Indonesia saw in 2017 on a strong footing with better a global environment supported by the country’s fiscal performance and better quality of spending, according to the World Bank’s Indonesia Economic Quarterly report released this month.
The report also highlights that a recent rating upgrade by global rating agency Standard and Poor’s (S&P) was significant acknowledgment of progress made by the government in improving fiscal management and credibility.
“However, Indonesia must continue to make progress on structural reforms. Persistent efforts remain vital to expanding the economy’s potential and making it less reliant on commodity exports,” said Rodrigo A. Chaves, World Bank country director for Indonesia, on Thursday.
The report points out that the country still sets restrictions with its Negative Investment List (DNI) that often thwarts foreign direct investment (FDI), which has yet to significantly contribute to boost Indonesia’s growth.
On that note, the government will increasingly face difficult choices when it seeks to tackle critical, but possibly unpopular, structural reforms.
“The government should therefore re-evaluate restrictions, particularly those in the negative investment list, to encourage more FDI,” said Hans Anand Beck, World Bank acting lead economist for Indonesia.
The bank has retained its economic growth projection for Indonesia at 5.2 percent this year and 5.3 percent in 2018.