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Widodo Seeks Indonesian Reboot

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James Bladen
James Bladen
James Bladen joined Alpha Southeast Asia in 2015. He has written on a wide range of issues covering capital markets, Islamic finance and M&A. He worked as a consultant in Indonesia (2013-2017) and moved to New York in 2020 where he continues to cover Southeast Asia. Disclosure: I have no direct investment holding in any stocks or bonds in Indonesia , and no plans to initiate any positions within the next 96 hours. The opinion expressed in this article is my own. I have no commercial relationship with any company cited on this website nor am I receiving any compensation from anyone except from Alpha Southeast Asia, controlling shareholder of www.whatinvestorswant.com

Indonesian President Joko Widodo is going for a reboot.

The president, known as Jokowi, has laid out a fresh plan to revive an economy growing at the slowest pace in over five years.

A former furniture manufacturer from humble origins, Jokowi took office buoyed by great investor optimism. He has since brought effective governance and market-friendly reforms to Southeast Asia’s largest nation. Those hopes have been largely undermined by protectionist policies, simmering political tensions and an infrastructure drive that has yet to begin.

Investors are no doubt looking for a realistic spending plan next year that can be achieved. Predictions for economic growth and revenue in the current budget have been overly optimistic, leading to unfulfilled expectations and perceptions of inexperience in the economic team.

“The markets will be watching this very, very closely,” he said. “Up until now the government has always been very optimistic, ignoring the domestic and global economic conditions. Will we get more of this tomorrow, or a more realistic view?”, shared an investor in Jakarta.

Jokowi has often appealed to foreign businesses to invest in Indonesia, and hasmade great strides fixing concerns over corruption, red tape and an uncertain legal environment. Still, a lot more needs to be done.

Government spending, expected to be the main driver of growth given a persistent slump in commodity exports, has been hampered by changes in ministries and bureaucratic inefficiencies.

“The biggest expectation for Jokowi is that he will be able to spend and spend efficiently,” said Vaninder Singh, an economist at Royal Bank of Scotland Group Plc in Singapore. “If he can’t even spend, we won’t even get to see the efficient part.”

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