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Dr Bambang Brodjonegoro, minister of national development planning of Indonesia, tells Sebastian Shehadi how predictions for the country’s economic trajectory are fuelling its growth plans and why the current focus is on deregulation.

Q: What is attracting FDI to Indonesia?

A: First of all, Indonesia is a big market. In terms of population, we are fourth in the world with 260 million. Our GDP is in the class of $1000bn, so we are 15th in the world. Investment opportunities are there for any business that will target bigger markets. In terms of the sectors, I believe manufacturing is still at the top. Services, especially those related to tourism, are an important investment target. The others would be related to agriculture: plantation as well as infrastructure.

The government has improved the investment climate. For example, our ease of doing business rank jumped from 120 to 70. We need to keep maintaining macroeconomic stability, monetary policy, fiscal policy as well as the policy to attract foreign investment. Indonesia is open to FDI. We are now transforming our economy from a reliance on natural resources to manufacturing and value-added activities. We are hoping to get out of the middle-income trap and to become a high-income, developed economy.

Q: What FDI challenges does Indonesia face?

A: We need to continue with deregulation. I think our regulation is still too tight for some investors. The other thing is investment certainty. We need to make sure that we can provide that. We have to eliminate any possibilities that create uncertainty in the business climate. Then we need to talk about how we can diversify our source of growth including our source of investment. We can’t just rely on one or two countries but we need to target many countries to bring their FDI to Indonesia. That’s why I am here in Dubai, because we need to attract more Middle Eastern investors to Indonesia.

Q: Are you worried about the potential trade war between China and the US?

A: Of course, we have to worry about any protectionism throughout the world because this would have a negative impact on growth. But I think we are still OK in terms of the impact of the trade war. But if, let’s say, China’s exported goods or commodities are blocked to the US and they shift their markets, Indonesia is one of the markets that has to receive the influx of Chinese products. This means a further imbalance, because we already have a trade deficit with China, which exports a lot to us.

Q: Would you like free trade agreements like the Trans-Pacific Partnership with the US?

A: We haven’t focused so much on the US. I think our focus is to finish our agreement with the EU, with Australia and with Asia Pacific, including China and Japan. That will be our priority.

Q: Is there anything you would like to add?

A: According to many predictions, Indonesia will be in the top five economies by 2050. That means that we are only behind China, the US and India. It means that big opportunities are in Indonesia. Maybe not now, but in the near future it means that Indonesia is welcoming investors – and we need to have high growth in investment in order to push our economic growth higher than what we have right now.

This article is sourced from fDi Magazine
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