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The economy in the year of politics
Some say they would wait until 2019 to decide whether to invest in Indonesia.
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In focus: A photojournalist takes his place in front of a screen showing an election-related violence index compiled by the Election Supervisory Agency (Bawaslu) ahead of the simultaneous local elections on Dec. 9. General Elections Commission (KPU) chairman Husni Kamil Manik said the noken voting system would be still used in 2017 regional elections in Papua
(thejakartapost.com/DON)
T
he general election and the presidential election are 18 months away, but questions remain among investors and economic agents about their impact on the economy. Some say they would wait until 2019 to decide whether to invest in Indonesia.
In general, businesspeople are in wait-and-see mode. Only the government, with its stateowned enterprises (SOEs), is looking seriously at boosting the economy in the remaining term of the current administration, with expectations of being reelected.
The government is very serious about boosting the economy during this highly political year. The strategy is to accelerate infrastructure development and expand social programs. The 2018 state budget allocates more than Rp 400 trillion (US$30 billion) for infrastructure development.
The government would very much like the private sector’s participation to boost investment. However, it is hard to lure them in if they are in watch-andwait mode.
The finance minister has revised the 2017 target growth from 5.2 percent to 5.17 percent, because of inadequate private sector investment.
Although as an independent institution, Bank Indonesia (BI) cannot openly support the government’s effort to boost the economy, it again cut the policy rate by 0.25 percent in August. The reason is that inflation is a benign below-4 percent, but credit growth is still low around 8 percent year on year, and around a mere 2 percent year-to-date.
BI even plans to revise the loan-to-value (LTV) ratio according to region. This means that for certain regions, the down payment for mortgage and motor vehicle financing would be lowered from the current 25 percent.
