The Indonesian government plans to roll out the red carpet for investors in another attempt to attract direct investment, hence boost the macroeconomy, increase employment opportunities and combat poverty. In the 16th economic policy package, which was announced on Friday 16 November 2018 - but is yet to be signed by Indonesian President Joko Widodo - three programs are included that should improve the nation’s investment climate, thus strengthen the economy.
These three programs are:
- An expansion of Indonesia's tax holiday program (slashing corporate income tax)
- A revision of the country's Negative Investment List
- The provision of tax incentives for the newly mandated conversion of export earnings to rupiah
The latest economic policy package was presented to the press by Indonesian Coordinating Economic Minister Darmin Nasution, who emphasized that the three programs aim at improving the current account balance and trade balance as both these balances have shown widening deficits in 2018 and therefore put additional pressure on the Indonesian rupiah (which touched a 20-year low against the US dollar in late October 2018). Moreover, external conditions are far from conducive as global economic growth is expected to ease next year, while the US Federal Reserve is expected to continue tightening its monetary policy. This could lead to fewer capital inflows into emerging markets such as Indonesia and therefore the government needs to come up with attractive programs that can attract capital inflows.
This articles discusses:
• the contents of each of the three programs in the 16th economic policy package
• reactions to the package from the government, stakeholders, investors, & business associations
• our opinion of the package and our forecast for the success or unsuccess of the program
Read the full article in the November 2018 edition of our monthly research report. You can purchase this report by sending an email to firstname.lastname@example.org or a WhatsApp message to the following number: +62(0)8788.410.6944
Poll Indonesia Investments:
What do you think will be the growth rate of the Indonesian economy in full-year 2018?
Voting possible: -
- 5.1% (or lower) (44.7%)
- 5.2% (21.6%)
- 5.3% (or higher) (20.7%)
- No opinion (12.9%)
Total amount of votes: 564