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

Jokowi Urges Bigger Role for Emerging Markets in G20
Friday, 11 December 2015
By : The Jakarta Post - hits : 607

President Joko “Jokowi” Widodo has suggested to G20 leaders that global financial architecture should be reformed so that developing countries play a bigger role in international funding organizations.

Antalya, Turkey – President Joko “Jokowi” Widodo has suggested to G20 leaders that global financial architecture should be reformed so that developing countries play a bigger role in international funding organizations. The President also underlined that a new global reserve currency was needed to reduce dependency on the US dollar at the G20’s first working session on the global economy and inclusive growth on Sunday in Antalya, Turkey. “High dependency on the US dollar has created global distortions that pose a threat to the development of the global economy,” Jokowi said in a press release distributed by the presidential communication team. As part of an attempt to reduce dependence on the US dollar, Jokowi said China had agreed to a US$5 billion liquidity support related to the bilateral currency swap agreement (BCSA), in addition to the $15 billion commitment made previously. Under the agreement, Indonesia and China agreed to use yuan instead of US dollars in their trading activities, as well as in other areas. “The amount is very good. Not to mention that, as the investment is upcoming, it will have a [good] impact on capital inflow,” Jokowi told reporters on Sunday evening local time, after an informal meeting with Chinese President Xi Jinpingon the sidelines of the G20 Summit. During the first G20 working session, the global economic slowdown was at the heart of the discussion, which also discussed the International Monetary Fund’s (IMF) prediction of 3.1 percent global economic growth this year, lower than last year’s 3.3 percent, Finance Minister Bambang Brodjonegoro said. Despite predictions of improving global economic growth to 3.6 percent in 2016, both developed countries and emerging markets agreed that the slowdown needed to be addressed immediately by making joint efforts. “One of these efforts is by ensuring that [one’s own] domestic economy is running well, just as China, Indonesia and many other countries have done,” Bambang said on Sunday evening. Jokowi told the G20 forum that infrastructure development was one of the ways to address the economic slowdown, Bambang added. “In the short term, infrastructure can create new jobs, while in the medium and long term, it can help improve the economy itself,” Bambang said. Indonesia also expressed its commitment to keep contributing to efforts to lift the members’ combined gross domestic product (GDP) by at least an additional 2 percent by 2018, an ambitious goal set by member countries at the previous summit in November 2014. Bambang added that the stimulus packages that the government had rolled out this year would contribute to that goal and also create inclusive domestic growth. If realized, the G20’s 2 percent target would add more than S2 trillion to the global economy and create millions of jobs. However, one year after the agreement was made turmoil in the financial world cast doubts over its ability to be realized. Data from the Organisation for Economic Cooperation and Development (OECD) show.that the combined GDP of G2Q nations reached 3.3 percent last year. In 2015, the rate eased on a quarterly basis, standing at 0.7 percent only in both the first and second quarter, making the growth target a seemingly daunting task.

Source: The Jakarta Post, November 17 2015

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