Synergy in Safeguarding Domestic Stability

KOMPAS/PRIYOMBODO

Governor Perry Warjiyo (third left), together with Coordinating Economic Minister Darmin Nasution (right), Deposit Insurance Agency (LPS) Board of Commissioners chairman Halim Alamsyah (left) as well as former BI governors Agus Martowardojo (second left), Burhanuddin Abdullah (third right) and Syahril Sabirin (second right) publish the 2018 Indonesian Economic Report at the Bank Indonesia building in Jakarta, Wednesday (27/3/2019). The book with the theme "Synergy for Resilience and Growth" is an annual routine publication of Bank Indonesia that reports on the performance and progress of the Indonesian economy.

JAKARTA, KOMPAS — Bank Indonesia (BI) has been consistent in building cooperation to boost economic growth in the face of global economic challenges. This year, the country can expect better economic prospects.

There are good prospects that the national economy will improve in the medium term. BI predicts economic growth will be 5-5.4 percent in 2019, with support from strong domestic demand. In 2024, economic growth will be around 5.5-6.1 percent. In 2018, Indonesia’s gross domestic product (GDP) grew 5.17 percent.

Last year, cooperation and policy safeguarded domestic economic stability in the face of global economic turmoil.

“Throughout this year, the economy will still face structural challenges, both globally and domestically. We have to be wary of this,” BI Governor Perry Warjiyo said at the release of the 2018 Indonesian Economic Report in Jakarta on Wednesday (27/3/2019).

Synergy is key in facing challenges and accelerating structural reform to ensure sustainable economic growth. “We will continue to work with the government, the Financial Services Authority [OJK] and business communities,” he said.

To realize the projection, BI will push for four economic boosters, namely increasing competitiveness, nurturing industrialization, developing the digital economy and expanding funding sources.

KOMPAS/ALIF ICHWAN

Job seekers crowd the Jakarta Career Expo at Smesco Convention Hall, Jakarta, Wednesday (27/3/2019). The expo ends on Thursday (28/3/2019). According to Statistics Indonesia (BPS), 7 million people were unemployed in Indonesia as of August 2018.

With respect to efforts to nurture industrialization, Perry said export mindset should be changed from commodity-based to industrial goods-based. Structural reform is needed to boost the automotive, garment, electronic and footwear industries to prioritize exports.

BI senior deputy governor Mirza Adityaswara said BI had urged the government and private sector to boost and diversify exports. BI hopes fossil energy imports can be reduced and replaced with renewable energy such as water, wind and solar power. This effort is to improve the current account deficit, which was US$31.06 billion or 2.98 percent of GDP in 2018.

BI also shares roles with the government in accelerating efforts to achieve 20 million foreign travelers’ visits in 2019 and US$17.6 billion in foreign exchange earnings. To achieve this target, infrastructure development will be accelerated, tourist destinations developed and the quality of tourism sites’ amenities improved.

Real sector

Publicly listed PT Astra International director Henry Tanoto said Indonesia had huge automotive export potential. “Indonesia could export so much more if products had high added value,” he said.

Henry added that he believed the simplification of export regulations that the government implemented in February would lead to the automotive industry increasing exports. However, this policy easing must be accompanied with liquidity easing so that the automotive industry will not have difficulties in securing funding.

KOMPAS/TOTOK WIJAYANTO

Motorists pass under the under-construction Cakung LRT station on Jl. Letjen MT Haryono, East Jakarta, Wednesday (27/3/2019). Cawang Station is the hub connecting the Bekasi-Cawang, Cibubur-Cawang and Cawang-Dukuh Atas routes.

Asian Development Bank (ADB) economist Eric Sugandi said despite it not being within BI’s domain, BI had the authority to determine monetary policies that would side with domestic industry interests. (DIM)