WASHINGTON: After a convincing victory in presidential elections, Indonesia’s President Joko Widodo, known as Jokowi, has his work cut out to deliver on campaign promises to put Indonesia on a higher growth path and find jobs for the millions joining the workforce each year.
He made no apologies for overseeing a larger role for state-owned enterprises in a broad range of industries that crowded out private foreign and domestic investors alike.To his credit, Jokowi made progress in creating a stronger environment for investors. Expanded spending on rural infrastructure has been popular, slowing and even reversing wealth inequality. The results are apparent in global rankings.
Recent industry analysis suggests Indonesia must invest more than US$150 billion into exploration, gas distribution infrastructure and refinery capacity to slow production decline and meet growing demand. Without new investment, Indonesia could see its hydrocarbon production fall by another 20 per cent before 2024.
In 2014, Jokowi turned to a set of state-owned enterprises to jumpstart infrastructure development. While a defensible strategy at the time given the scale of Indonesia’s infrastructure deficit, the SOEs grew steadily more dominant in leading sectors, expanding into new areas and demanding preferential government treatment.
The Belt and Road Initiative envisages massive investments in maritime, road and rail projects across 65 countries Indonesia submitted a project wish list worth more than US$90 billion at the Belt and Road Initiative Summit in April, most situated within the three priority “economic corridors” in North Sumatra, North Kalimantan and North Sulawesi.