Jokowi planning to cut red tape to attract investments

Indonesia has been trying to tackle a widening current account deficit amid a global economic slowdown. The deficit reached US$31.1 billion (S$43 billion) last year.
Indonesia has been trying to tackle a widening current account deficit amid a global economic slowdown. The deficit reached US$31.1 billion (S$43 billion) last year.PHOTO: EPA-EFE

President Joko Widodo is going to ease bureaucracy and may also restructure Cabinet posts as Indonesia is falling behind other countries in the region in drawing foreign investments and boosting exports.

Mr Joko is mulling over the creation of a ministerial post that focuses entirely on investment, merging the trade and industry ministries to streamline bureaucracy. He has also been advised to appoint a foreign affairs minister who has strong expertise on trade.

A palace insider told The Straits Times that among the people considered qualified to be the next foreign affairs minister is Indonesia's ambassador to the United States Mahendra Siregar. The seasoned diplomat has held the posts of deputy trade minister and deputy finance minister before.

During a meeting last week with his ministers, Mr Joko raised his observation on manufacturing plants moving out of China to circumvent tariffs imposed by the US on Chinese goods in their trade war.

None of these companies was coming to Indonesia, said Mr Joko, who is popularly known as Jokowi.

Instead they chose countries such as Vietnam, Malaysia and Thailand as these places have less bureaucracy and more welcoming regulations, he noted.

Citing a research report, Mr Joko said that between June and August this year, 33 Chinese companies announced plans to set up or expand their facilities abroad; 23 of them are going to Vietnam and the rest to Malaysia, Thailand, India, Cambodia, Mexico, Serbia.

He highlighted that setting up a factory in Vietnam would take about two months, while in Indonesia it could take more than a year.

"I asked all ministers... to identify hindering regulations," Mr Joko said, stressing that his administration will then streamline the rules.

With boosting investment and exports at the top of his agenda, Mr Joko has hinted that he would merge ministries and create new ones. "I have asked (my) ministers whether we need an investment minister, an export minister," he told reporters.

He said Indonesia must quickly preempt a possibility of the global economic situation getting worse.

The President met his ministers again yesterday to discuss the issue.

Indonesia has been trying to tackle a widening current account deficit amid a global economic slowdown. The deficit reached US$31.1 billion (S$43 billion) last year. South-east Asia's largest economy imports more goods and services than it exports.

But it has been an uphill task, as the country is facing deindustrialisation - output growth from the manufacturing sector has for years been consistently below the overall output that the economy produces.

With boosting investment and exports at the top of his agenda, Mr Joko has hinted that he would merge ministries and create new ones. "I have asked (my) ministers whether we need an investment minister, an export minister," he told reporters.

Mr Sofjan Wanandi, chairman of Vice-President Jusuf Kalla's economic team, told The Straits Times that the government will cut headcounts of civil servants tasked with administrative work to create slimmer organisations.

 

The objective of restructuring the Cabinet posts is to make the Cabinet more effective, with the possibility of merging a few ministries, Mr Sofjan said, pointing out that this has not been finalised.

He added: "It is not yet certain whether we are really going to have a foreign minister deal with our international trade... This is just an idea being discussed."

President Joko will be sworn in on Oct 20 to begin his second and final five-year term.

Wahyudi Soeriaatmadja

A version of this article appeared in the print edition of The Straits Times on September 12, 2019, with the headline 'Jokowi planning to cut red tape to attract investments'. Print Edition | Subscribe