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View all search resultsIndonesia must foster more productive firms, World Bank’s IFC says
International Finance Corporation (IFC), the World Bank’s private sector arm, has urged Indonesia to prioritize the growth of more productive, higher-value businesses through regulatory reforms.
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People sit on July 30, 2024, at a park in South Jakarta with a view of the city’s Sudirman Central Business District (SCBD). (Reuters/Ajeng Dinar Ulfiana)
I
nternational Finance Corporation (IFC), the World Bank’s private sector arm, has urged Indonesia to prioritize the growth of more productive, higher-value businesses through regulatory reforms.
Keiko Miwa, IFC division director for Southwest Asia and Pacific Islands, told The Jakarta Post on March 10 that corporate growth in Indonesia was “increasingly driven by market power rather than productivity, with dominant players absorbing resources even as efficiency declines”.
She cited the World Bank Group’s recent flagship report, Indonesia Country Growth & Jobs Report (CGJR), which finds that Southeast Asia’s largest economy still grapples with “growing pains” typical of middle-income countries.
“Against this backdrop, we need to focus on fostering the growth of more productive, higher-value firms and industries,” she noted.
Keiko pointed out that government reforms were critical to such a shift, emphasizing “a more predictable regulatory environment, stronger competition, streamlined firm entry and exit, and fewer trade restrictions”.
These measures were key to unlocking private-sector potential in Indonesia, she said, noting that the private sector could serve as the main engine of employment and income growth, as it accounted for over 90 percent of jobs in the country.
Multilateral development banks, such as the IFC, could also support the efforts by implementing measures aimed at reducing barriers, strengthening markets and attracting more investors, Keiko added.
