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Foreign capital remains dominant in Indonesian economy: Expert
Wihana Kirana Jaya
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Wihana Kirana Jaya.(Courtesy of ugm.ac.id) (Courtesy of ugm.ac.id)
Wihana Kirana Jaya. (Courtesy of ugm.ac.id)
In the present economic condition, the economic independence embodied in 'Nawa Cita' ' the nine-point development concept of President Joko 'Jokowi' Widodo ' is unlikely to be realized, believes one economist.
During an interview on Tuesday, the dean of economics and business at UGM, Wihana Kirana Jaya, said that foreign capital still dominated Indonesia's economy.
According to Wihana, half of Indonesia's capital market and government bonds are foreign-owned, forcing the government to be sensitive around investment-grade issues.
Wihana said the high interest rates set by Bank Indonesia (BI) are providing incentives for foreign investment, concluding that Indonesia is still controlled by foreign powers.
'Ideally, the government would lower interest rates to encourage contribution from local enterprises in fostering the domestic capital market. That would be in line with achieving economic independence,' Wihana told thejakartapost.com.
Meanwhile, when the question of President Joko 'Jokowi' Widodo's economic performance during his first year in office was brought up, Wihana said that Jokowi was on the right track, though the government needed to revise their fundamental views and adapt to the new economic structure to keep up with changes in global macro- and micro-economies.
However, Wihana asserted, the real challenge on national development is the 'sectoral egos' of government institutions clashing. Thus, Wihana advised the government to focus on synchronization and coordination between institutions to avoid accommodating only elitist group's interests. 'The government should put aside their sectoral egos and consider more than just aggregate economic growth,' he said.
Wihana supports continuous improvement reviewing, for example by regularly evaluating the four economic packages. They need to review the [packages'] impact each year, checking whether the policies distort the economy, or instead, promote synergy and inclusive economic growth, according to Wihana. (dan)(++++)
