INDONESIA ECONOMIC OUTLOOK : OPPORTUNITIES AND CHALLENGES RADEN - - PowerPoint PPT Presentation

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INDONESIA ECONOMIC OUTLOOK : OPPORTUNITIES AND CHALLENGES RADEN - - PowerPoint PPT Presentation

Jan 11, 2024 94 likes •271 views

INDONESIA ECONOMIC OUTLOOK : OPPORTUNITIES AND CHALLENGES RADEN PARDEDE, SENIOR ADVISOR COORDINATING MINISTRY OF ECONOMIC AFFAIRS A Nation in Progress CHALLENGES Normalization Climate Change Interest rate and For Indonesia liquidity

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SLIDE 1

INDONESIA ECONOMIC OUTLOOK : OPPORTUNITIES AND CHALLENGES

RADEN PARDEDE, SENIOR ADVISOR COORDINATING MINISTRY OF ECONOMIC AFFAIRS

A Nation in Progress

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SLIDE 2
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SLIDE 3

Normalization Interest rate and liquidity Trade War Inequality Anti-globalization Oil and Commodities Price Radicalism Populism nationalism Geo-politics

CHALLENGES

Stronger USD CAD Rapid technology development and job destruction

For Indonesia

Climate Change

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SLIDE 4

FINANCIAL MARKET UNDER PRESSURE

40 112 100 26

  • 41

16 3 151

  • 13
  • 13

7 19 51

  • 100
  • 50

50 100 150 200 India Switzerland Russian Federation South Africa Singapore Korea Malaysia Japan Indonesia EU Australia UK Norway USA

10-year Gov't Yield Movement (BPS)

Data as of Dec 5, 2018 6,1

  • 3,2

15,9

  • 13,1
  • 15,3
  • 3,7
  • 3,5
  • 10,2
  • 6,5
  • 10,0

6,9

  • 19,9

0,6 6,2

  • 30
  • 20
  • 10

10 20 India Switzerland Russian Federation South Africa South Korea Japan Indonesia European Union Australia UK Norway China US DJI US NASDAQ

Stock Index Movement (%, YTD)

Data as of Dec 5, 2018

  • 10,8
  • 2,4
  • 15,4
  • 12,1
  • 3,6
  • 0,1
  • 6,2
  • 5,6
  • 7,0
  • 5,9
  • 3,6
  • 5,4

India Switzerland Russian Federation South Africa Korea Japan Indonesia EU Australia UK Norway China

Currency Movement (%, YTD)

Data as of Dec 5, 2018

85 90 95 100 105 110 j a n

  • 1

8 f e b

  • 1

8 m a r

  • 1

8 a p r

  • 1

8 m a i

  • 1

8 j u n

  • 1

8 j u l

  • 1

8 a u g

  • 1

8 s e p

  • 1

8

  • k

t

  • 1

8 n

  • v
  • 1

8 d e s

  • 1

8

Exchange Rate Against USD (Jan 2018 = 100)

China Australia Euro Indonesia UK Norway

Data as of Dec 5, 2018

80 85 90 95 100 105 110 115 120 J a n

  • 1

8 F e b

  • 1

8 M a r

  • 1

8 A p r

  • 1

8 M a y

  • 1

8 J u n

  • 1

8 J u l

  • 1

8 A u g

  • 1

8 S e p

  • 1

8 O c t

  • 1

8 N

  • v
  • 1

8 D e c

  • 1

8

Stock Index Movement (Jan 2018 = 100)

DJI NASDAQ 100 Nikkei FTSE ASX OSEAX

Data as of Dec 5, 2018

8,1 0,5 2,5 2,9 1,3 1,8 2 4 6 8 10 j a n

  • 1

8 f e b

  • 1

8 m a r

  • 1

8 a p r

  • 1

8 m a i

  • 1

8 j u n

  • 1

8 j u l

  • 1

8 a u g

  • 1

8 s e p

  • 1

8

  • k

t

  • 1

8 n

  • v
  • 1

8 d e s

  • 1

8

Government 10 Year Bond Yield (%)

Indonesia EU Australia USA UK Norway

Data as of Dec 5, 2018

Source: CEIC

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SLIDE 5

Forecast

4,7 4,7 4,9 4,9 4,8 4,8 4,7 4,9 5,1 5,1 5,1 5,0 5,0 4 5 6 7 8 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 2 1 7 2 1 8 2 1 9 2 2 2 2 1 2 2 2 2 2 3

Emerging and Developing Countries Economic Growth (%)

Revised Unrevised

Forecast Forecast

3,7 3,7 3,7 3,6 3,6 3,6 3,7 3,9 3,9 3,8 3,8 3,7 3,7 2 3 4 5 6 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 2 1 7 2 1 8 2 1 9 2 2 2 2 1 2 2 2 2 2 3

