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Jakarta Post

Forming new ministries won’t boost investment, exports: Economists

  • News Desk

    The Jakarta Post

Jakarta   /   Thu, March 14, 2019   /   08:25 am
Forming new ministries won’t boost investment, exports: Economists Vehicles travel on Jl. Pak Kasih at the Pelindo II-operated Dwikora river port on the Kapuas River in Pontianak, West Kalimantan. (The Jakarta Post/Severianus Endi)

President Joko “Jokowi” Widodo has telegraphed his intension to create new ministries covering exports and investment in response to poor performances in the two sectors, but economists consider this to be a bad idea. Instead, they called on the government to maximize the performance of existing institutions.

“Creating new ministries is not a guaranty to resolve export and investment problems,” said Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira in Jakarta on Tuesday as quoted by kontan.co.id.

On investment, Bhima said the government needed to maximize the performance of the Investment Coordinating Board (BKPM), which has long been involved in the sector but lacks support from other ministries.

“The investment frequently relates to the Environment and Forestry Ministry, Energy and Mineral Resources Ministry and regional governments,” he said, adding that the challenge was how to encourage these ministries to closely coordinate with and support the BKPM.

The creation of new ministries would certainly burden the state budget because the Trade Ministry, for example, needed at least a Rp 3.5 trillion (US$245.48 million) annual budget to operate, he said.

Similarly, Center of Reform on Economics (Core) director Mohammad Faisal said the poor performance in investment and exports was caused by a lack of synergy between relevant government institutions.

This had resulted in the lack of competitiveness of Indonesian agriculture and mining commodities as well as manufacturing sector products, he said, adding that if competitiveness was really the issue, creating new ministers was not the solution.

“What we need is to improve efficiency in both upstream and downstream businesses. They need to be supported by a proper policy,” Faisal added.

Last year, exports grew by 6.65 percent year-on-year to $180.06 billion, while imports grew by 20.15 percent to $188.6 billion. (bbn)