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

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

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

MWC 2016: IoT experts fret over fragmentation

What paleoecology can teach us about fires in the Amazon

3 ways to fight short-termism and relaunch Europe

EU Parliament semi worried over democratic deficit

These are the countries where most adults still don’t have a smartphone

Scoring for the environment: what Mathieu Flamini’s top-flight football career taught him about leadership

We can decide to live within the limits of our planet

Eurozone economy desperately needs internally driven growth

Guterres calls for ‘maximum restraint’ following drone assault on key Saudi oil facility

New Zealand will have a new ‘well-being budget,’ says Jacinda Ardern

The business case for investing in sustainable plastics

Deaths from far-right terrorism have more than tripled in the West

Why is Grexit again in the news? Who is to pay for Eurozone’s banking problems?

Merkel had it her way with the refugees & immigrants but can Greece and Turkey deliver?

Turkey presents a new strategy for EU accession but foreign policy could be the lucky card

The latest emoji are more inclusive – but who approves them?

Thursday’s Daily Brief: Climate emergency, call to support breastfeeding, rising political heat and new investigation board for Syria

German banks suffer of nausea amidst rough seas

The strong version of the EU banking union gains momentum

‘No steps taken’ so far to end Israel’s illegal settlement activity on Palestinian land – UN envoy

GSMA Announces New Keynote Speakers, Event Updates for 2019 “MWC Los Angeles, in Partnership with CTIA”

Study: Trade supports over 36 million jobs across the EU

UN Security Council welcomes results of Mali’s presidential elections

Companies can help solve water scarcity. Here’s how

‘Virtual Biopsy’ device detects skin tumours in 15 minutes

UN chief condemns suspected Boko Haram attacks targeting Eid al-Fitr celebrations in Nigeria

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

How distorted is the EU labour market by this crisis?

Monday’s Daily Brief: human rights in the Near East and a Forum for Refugees

EU finally agreed to cut roaming charges in 2017 but criticism is always there

Millions of young lives at risk due to humanitarian funding shortfall: UNICEF

This is why mountains matter more than you think

Further reforms in Japan needed to meet the challenges of population ageing and high public debt

These are the countries that eat the most meat

Advocate General ‘outlaws’ Data Retention Directive

Central African Republic: Guterres says UN mission committed to protecting civilians, helping stabilize country, as violence flares

EU Commission: Growth first then fiscal consolidation

5 ways blockchain can transform the world of impact investing

The Eurogroup offered a cold reception to IMF’s director for Europe

A Sting Exclusive: EU Commission’s Vice President Šefčovič accentuates the importance of innovation to EU’s Energy Union

WEF Davos 2016 LIVE: “European unity and cooperation is being called on question”, Vice President Joe Biden criticizes from Davos

Will the EU reconsider Frontex’s role in light of accusations about violations of migrants’ human rights?

UN condemns attack on Ebola treatment centre in DR Congo which left doctor dead, two others injured

‘No-deal’ Brexit preparedness: European Commission takes stock of preparations and provides practical guidance to ensure coordinated EU approach

The US bugged Europe: Is this news?

World Television Day celebrates an integral part of modern life

Chart of the day: This is what violence does to a nation’s GDP

Here are 3 ways venture capital can fund a better future

There are now four competing visions of the internet. How should they be governed?

The world needs a grand coalition to tackle climate change

Who cares about the unity of Ukraine?

Civilians ‘must never be a target,’ says UN in Afghanistan, amid troubling number of casualties during Ramadan

What UK and EU risk if Brexit “wins” these elections

French full-body veil ban, violated women’s freedom of religion: UN Human Rights Committee

OECD and European Commission join forces to further support structural reforms in European countries

Much more than a ‘lifeline’ for millions of households, remittances can spur global growth, says UN agency

Libya detention centre airstrike could amount to a war crime says UN, as Guterres calls for independent investigation

The Sichuan Province of China presents its cultural treasure to the EU

Terrorist content online should be removed within one hour, says EP

Wednesday’s Daily Brief: Syrian detainees, Zimbabwe hunger crisis, Kabul attack, Mexico disappearances, new tech to feed the world

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