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Economy & Cabinet Resuffle

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The cabinet resuffle would be welcomed by business sector as six new ministers have qualifications in supporting the government’s effort to accelerating the economy next year. The backgrounds of said ministers, both in business and politics, are the main factors building such a trust to business community.

Sandiaga Uno as new minister for tourism and creative economy has a vital role in overcoming the impact of the COVID-19 pandemic for tourism sector. Sandiaga has experiences in government affair, politic, and business. Sandiaga is hoped to lead the creative economy as locomotive in creating jobs amid current global economic downturn.

New ministers are considered to easily collaborate and build a synergy between government and business sector as they have good relationship for longtime before. New ministers could soon work and adapt in short transition process, then taking strategic steps in related ministries, and strengthening trusts of investors and business community on the country’s economic prospect.

Muhammad Lutfi, new minister for trade, is also considered to improving the trade diplomacy, then the access for export would be lifted, mainly trade diplomacy with trading partners such as United States, European countries, China and Turkey. Lutfi is former minister for trade during administration of President Soesilo Bambang Yudhoyono (SBY), also ambassador for Japan and United States, and head of Indonesian Investment Board (BKPM).

Budi Gunadi, as new minister for health, is hoped to have better knowledge and capacity in handling the COVID-19 pandemic in the country. Budi is former vice minister for state-owned enterprises (SoE), president director of Inalum and Bank Mandiri.

Meanwhile Finance minister, Sri Mulyani Indrawati, again revised down Indonesian economic growth to minus 2.2 to 1.7 percent in this year due to high pressures from the COVID-19 pandemic. In August 2020, she was still optimistic saying the national economy would only contract by 1.1 to 0.1 percent. Sri Mulyani noted that the growth is sloping due to the weak household consumption and people’ purchasing power.

Japan Credit Rating Agency, Ltd. (JCR) maintained Indonesia’s sovereign credit rating at BBB+ with stable outlook (investment grade), reflecting that the global investors’ trusts are still maintained over Indonesia’s economic resilience amid the COVID-19 pandemic. JCR affirmed its rating for Indonesia, as Indonesia’s economic growth is solid, supported by domestic demand.

President Joko “Jokowi” Widodo is also optimistic that the country’s economy to accelerate its recovery in 2021 as public consumption have gradually improved, while investment is predicted to grow supported by the implementation of the Omnibus Law on Job Creation.

Global economic improvements, according to central bank (Bank Indonesia/B.I.), have endured and are projected to accelerate in 2021. The global economic gains come amidst increasing mobility and the impact of ongoing policy stimuli in various countries, particularly the United States and China.

At home, B.I. said, domestic economic growth is expected to gradually gain momentum and accelerate in 2021. This was confirmed by several positive indicators in November 2020, including increasing public mobility in several regions, ongoing improvements in the Manufacturing PMI as well as stronger consumer confidence and expectations concerning incomes, job availability and business activity.

For 2021, government projects the economy to grow by 4.5-5%, depending on how and what kind of efforts in handling, preventing COVID-19 pandemic through implementation of health discipline and vaccine program. Government will next year focus on handling COVID-19 pandemic and accelerate the economic growth.

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