Q&A with Trade Minister: How Indonesia is fixing its 'misguided' economic policy
JAKARTA, Indonesia – In September, Indonesia introduced stimulus measures to woo desperately needed investment, in its latest bid to boost the sliding rupiah and breathe new life into the slowing economy.
Southeast Asia's top economy has unveiled steps to battle a sharp slowdown, as it comes under pressure with other emerging markets due to a strengthening US economy and turmoil in China.
Newest measures announced included slashing the time taken to process investment permits from at least 8 days to just 3 hours.
To keep US dollars in the country, the government also said it was cutting taxes for exporters who deposit their foreign exchange revenue in the country or convert it to rupiah, which should make it more attractive than depositing funds in countries such as neighboring Singapore.
This, since the rupiah has plunged about 20% against the US dollar this year, while the economy is forecast to grow less than 5% in 2015, its slowest pace in 6 years. The World Bank also ranked Indonesia 114th in its annual "ease of doing business" survey this year.
As the Indonesian government continues to reform its economic package, Trade Minister Thomas Lembong sat down with Rappler to talk about what his ministry is doing to increase trust in investors and make conducting business in the country easier than ever.
Rappler: The public perception, especially from international media, sees Indonesia moving towards protectionalism in their economic policy especially in your ministry. What is your comment?
Thomas Lembong: I think it's true certainly that over the last 3 or 4 years we’ve seen more and more policies that were flavored by protectionist reflex. But I think we’ve reached a turning point where we realized that those policies largely backfired. So now we’re visibly dismantling many, and hopefully, eventually most of those policies
Rappler: Do yout think the newest deregulation will invite more trust and investment for the Indonesian economy?
Lembong: Absolutely. But first it's like this: I think we appreciate the importance of confidence and the indonesian word for confidence is kepercayaan. And the root of that word is percaya which is basically 'trust.'
I recognize that if we ask the public and investors to trust us then we have to tell the truth. So part of the deregulatory spirit is to admit that yes, a lot of our policies are misguided, a lot of our policies aren’t working so I think one thing I would like to convey is we acknowledge it, we realize it, and we are now taking actions to correct it and in many cases remove it.
Rappler: Can you elaborate more on that? Especially with regards to your Ministry on deregulation?
Lembong: The Trade Ministry is very far reaching because it covers notably international trade, but also domestic commerce so inter-state commerce, inter-island commerce is all covered.
It covers commerce in agricultural products, it covers commerce in manufacturing products and the goal is to radically simplify the permitting and licensing. I think extensive permitting and licensing belongs to a different era and we now live in an era of online communication and online business processes. – with reports from Agence France-Presse/Rappler.com