Indonesia made great progress in reforming its economy during the first term in office of President Joko Widodo.
The country’s ranking in the World Bank’s ease of doing business study rocketed from 114 in 2014 to 73 this year, and ratings agency Standard and Poor’s in 2017 joined Moody’s and Fitch in awarding BBB investment status.
But securing capital remains a big challenge. Last year foreign direct investment fell 8.8 per cent, the worst performance since 2010, and figures for this year look similarly unsatisfactory – in the second quarter, growth stood at 5.01 per cent compared with 5.85 in the same period last year.
Finance minister Sri Mulyani says foreign investment is crucial to the economic ambitions of Southeast Asia’s biggest economy because the amount coming from domestic sources is limited and largely hindered by the country’s poor savings ratio. The government and state-owned enterprises are only able to stump up about a quarter of the funds needed to meet targets, so a large portion of cash will need to come from overseas.