development Planning Bambang Brodjonegoro.

The Review examines the performance of SMEs and entrepreneurship and provides tailored recommendations for improving the business environment and framework conditions, the strategic policy context, national programmes and the coherence between national and provincial policies.

“In Indonesia, small companies employing less than 20 people account for more than three-quarters of national employment, more than in any OECD country,” said Mr. Gurría. “This is why policies to boost SME development should remain a priority for the Indonesian Government.”

To strengthen productivity growth in SMEs, the OECD suggests increasing government spending on skills upgrading and innovation in SMEs. The Review finds that Indonesia spends less than 0.1% of GDP on R&D, compared with the OECD average of 2.3%, and that standard innovation policies such as R&D tax credits are relatively underdeveloped.

To reduce the budgetary impact of this policy, the OECD also suggests reducing the cost of some large-scale programmes, such as KUR (Kredit Usaha Rakyat, People’s Business Credit) – a loan guarantee with an interest rate subsidy – by increasing focus on targeted groups, such as first-time borrowers and SMEs from lagging regions.

To improve the overall coherence of Indonesian SME policy, the Review recommends the integration and merger of programmes that offer very similar services but are operated by different ministries, for example in the field of business development services and business incubators.

Mr Gurría and Minister Indrawati also launched a new OECD – Indonesia Joint Work Programme (2019-21) that will cover a range of national studies, policy advice and capacity building, while placing greater emphasis on bringing Indonesia closer to OECD bodies and instruments. “Aligning Indonesia to OECD standards can lead to a more dynamic economy and a more inclusive and sustainable growth model,” Gurría said.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Grexit no longer a threat but how to manage a “tutti frutti” government if not with fear?

European Confederation of Junior Enterprises hosts in Geneva the Junior Enterprise World Conference

UN underscores the need to celebrate indigenous peoples, not confine them

Drought in Europe: Commission presents additional measures to support farmers

Global Leaders Take The Stage At MWC Shanghai 2019, in association with The European Sting

EFSF/ESM boss tells half truths about Troika’s doings

Here’s how data could make our cities safer

Barriers to trade: as protectionism rises, EU continues opening up export markets for European firms

Why city residents should have a say in what their cities look like

Everything you need to know about water

Khashoggi trial in Saudi Arabia falls short of independent, international probe needed: UN rights chief

Where is Egypt leading the Middle East and the Mediterranean economy?

These countries are ranked highest – and lowest – for human development

Erdogan’s electoral win on a ‘me or chaos’ dilemma means trouble for everybody

Paris, Washington, IMF against Berlin and ECB on money and interest

Lack of access to clean water, toilets puts children’s education at risk, says UN

On our way to China

Security Council should ‘nurture’ Colombian consensus against return to violence, top UN official urges

Climate change is destroying a barrier that protects the US from hurricanes

The 27 EU leaders did nothing to help May unlock the Brexit talks

Commission tries to solidify the EU statistical system

Parliament sets up plan to fight the 3,600 criminal rings of EU

Scotland wants to create an ethical stock exchange (Post Brexit)

European Development Days 2013

Merkel refuses to consider the North-South schism of Eurozone

On Google antitrust case: “Let’s face it, some companies want to hurt Google and it goes as simple as that”

ZTE @ MWC14: ZTE excels in all areas at this year’s Mobile World Congress

‘Nothing left to go back for’: UN News hears extraordinary stories of loss, and survival as Mozambique rebuilds from deadly cyclones

Mainland Europe adopts Germanic cartel business patterns

What will the US look like under Trump? Was his election campaign a big scam?

State aid: Commission approves €431 million public support for cleaner transport in German cities

Google prepares to final EU judgement over Android antitrust case

MEPs want robust EU cyber defence and closer ties with NATO

The creation and maintenance of smoke-free public spaces in the UK

Davos participants call for digital trade deal

Greening the Belt and Road is essential to our climate’s future

The opportunity of studying Medicine abroad

New York City has a plan to fight fast fashion waste. Here’s how it works

Digital Single Market: New EU rules for online subscription services

UN food relief agency airlifts aid to DR Congo province hit by Ebola outbreak

Colombia: ‘Terrible trend’ of rights defenders killed, harassed; UN calls for ‘significant effort’ to tackle impunity

Kellen Europe Hosts EuroConference 2016

AI-assisted recruitment is biased. Here’s how to make it more fair

How civil society must adapt to survive its greatest challenges

European Parliament marks EU accession prospects for Serbia and Kosovo

Ensure safety of responders UN Security Council urges, amid worsening DR Congo Ebola outbreak

Resolving banks with depositors’ money?

UN postal agency ‘regrets’ US withdrawal

Some Prevailing Arguments and Perceptions over the South China Sea Issue Are Simply Wrong

‘End the ongoing atrocities’ against people with albinism in Malawi, say UN rights experts

Manufacturers Get Smarter for Industry 4.0

Zeid calls for ICC probe into Myanmar Rohingya crisis

New York and London mayors call on cities to divest from fossil fuels

The COP24 Agreement: Yes, it happened at last

MEPs take stock of the EU’s foreign, security and defence policy priorities

OECD joins with Argentina to fight financial crime

European Commission: Does Apple, Starbucks and Fiat really pay their taxes?

How fungi could save the world

The economic cost of anti-vaccination movements in Italy

MWC 2016 LIVE: Xiaomi looks to revive growth with flagships

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s