Indonesian growth steady as Jokowi prepares economic incentives | Daily News

Indonesian growth steady as Jokowi prepares economic incentives

Joko Widodo, who won a second term as Indonesia’s president in April, is preparing measures to help boost the country’s human capital. (Photo by Kosaku Mimura)
Joko Widodo, who won a second term as Indonesia’s president in April, is preparing measures to help boost the country’s human capital. (Photo by Kosaku Mimura)

JAKARTA -- Indonesia managed to register steady growth in the three months through June, with President Joko Widodo preparing for his second term by drawing up plans to boost the country’s economy.

Real gross domestic product for Southeast Asia’s largest economy increased 5.05% on the year in the April-June period, according to data from Indonesia’s statistics agency, or Badan Pusat Statistik. The median forecast of 16 economists polled by Reuters was also for a 5.05% expansion.

Private consumption, which accounts for more than half of GDP, grew 5.17%, owing mainly to the Islamic festival season of Eid al-Fitr.

The country’s growth rate was in line with the yearslong average of 5%, which Widodo, whose second term begins in October, is looking to speed up. Last month, Bank Indonesia came to his aid by slashing its benchmark interest rate for the first time in nearly two years. The central bank last year raised rates by a combined 175 basis points to protect the rupiah after the currency plunged to a 20-year low.

Widodo, who prioritized infrastructure building in his first term, wants to take up the development of human capital as his biggest economy-boosting task in his second term.

The government has announced a “super deductible tax” scheme that will incentivize companies to set up research and development as well as vocational training facilities in Indonesia. Widodo has also vowed to reform the country’s rigid labor law, which is notorious for making it hard for companies to fire employees.

External pressures remain a short-term challenge for the president. While the trade war between the U.S. and China has not had an immediate impact on Indonesia’s trade and economy -- the country for the most part is not part of the global supply chain -- fears of the spat leading to a worldwide downturn has already led to weak prices for palm oil, Indonesia’s major export, and other commodities. This has led to lower purchasing power, which Japanese automaker executives say resulted in a 13% plunge in car sales in the first half of this year.

A current-account deficit also makes the country prone to currency sell-offs in times of heightened global economic uncertainty.

(asia.nikkei.com)

 


 

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