The Jakarta Post
Infrastructure and human resources development, investment promotion, bureaucratic and structural reform and efficient and prudent fiscal management that President Joko “Jokowi” Widodo outlined as his top priority programs for his second and last term in office are by and large similar to his policies over the past five years.
Yet more promising is that he will be better able to accelerate the implementation of these programs because he will have more political courage to implement bolder, though painful, reforms for the long-term good of the economy. His coalition’s majority in the House of Representatives is further political capital to help him carry through many more structural reforms to strengthen economic competitiveness.
He will no longer have to hesitate in implementing unpopular measures, such as reform of the energy policy, which has so far wasted huge sums of taxpayers’ money, the civil service (bureaucracy) and the Labor Law, considered by investors one of the toughest in the world.
The rationale of the five top priority programs really makes sense.
Only efficient and adequate infrastructure can reduce our logistics costs, long blamed for our lack of economic competitiveness, and improve connectivity between the islands and between the urban and rural areas. Without connectivity we will never have a well-integrated domestic market and our manufacturing industry will never be able to take full benefit of the global value chain.
Likewise, human resources development through better education and health services is virtually key to the whole development process. Well-educated and healthy people will contribute greatly to further development of the nation and the economy through higher productivity and skilled employment and creativity.
The promotion of private investment is also vital because investment, rather than the government, creates productive jobs, thereby generating people’s purchasing power. It is business entities that contribute the bulk of tax revenues to the state budget. Moreover, given the subdued export market condition, private investment, besides private consumption, will become the main driver of economic growth.
Jokowi is so obsessed with attracting and stimulating private investment that he has strong words for those who do not support his investment promotion drive. He asserted: “No one should be allergic to investment. Therefore, anything that obstructs investment must be removed.”
However, the fact that more than a dozen economic packages he introduced to woo investment during his first term were difficult to implement should serve as a grim reminder for Jokowi.
Private investment will not thrive unless the business licensing system is efficient and clean. Hence, bureaucratic and structural reform is equally important not only to establish a clean and efficient public administration but also to improve the institutional capacity of government offices to implement policies and enforce laws. Last but not least, prudent and efficient fiscal management is crucial not only because state spending is the third driver of growth, but it also reflects good governance.