World Economy

Indonesia Says Elections Will Not Derail Reforms

In 2018, Indonesia is due to hold scores of provincial elections, ahead of a presidential vote in 2019. The local elections have caused some concern that a heated political environment could hamper efforts by President Joko Widodo’s administration to push through reforms.

In a note on the 2018 outlook for Asia-Pacific sovereign credits, Moody’s Investors Service said on Wednesday that in India and Indonesia, regional elections are “likely to slow down any reform momentum”, Reuters reported.

Finance Minister Mulyani Indrawati expressed disagreement with that view. “I want to point out that any reasoning that says this year the government will be distracted and not push through its reform programs, is wrong,” she told reporters.

Last year, a bruising election for governor of the capital Jakarta saw political and religious tensions in the world’s biggest Muslim-majority country hit the highest in decades.

Indrawati said the government “is now sitting together, coordinating (and) collaborating to make concrete improvements in investment and to support exports”. She said there was a change of “mindset” to resolve problems facing investors and noted that authorities were also addressing issues faced by small and medium enterprises in paying taxes.

“Procedures will be easier, the terms will be simpler and everything can be done digitally,” she said.

The government has also rolled out a series of regulatory changes intended to encourage foreign investment and reduce the dependence on private consumption. Among them are steps to ease working with Indonesia’s notorious bureaucracy.

However, cutting red tape has proved difficult. Last year, Widodo told off cabinet ministers for issuing regulations that will “add to bureaucracy and increase complications” for businesses wanting to expand or invest.

Foreign direct investment rose 12% in the third quarter of 2017 from a year earlier in rupiah terms, compared with a 10.6% annual increase in April-June.

The government has made progress in building infrastructure, although sluggish growth in consumption and bank lending has meant policymakers have struggled to push economic growth significantly above 5% in recent years.

Meanwhile, the ministry of agriculture claimed that Indonesia does not need to import rice as the domestic stock of three million tons produced in December 2017 will sufficiently meet the needs of 2.6 million tons, an official said.

“We do not need to import rice, as you can see from December to January, we had big harvest in many regions, including Gunung Kidul District,” said the head of agriculture human resources development, Momon Kusmono during a harvest festival in Gunung Kidul District, Yogyakarta special region on Tuesday.

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