Indonesia focuses on reforms to stimulate economy

20 April, 2021 12:00 AM printer

JAKARTA: Even while peering into a Zoom conference screen, Indonesian Finance Minister Sri Mulyani Indrawati exudes the same attitude she’s had since first taking on the job over 15 years ago - having a sense of realism, and with plenty of confidence.

The 58-year-old economist - who returned to her old post in 2016 after a stint as managing director and chief operating officer of the World Bank in Washington - is under no illusions that the global economy and those of many Asian nations, including Indonesia, will be forever changed in a post-Covid world, report agencies.

“It will not be business as usual,” the Jakarta-based politician told The Business Times in an exclusive interview last Friday. “I firmly believe there will be changes in the way we work, the way business is conducted. There will be changes in the way people consume, and more awareness of climate change. This is going to be the new game for all countries.”

Among other things, she noted upcoming changes to the global health industry, given the arrival of new Covid-19 vaccines in 2021.

“I believe this is going to shape the global economy and the region, as well as Indonesia,” the minister said.

But, according to her, change is not necessarily a bad thing, especially for South-east Asia’s largest economy.

Dr Sri Mulyani said the government of President Joko Widodo is still optimistic that Indonesia’s economy will grow between 4.5 and 5.3 per cent this year, with the possibility of landing at 5 per cent, as more of the population get their vaccines in the coming months.

This is the same level of economic growth that Indonesia has achieved in recent years, before the pandemic hit.

“The first quarter of this year was a little bit slow but we saw a pick-up in March. In April, we see the PMI (purchasing managers’ index) growing at 53.2. Exports in March jumped 30.4 per cent. The momentum of growth is on the demand side,” she pointed out.

While the Indonesian government, along with national and regional parliaments, have bought into state policies to mitigate Covid-19, “reform has become one of the most frequent menu in the Cabinet as well as (is) being discussed in Parliament”, said Dr Sri Mulyani.

One of the Widodo administration’s major successes was the passage of what is known as the Omnibus Law last October, which eases stringent business regulations for both domestic and foreign companies in hopes of increasing productivity, jobs and attracting new foreign direct investment.

Regulations continue to be drafted and approved. As of February, 44 had been completed but numerous others remain, ranging from the national sovereign fund, to taxation, local governments, the environment, small and medium-sized enterprises, labour and special economic zones.

Dr Sri Mulyani cautioned, however, that Asian businesses are still cautious about entering new ventures due to their own internal financial issues including non-performing loans that must be restructured.

This raises questions about how firms will continue to borrow in such a situation to bounce back from the pandemic.