COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA

PRESS RELEASE
HM.4.6/11/SET.M.EKON.3/1/2022

Structural Reforms Are Key to the Success of Sustainable Economic Transformation

Jakarta, January 13th, 2022

Signals of world economic recovery have begun to be seen in several countries, including Indonesia. The global economy is projected to grow by 4.3%-4.9% (YoY) in 2022. The Indonesian economy itself managed to grow positively in the second and third quarters of last year. This growth is projected to continue to increase, as seen from the development of several key indicators.

To accelerate economic growth in 2022, a special strategy is needed that can be implemented domestically and by adjusting the conditions that occur in the global economy. Pandemic control will still be a top priority in 2022, where success in overcoming the surge caused by the Delta variant in the middle of last year will be a valuable lesson in overcoming the Omicron variant. Thus, the momentum of economic recovery can also be maintained by controlling the condition of the health sector.

In addition to controlling from the health side, the Government will continue the National Economic Recovery Program (PEN) with a budget allocation of IDR414 Trillion, encouraging front-loading and continuing the element of flexibility to adapt to the pandemic situation. The PEN program will also increase people's purchasing power and maintain the sustainability of the business sector.

“Manufacturing activity and the consumer confidence index remained at expansionary levels. This is in line with retail sales which also increased due to increased demand. The easing of community mobility accompanied by the implementation of health protocols will continue to support the sustainability of this year's economic recovery," said Coordinating Minister for Economic Affairs Airlangga Hartarto in a virtual meeting "Standard Chartered Global Research Briefing 2022" event, Wednesday (12/01).

The fundamentals of the national economy were also strengthened by improvements in the external and financial sectors. The trade balance was able to generate a surplus for 19 consecutive months and investment in the country also increased in 2021. Meanwhile, an accommodative monetary policy led to an expansion of credit distribution with a non-performing loan ratio in the range of 3%.

"Investor optimism continues to be maintained, as shown by Indonesia's maintained credit rating, despite being under pandemic pressure during the past year. The government is committed to continuing this to accelerate economic recovery. In addition, macroeconomic policy coordination will also continue to be strengthened to provide positive sentiment in 2022, so that our economic growth is projected to reach 5.2% (YoY) at the end of next year," explained Coordinating Minister Airlangga.

High economic growth is needed to increase the employment and social welfare of the community, along with the target of getting out of the Middle-Class Trap in the Medium-Long term. "Structural reform is the key to the success of sustainable economic transformation," added Coordinating Minister Airlangga.

To increase the amount of investment, the Government has expanded the realm of investment to expand the creation of new jobs. There are 246 priority businesses that will be open for investment with the facilitation of fiscal and non-fiscal incentives. Export-oriented and high-tech industries are prioritized so that they can become the motor of national economic growth going forward.

“Indonesia has successfully achieved several investment commitments from abroad. For example, the cooperation between Indonesia and the United Arab Emirates has resulted in business commitments and investments of US$44.6 billion. In addition, the investment of US$9.29 billion that Indonesia managed to get from last year's COP26 Summit to strengthen sustainable development," said Coordinating Minister Airlangga.

This is in line with Indonesia's commitment to accelerate the transition to a green economy. The government has also released Presidential Regulation Number 98 of 2021, the legal basis for implementing an economic assessment mechanism for greenhouse gases. In addition, the Government will implement a carbon tax to change the behavior of economic actors to carry out low-carbon activities.

"This year, Indonesia is also trusted to be the G20 Presidency. There are at least three advantages that Indonesia can gain from this leadership, in terms of economy, social development, and politics. From the economic aspect, one of them is targeted at increasing domestic consumption," concluded Coordinating Minister Airlangga. (ltg/alr/tam/fsr)

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Coordinating Ministry for Economic Affairs of the Republic of Indonesia
Haryo Limanseto

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