The ASEAN Economic Community (AEC) and the increasingly
significant roles of Indonesia in driving the growth in the region became the
topic of the day as Indonesia’s economic projection is expected to reach 5
per cent this year.
HSBC Economic Outlook, which recently began its series of
talks, focused on Southeast Asia which remains the most dynamic region with the
fastest growth in the region in which Indonesia contributes up to 35 per cent
of the total GDP of ASEAN and over 40 per cent of total population of ASEAN.
The main driving factor of such economic growth in the region is the stable
leverage or the bank lending level. Despite concerns on debt levels in the
Asian region, Indonesia remains the safest country for investment due to a
series of economic and financial policy reforms initiated by the government.
SBC Economic Outlook, which recently began its series of talks, focused on
Southeast Asia which remains the most dynamic region with the fastest growth in
the region in which Indonesia contributes up to 35 per cent of the total GDP of
ASEAN and over 40 per cent of total population of ASEAN. The main driving
factor of such economic growth in the region is the stable leverage or the bank
lending level. Despite concerns on debt levels in the Asian region, Indonesia
remains the safest country for investment due to a series of economic and
financial policy reforms initiated by the government.
The economy
size in ASEAN is valued at 2.2 trillion US dollars and so far has attracted 35
per cent of foreign direct investments to the region. Indonesia remains the core economic driving
factor with its contribution of 35 per cent, followed by Vietnam and Malaysia.
However, how do we see this competition? By reviewing the investment
realization which went up by 17.8 per cent at 545 trillion rupiahs in 2015 and
the realization of the 1st quarter of 2016 at 146.5 trillion rupiahs or up 17.6
from the same quarter of the previous year, the Indonesian government continues
to support productive economic sectors. A series of policy reforms which have been launched
since September 2015 are the simplification in business licensing, wage
formulation, cost reduction, tax discount, free VAT, and improved ease of doing
business. The economic potential of the Indonesian regions remain wide
open with economic centers in the process of development in various islands and
economic sectors such as manufacturing, tourism, maritime, etc.
Meanwhile,
the
economic condition in Indonesia is predicted to improve in 2016 despite the
moderate rate of such growth. This growth is marked by the decrease in poverty rate
at 9-10 per cent, the reduction of open unemployment rate to 5.2-5.5 per cent,
stable inflation rate at 4.7 per cent, and the projected growth for next year
at 5.3 per cent. These optimistic numbers are ought to be responded by
a pro-active attitude in welcoming business investments and inquiries to
ensure such investments commence smoothly in Indonesia.
Other
concerns which became the highlights during the panel discussion were the corruption
eradication and zero tolerance attitudes towards corruption in all government
levels to ensure the smooth and clean investment operations. The discrepancy in
bureaucratic services between the central and regional governments was also
highlighted due to the expensive costs that some businessmen have to bear. Some
parties also believe that state-owned-enterprises must be forced to compete
fairly with the private sectors without enjoying special privileges from the
government. State-owned-enterprises, whose corporate culture adjusts to the
fair business practices, will ultimately increase the productivity of such
company.
Indonesia
is not immune to the slowing down of the global economic growth. However, the
confidence level against the investment assurance in Indonesia remains solid
thanks to the strong government support in enabling the speedy economic
development. Another mutual understanding is the importance of a strong
financial market support. This is in line with HSBC’s determination to continue
placing Indonesia as a strategic priority in business growth.
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