（Singapore, 29 August 2020）As the world is battling against Covid-19 pandemic, a new normal will emerge post covid-19. New normal demands a new world economic paradigm in many basic elements and structures of economies, and Indonesia has such basic elements for the country to be the best investment destination, highlighted by Mr. Luhut Binsar, the Coordinating Minister for Maritime and Investment Affairs of the Republic of Indonesia in a virtual investment forum held on 25 August 2020.
During the 2-hour forum, Indonesian speakers addressed how the Indonesian Government has input the finance and resource to manage its economy in this Covid-19 extraordinary time in order to maintain the business and trading productivity for the best investment destination in the new world economic paradigm.
Dr. Michael Goutama, special advisor to the Coordinating Minister for Maritime Affairs and Investment of the Republic of Indonesia emphasised on the key strengths of Indonesia, specifically Batam, as the best destination for investment and trade, in that Batam is the gateway to Association of Southeast Asian Nations (ASEAN) economic community.
He also elaborated on the Government’s commitment in providing a conducive environment for businesses to operate and thrive in Indonesia. Such pro-business measures include Indonesian Government’s use of numerous fiscal stimulus in areas of “business incentives”, “Small and Medium Enterprises (SMEs)” and “Corporation Financing”.
Among which, 120.61 trillion Indonesian Rupiah (US$8.29 billion) from the Government’s budget was set aside as business incentives, use to reduce corporate income tax and offer early tax returns. 123.46 trillion Rupiah (US$8.48 billion) was reserved to grow the SMEs such as providing subsidies on internet and offering loan structuring incentives. Lastly, 53.57 trillion Rupiah (US$3.68 billion) was allocated to corporation financing to offer funds for labour intensive industries and debt allocation for businesses.
In total, the Indonesian Government has prepared 695.2 trillion Rupiah (US$47.76 billion) fiscal stimulus to stimulate the economy, focusing on 6 key areas, namely: Health, Social Protection, Business Incentive, SMEs, Corporation Financing, Sectoral and Regional Government.
Government’s effort to onboard SMEs digitally has shown results. Since 14 May 2019, the Indonesian Government has aided around 1.5 million SMEs to have online presence, such as providing trainings, expanding market access and reducing their business cost. This growth of digital onboarding will be closely monitored to achieve a target of 2 million SMEs onboarding successfully by the end of 2020, as to what the President has mentioned on 12 May 2020.
Dr. Michael Goutama recognised the role of internet to facilitate global coordination, such measures were implemented in hope of facilitating foreign investors’ entry to the Indonesian market. He reiterated, “New normal demands a new world economic paradigm in many basic elements and structures of economies, as the country is growing to Group of Seven (G-7), it has the basic elements to be the best partner in the new world economic paradigm. It presents new opportunities in post covid-19 economies”.
As of July 2020, Indonesia’s cement sales recovered to reach 93% of its average 2019 level. However, car sales still lag at 30% of 2019 monthly level. Indonesia’s 4-wheeler sales improved but still far from 2019 level. Forecasting Indonesia’s debt to GDP ratio for the next 3 years, Mr. Luhut Binsar said that debt ratio will increase significantly from 30% in 2019 to 38% in 2023. Deficit as a percentage of GDP will return to below 3% GDP in 2023, even though it has a level of -6.3% this year due to Covid-19 outbreak.
The forum titled “Indonesia in the new world economic paradigm: Your best investment destination” was organised by the Embassy of the Republic of Indonesia in Tokyo, with the support of Indonesian Investment Promotion Centre (BKPM), Japan Business Federation (KEIDANREN) and Japan Indonesia Association (JAPINDA).
The forum attracted more than 500 attendees with majority from Japan. The speakers from Indonesia include the Coordinating Minister for Maritime Affairs and Investment of Indonesia Mr. Luhut Binsar, Chairman of Indonesia Investment Coordinating Board Mr. Bahlit Lahadalia. The important speakers from Japan include JAPINDA President Fukuda Yasuo, Mitsubishi Chairman Mr. Ken Kobayashi and Marubeni Chairman Mr. Fumiya Kokubu. The forum was facilitated by Mr. Tri Purnajaya, Charge of Affairs of Indonesian Embassy in Tokyo and Dr. Michael Goutama, special advisor to the Coordinating Minister for Maritime and Investment of Indonesia.