Global Economic Growth (%)

Revised Unrevised

GLOBAL ECONOMIC OUTLOOK REVISED DOWN IN OCT. 2018

Source: World Economic Outlook, Oct & April 2018

2,4 2,1 1,7 2,3 2,5 2,2 1,7 1 2 3 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 2 1 7 2 1 8 2 1 9 2 2 2 2 1 2 2 2 2 2 3

Advanced Countries Economic Growth (%)

Revised Unrevised

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SLIDE 6

SUMMARY

¡ Indonesia has made significant political, economic and social progress, and

strengthened resilience during the past 2 decades (achievement)

¡ The economic landscape is shifting, highlighting some short and medium term

challenges (challenges)

¡ To continue to prosper and further enhance resilience of the economy,

Indonesia needs to further modernize its policy framework and implement critical reforms (response)

¡ Going Forward Indonesia will continue to grow above 5%, benefits from

demographic bonus, policy reforms and technology adoptions (outlook)

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SLIDE 7

START FROM LOW BASE : INDONESIAN ECONOMY AMONG THE BEST PERFORMER

Mckinsey

ACHIEVEMENTS

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SLIDE 8

2018 ~4,000

CATCHING UP

ACHIEVEMENTS

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SLIDE 9

POLITICAL AND ECONOMIC REFORMS

  • Democratic multiparty system (from military led political system)
  • Broadly decentralization program (from centralized government)

Political reforms

  • Reduction of poverty and infant mortality
  • Improvement in living standards : life expectancy, education

attainment, access to electricity, sanitation and clean water

Social progress

  • Fiscal : fiscal rules ( BD <3%), cap public debt
  • Monetary : floating exchange rate, inflation targeting
  • Banking sector : restructuration, overhauled supervision

Economic policy reform

ACHIEVEMENTS

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SLIDE 10

STABLE “HIGH MODERATE GROWTH” AND BECOME MORE RESILIENT

¡ Growth stabilized at about 5% ¡ Inflation contained within the target (3.5 +1 %) ¡ Public debt is moderate about 30% of GDP ¡ NPL are low. Less than 3% of total loans, CAR 22% ¡ Education spending 20% of total government spending ¡ Infrastructure spending has increased 3 folds since 2015

ACHIEVEMENTS

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SLIDE 11

PURSUE CRITICAL REFORMS

¡ Medium term revenue strategy, to finance infrastructure, Education and

health

¡ Carry Structural reforms

¡ Continue infrastructure development and ¡ Well targeted education, social and health program ¡ Reduce reliance on portfolio investment and Boost FDI ¡ Streamline regulations : Lower restriction for trade and private investment, ease

entry barriers on business (the fewer the better)

¡ Modernize SOE and strengthened the role of private sector ¡ Improve Institutional (politics) accountability

RESPONSES

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SLIDE 12

PRIORITIES OVER THE NEXT 5 YEARS

¡ Infrastructure across regions

¡

Connectivity : Roads, Airport, Seaport, Digital infrastructure

¡

Power Plant (renewable energy) and distribution ¡ Soft Infra and Human resource

¡

Education (basic)

¡

Vocational (multi-skill)

¡

Health ¡ Benefit from Technology (Digital and IOT)

¡

E-commerce, Platform economy, Travel and tourism

¡

New Unicorns (valuation 1B USD)

RESPONSES

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SLIDE 13

RECENT POLICY INITIATIVES

¡ Fiscal Policy (responsible and prudent) : BD 2%

¡

Tax reform underway

¡

Discipline and well targeted spending ¡ Monetary Policy

¡

Ahead the curve

¡

Stability over growth ¡ Deregulation packages (16), incl recent Tax Holiday, Investment negative list, OSS ¡ CAD

¡

FDI more attractive

¡

Export push (new commodities and markets)

¡

Open (reduce investment negative list), FTA, Regional and Multilateral (CEPA)

RESPONSES

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SLIDE 14

GOING FORWARD, CONDUCIVE ENVIRONMENT IS UNDERPINNING GROWTH FUNDAMENTALS…

¡ The largest economy and population in South East Asia ¡ Demographic dividend ¡ Large consumer base for fast growing consumer spending power with

middle income class continue to grow

¡ Strong Commitment to improve investment and business climate ¡ Infrastructure investment to improve efficiency and connectedness ¡ Human resource development, (the new priority in the next five years) ¡ Economy will continue to grow above 5% per-annum

OUTLOOK

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SLIDE 15

POTENTIAL .. BUT NOT EASY

16 Indonesia

OUTLOOK

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SLIDE 16

We are ready to listen to your concern

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