Saturday, 25 June 2022 | 11:13 WIB

Finance Minister: Indonesian Gov‘t Continues Structural Improvements of Economy

Indoniesian Minister of Finance Sri Mulyani Indrawati (wikimedia)

JAKARTA, NETRALNEWS.COM - Indoniesian Minister of Finance Sri Mulyani Indrawati has ensured that the Indonesian government would continue the fundamental and structural development of the Indonesian economy, even though the government's focus is currently being directed at handling COVID-19.

"The focus of handling COVID-19 and efforts to recover the economy should not distract us from efforts to improve economic fundamentals," Sri Mulyani said at a Plenary Meeting with the House of Representatives in Jakarta, on Thursday (05/20/2021.

She said Indonesia still has structural issues that must be resolved, such as improving the quality of human capitals and improving infrastructure, which is currently inadequate.

There are also issues regarding low productivity and bureaucracy, as well as institutions and regulations that are inefficient, complicated, and not yet free from corruption.

The Finance Minister said that improving the quality of human capitals and workforce must continue to be a central part in raising Indonesia's productivity and competitiveness, especially in the knowledge economy era or the Industrial 4.0 era.

The results of the Ministry of Finance and ADB's study titled "Innovate Indonesia: Unlocking Growth through Technological Transformation," show that the ability to adopt technology and innovation has the potential to increase 0.55 percent of economic growth per year over the next two decades.

Furthermore, infrastructure development will also be continued to close the infrastructure gap and improve the ability to adopt technology.

The G20 Surveillance Note presented at the Virtual Meeting of the G-20 Leaders' Summit shows that 0.5 percent of GDP for infrastructure spending has the potential to drive an additional one percent of economic growth per year in the next four years.

Sri Mulyani emphasized that infrastructure spending must be followed by good, transparent, and competitive planning and procurement so that the quality of the infrastructure being developed and its impact can be maximized.

Meanwhile, the unfavorable business climate, bureaucracy, and complicated and inefficient regulations and high-cost economy are obstacles to investment and export competitiveness.

Therefore, the Finance Minister emphasized that performance and efficiency-based bureaucratic reform must be carried out in the central government and local governments.

Not only that, the pandemic condition which requires a change in the way of working by relying on a digital communication system must also be used as a momentum to improve efficiency.

"The human capitals must be of high quality, the infrastructure must be supportive, and the business climate must be facilitated. The implementation of the Job Creation Law for ease of investment and simplification of regulations must run effectively," said Minister of Finance Sri Mulyani.

These structural improvement measures are expected to increase the productivity component to around 2.4 percent per year on average in the next five years or higher than the ten-year average before the pandemic of 1.6 percent.

Sri Mulyani also hopes that increased investment and job creation can also push up the contribution of labor and capital or investment to economic growth.

"With these various structural reform steps, the potential for economic growth can be increased from a level of around five percent to a level of about six percent per year," she added, as reported by Antara.