Indonesia to introduce new measures to stimulate GDP growth

Indonesia to launch measures for higher economic growth 

With the upcoming second presidential term, President Joko Widodo (also known as President Jokowi) sets to introduce new measures aimed at boosting Indonesia GDP. 

On this note, economic growth in Indonesia had declined to a two-year low last quarter amid trade war and risk of a global economic slowdown. As such, a balance between short-term economic stimulants with long-term reforms will be necessary to boost Indonesia economy. 

Indonesia GDP stagnates at 5% since 2014

Since 2014 (the start of Jokowi’s term), Indonesia GDP growth has been around 5%. Its GDP growth even reached a two-year in the second quarter at 5.05% and is predicted to stay around this value in the upcoming years.

As such, the president has pledged to boost foreign investment through tougher reforms, amongst other reforms. 

Other than its slowing Indonesia GDP growth, government spending has increased by almost 40% since 2014. 

3 things to expect in the 2020 budget

Three things that are anticipated to be included in the 2020 budget are:

  • - Labour reform
  • - Infrastructure projects
  • - Reduction of tax

Labour reform

Despite the large labour force population in Indonesia, there’s a productivity problem that’s causing lower labour force quality. To solve this, higher education spending is expected to be implemented to raise workers’ skill levels (and eventually raise Indonesia GDP above 6%). 

Jokowi is also promising tougher reforms to boost competitiveness and foreign investment, including easier hiring and firing of workers and providing more funds for vocational training.

Infrastructure projects

Jokowi’s first presidential term mainly focused on “nation-building” – which includes road, port and railway constructions. This is expected to continue in the second term with infrastructure products worth more than $400 billion, ranging from airports to power plants.

Reduction of tax

The 2020 budget is also expected to reduce corporate tax to increase the country’s competitiveness, attract foreign investment and boost the manufacturing sector in Indonesia.

Indonesia is expected to introduce new measures to stimulate GDP growth as Jokowi’s second term starts soon – which includes labour, infrastructure and tax reforms.
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