Indonesia should usher in three reforms for economic restoration: WB

Indonesia should usher in three reforms for economic restoration: WB

Illustration - Jabodebek Light Rail Transit (LRT) line and station construction project. ANTARA FOTO/Aditya Pradana Putra/ws

Jakarta (ANTARA) - World Bank (WB) Indonesia Country Director Satu Kahkonen recommended Indonesia to take three steps for reform to facilitate economic recovery in the wake of the COVID-19 pandemic and for rebuilding the nation for the better.

"This crisis always presents challenges and opportunities for us to rebuild this country to be better by implementing several key reforms," Kahkonen remarked at the Indonesia Economic Prospects (IEP) of the July 2015 edition in Jakarta on Thursday.

One step to bring about reform is by promoting the Omnibus Bill on job creation to surmount over barriers to draw investment into Indonesia.

"The Omnibus bill is a signal that Indonesia is open for business," Kahkonen pointed out.

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Before the adoption of the Omnibus bill on job creation, Kahkonen suggested that the bill be audited, designed, and prepared suitably for it to serve as an effective legal basis.

The second step is through State-Owned Enterprises (SOE) reform to encourage investment since Indonesia needs to plug the US$1.36 trillion-gap in the realm of infrastructure.

Kahkonen emphasized that Indonesia should be able to mobilize finances from the private sector through SOEs that have a central role to play in offering infrastructure services.

On the other hand, Kahkonen noted that this concurrently had created the crowding-out of the private sector and the government's fiscal limit also led to SOEs switching to debt-based financing.

"Reforming SOEs, to serve as a catalyst in private sector participation, will be the key to continually driving efforts in the realm of infrastructure," Kahkonen stated.

The third reform is to expedite tax policy in a bid to boost state revenue, so that it can offer good public facilities.

"No country in the world can achieve a high-income bracket if the tax-to-GDP ratio is only single digit. Slowdown in the economic sphere will certainly have an impact on public spending," Kahkonen added.

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