The Jakarta Post
Finance Minister Sri Mulyani Indrawati has said the government and Bank Indonesia are joining hands to deal with external pressures on the economy, including factors that could hamper investments.
She said that the economy, including the government's efforts in boosting investment, would face tough challenges stemming from the United States Federal Reserve’s tightening cycle and escalating tensions in the US-China trade war.
“Global pressures will put a lot of pressure on investments while [investors] are pressured by interest rate hikes as well as the increasing prices of imported raw materials and capital goods,” Sri Mulyani said on Monday in Jakarta.
She added that the government’s effort to reduce imports as part of its overall effort to reduce the current account deficit would likely pressure investments further.
The Indonesian economy – Southeast Asia’s largest economy – grew 5.06 percent in the first quarter thanks to positive growth in household consumption and with investments growing 7.95 percent, higher than the 7.27 percent growth the previous quarter.
Sri Mulyani said the government, along with Bank Indonesia (BI) and the Financial Services Authority (OJK), would formulate the best policy mix to protect the economy against mounting external pressures.
She explained the recent move to revamp a number of tax incentives, including the tax holiday and final income taxes for small-to-medium enterprises (SMEs), aimed to attract investment to the country. (bbn)