Indonesia's latest round of moves to attract foreign investors into nearly 50 areas is welcome news to a region seeing slowing growth, rising unemployment and declining trade. New rules announced by President Joko Widodo's government allow full ownership in some sectors, 67 per cent in healthcare, and just short of a half-share in sectors deemed vitally important to sovereignty, including ports and airports. Taxi and bus service operations, hitherto closed to foreigners, will also be opened to as much as 49 per cent of the share holding. There is promise that the list of areas proscribed for foreign investment will be trimmed further. The announcements came after economic expansion last year registered 4.8 per cent, the slowest in six years. President Joko is confident this can be bumped up to 5.3 per cent this year.
While the moves do not entirely merit the "big bang" tag bandied about in Jakarta, several positive aspects bear noting. They come weeks after the symbolic launch of the Asean Economic Community. Given that Indonesia is the natural leader of Asean - with the largest economy in the group - these stirrings are welcome news for South-east Asia, coming after worries that the country may be taking a protectionist turn. Jakarta has signalled that it would, eventually, like to join the Trans-Pacific Partnership, a grouping that includes three Asean states - Singapore, Malaysia and Vietnam. These moves will help in that endeavour.
Equally, and this is significant for Indonesia's internal dynamics, it signals that Mr Joko is gaining confidence to take on established interests within the country, including his own party. Asean needs Indonesia to thrive. Mr Joko's predecessor, Dr Susilo Bambang Yudhoyono, elevated the nation to investment grade during his tenure. Mr Joko must take it higher. To do this, he must get down to work across parliamentary divides, crack down on the canker of corruption, and pummel the bureaucracy into action. He also must follow up on the other parts of his growth strategy, which include upgrading services and improving infrastructure development - "arguably the biggest brake on Indonesia's economic growth", according to The Economist magazine.
As the largest investor in Indonesia - fully a fifth of last year's US$29 billion (S$40.8 billion) came from Singapore - Singapore would wish it well in implementing reforms. Two years ago, the Republic watched with dismay as the Indonesian central bank declined to allow Bank Danamon's control to pass from Temasek Holdings to DBS Group. Since then, Danamon's value has declined, even as other Indonesian lenders have done better. Vast changes sweeping the industrial landscape mean that only economies wedded to efficiency will survive. Indeed, if Mr Joko finds his touch, there might even come a day when the Brics acronym is expanded to include another 'i' - for Indonesia.