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Can we reach 6.1% economic growth in 2018?

Oleh: Toni Ervianto
Minggu, 02 Apr 2017 12:36
President Joko "Jokowi" Widodo has instructed his Cabinet to reach 5.4 to 6.1 percent economic growth in 2018.

"With the global economy healing, we must be brave enough to raise our economic growth target between 5.4 and 6.1 percent," he said during the opening of a Cabinet meeting on Wednesday. 

Jokowi called on his Cabinet to be optimistic, but realistic, when composing the 2018 state budget draft. Furthermore, he called on his government to think and act outside the box in order to achieve their target. "All the ministries must work hard and implement concrete steps. They should not just work in a routine business-as-usual manner," he said. 

Jokowi said earlier that the preparations for 2018 must take into consideration important factors like raising the growth of consumption by 5 percent, exports by 4 percent, imports by between 2 and 3 percent and investments by more than 10 percent.

Indonesia's gross domestic product (GDP) grew by 5.02 percent last year, lower than the targeted 5.2 percent. In the 2017 state budget, economic growth is targeted at 5.1 percent. Previously, for 2016, the government has revised its full-year gross domestic product (GDP) target down to 5.2 percent from 5.5 percent and reported 4.92 percent growth in the first quarter. The global economy was predicted to remain sluggish in 2018, which would lead to exports only contributing about 1 percent to GDP growth. 
At separate place, President Jokowi has reaffirmed his desire for Indonesia to jump to 40th place on the World Bank's Ease of Doing Business (EODB) index in 2018 from its current 91st position. To achieve the target, the ministries have to draft their detailed plans, the President said, adding that they had to make improvements to fulfill the EODB's indicators. In last year's World Bank index titled "Doing Business 2017: Equal Opportunity for All", Indonesia jumped 15 places to reach 91st place. The report claimed that Indonesia was among the world's top 10 most improved based on reforms, along with Bahrain, Belarus, Brunei Darussalam, Georgia, Kazakhstan, Kenya, Pakistan, Serbia and United Arab Emirates. 

Furthermore, there were seven key areas that Indonesia had reformed, including the ease to establish a business, access to electricity, registering property, acquiring finance, paying taxes, cross-border trade and establishing contracts. 

Boosting economic growth progress 

The Investment Coordinating Board (BKPM) plans to create one-size-fits-all standards to better serve potential investors across the country, in response to complaints about different registration forms and procedures in various regional administrations. BKPM head Thomas "Tom" Lembong told 531 representatives of regional investment agencies (DPM PTSP) during the BKPM National Coordination Meeting in Nusa Dua, Bali, that the board's reform watchword this year was "Kis", an abbreviation of Coordination, Integration and Standardization in Indonesian.

Under the current administration, thousands of business regulations have been annulled to simplify the registration, construction and running of businesses. The reforms have largely worked well at the central government level, but not at the regional level where businesspeople report dozens of different forms and licenses to be completed before starting business. 

Indonesia may have to put a little more effort into making itself attractive for United States investors in the wake of a protectionist Donald Trump presidency. The Indonesian government will also simultaneously try to seek "back up" investors from other countries in case US firms have to abide by policies made by President Trump.

There might be pressure on US investors from the government to invest domestically. Consequently, we have to work extra to ensure that Indonesia is attractive to US firms. 

Based on data provided by BKPM, the US invested US$1.16 billion on 540 projects in Indonesia throughout 2016. In his inaugural speech, Trump stressed that his administration demanded the country's businesses to invest in their home countries to create jobs. It is part of his America First policy to fulfill his campaign promises. 

Can we reach it?
Jokowi's intention to reach 6.1% economic growth in 2018 is a normal ambitions because Jokowi wants to accomplish all out his job, his promises in 2014 general elections and to make a history as long as his tenure period. Making Jokowi's dreams is not a difficult way because being admitted or not, Indonesia has an economic attractiveness higher than others countries and Indonesia has a political, social, cultural and security stable conditions.
Besides that, several biggest investor such as Chinese, Saudi Arabia including Germany, France, United Kingdoms and United States of America have a common opinion that Indonesia is "an investment heavan", so that they don't hesitate to invest their money in Indonesia.
One of challenges for Indonesia to reach their economic target in 2018 is the global economy has been predicted still sluggish in 2018. I think if Indonesia's government didn't have an attractive economic packages which can sell to other investor, i think we have a little hurdles to reach 6.1% economic growth in 2018.
For Jokowi himself, a readiness cash flow in 2018 is important because Jokowi wants to finish all of an infrastructure development project in Indonesia in 2018, and it will be happened, it could be highest political promoted for Jokowi to reelect in presidential elections in 2018 and also for the Struggle Indonesian Democratic Party (PDIP) to exist at a legislative elections in 2018 after they were lost in several minicipal, regency and province election in 2017.
Globally, it has been threatened for Jokowi's intention is unfinish dispute among several ASEAN countries with Chinese related to South Chinese Sea, the dynamics of Korean peninsula tensions, the end of Middle East political and security turmoil and last but not least it has depended on Saudi Arabia's government seriously to implement their promise to help Indonesian government through their investment without taxes which it promised when King Salman arrived in Indonesia.
Meanwhile, domestically it has several opportunities and challenges for Jokowi's administration to reach their economic target in 2018 such as a final political consolidation after simultaneous local elections in 2017 and how we make the final stage of Jakarta's governor elections could be finished without a political disputes or mass chaotic riots on April 19th, 2017. Hopefully, every stakeholders in Indonesia can put our national interest in front of a group interest because we are together love Indonesia. God bless us.

Editor: Sam

Sumber: The writer is a national and international news observer. Cersia’s founder. He earned his master at the University of Indonesia (UI).

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