Vice President Says Hardship Means Business

 
 

Vice President Jusuf Kalla expressed his optimism that the economy in Indonesia would improve in the next two to three years and encouraged entrepreneurs to invest now.

Bandung – Vice President Jusuf Kalla expressed his optimism that the economy in Indonesia would improve in the next two to three years and encouraged entrepreneurs to invest now. “The current conditions are quite difficult and it may continue on like this through next year. However, I am convinced that conditions will show improvement in the next two to three years,” said Kalla in his keynote address at the inauguration of the 7th Indonesian Chamber of Commerce and Industry (Kadin) national congress in Bandung on Monday. Investing during a less favorable time, he added, would be beneficial and dynamic entrepreneurs should see the situation as an opportunity. “Now is the time to invest as everything is cheaper. Building a factory now would definitely be cheaper compared to building in the next two or three years,” said Kalla. The government, continued Kalla, are very supportive of entrepreneurs willing to develop the manufacturing industry as this relates to urbanization, a shift in people from rural to urban areas in search of work. “The manufacturing industry could provide bigger job opportunities,” said Kalla before a crowd of 1,000 Kadin members. Based on Central Statistics Agency (BPS) data, slow economic growth would take place during the initial stage of the Joko “Jokowi” Widodo-Jusuf Kalla administration. BPS released economic growth figures for the second quarter of this year, shown at 4.67 percent, slightly lower when compared to the first quarter figure of 4.7 percent. In the third quarter, the economic growth was recorded at 4.73 percent, a slight increase compared to the second quarter. However, according to BPS, the figure was lower compared to the corresponding period last year, which stood at 4.92 percent. Based on BPS data, the numbers of underprivileged people in Indonesia have increased. In March this year, BPS recorded 28.59 million underprivileged people, 11.22 percent of the entire population. Kadin vice chair Shinta Kamdani said that if the government wished entrepreneurs to invest in the manufacturing industry, they would need to provide incentives. “This could be in the form of tax allowance and tax holiday,” said Shinta.

Since September, the government has released six economic stimulus packages as part of its efforts to revive the economy amid global economic downturn, which include fiscal incentives and the streamlining of licensing procedures for a wide range of industries. Meanwhile, outgoing Kadin chairman Suryo Bambang Sulisto said there needs to be synergy between the business world and the government so as to realize businesspeople’s expectations. The interest rate policy is currently regarded by entrepreneurs as being too high. Suryo cited Bank Indonesia’s interest rate of 7.5 percent as the highest and should be lowered. The government can also help entrepreneurs by not setting high interest rates for banks. “Kadin has proposed for the government to spearhead the move and not to ask for bank interest rates that are too high,” he explained. The 7th Kadin national congress, taking place from Monday to Tuesday, is the highest decision-making forum in the organization, in which participants will pick the chairman for the 2015-2020 period. Two contenders, former trade minister Rachmat Gobel and Kadin vice chairman for banking and financial affairs Rosan P. Roeslani, have expressed an interest in the top post. Both of them will run head-to-head, each looking to obtain a total of 132 votes.

Source: The Jakarta Post, November 24 2015

Indonesia’s Business Competitiveness Ranking Improves
Friday, 11 December 2015
By : Jakarta Globe - hits : 981

Indonesia climbed three places to rank 114th in the World Bank’s Doing Business 2015, an annual report that measures business regulations and business competitiveness in 189 economies world-wide.

Classified as a lower-middle-income nation, Indonesia made some particular improvements: on starting business, on improving electricity and reforming corporate taxation.

Indonesia climbed three places to rank 114th in the World Bank’s Doing Business 2015, an annual report that measures business regulations and business competitiveness in 189 economies world-wide.

 

Classified as a lower-middle-income nation, Indonesia made some particular improvements: on starting business, on improving electricity and reforming corporate taxation.

 

“Indonesia made starting a business easier by making it possible to issue the approval letter for the deed of establishment electronically,” the report said.

 

“It made getting electricity in Jakarta easier by eliminating the need for multiple certificates guaranteeing the safety of internal installations. And it lowered labor taxes.”

 

“However, it also increased costs with the introducing of a security deposit for new connections,” the World Bank report continued.

 

The report noted the government in the world’s fourth-most populous nation made starting a business easier by allowing the Ministry of Law and Human Rights to electronically issue the approval letter for the deed of company establishment.

 

This reform applies to both Jakarta and Surabaya, the second-largest city in the country.

 

The government’s efforts to reduce the tax paid by companies by lessening the employers’ health insurance contribution rate was also appreciated.

 

However, the are still many factors that continue to constrain Indonesia’s competitiveness.

 

Trading across borders has became increasingly difficult due to inadequate infrastructure at the country’s busiest port, Tanjung Priok Port in North Jakarta. The report also listed dealing with construction permits, registering property, getting credit, and resolving insolvency as further constraints.

 

Indonesia ranked higher than its emerging market rivals such as Brazil, which is in 120th place, Argentina, in 124th place, and India, which is in the 142th position.

 

However, Indonesia is left behind by most neighboring Southeast Asian nations such as Vietnam, which is in 78th place on the list, and Malaysia in 18th place.

 

Indonesia, Southeast Asia’s largest economy, needs more investment to upgrade its infrastructure and cut down logistics costs, which will ultimately spur the economic growth.

 

Affected by the slowdown in China, a giant consumer of commodities, Indonesia may only see its economy grow by between 5.0 percent and 5.1 percent in the third quarter of this year, according to estimates by the newly appointed Finance Minister Bambang Brodjonegoro.

 

Bambang told Reuters that exports from Indonesia had been hit by falling prices.

 

“The slowdown in China is more significant to us than to the United States,” he said.

 

The central bank has said it expects growth this year in the range of 5.1 percent to 5.5 percent, with third-quarter growth at 5.2 percent.

 

Source: Jakarta Globe

 

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