Asian Development Bank (ADB) approved a loan worth US$ 500 million or equivalent to IDR 7.6 trillion (exchange rate IDR 15,361) for Indonesia. This loan was approved on September 22 to support Indonesia’s development agenda and reform priorities.
The development agenda consists of creating an environment that supports investment, reducing trade barriers and increasing the scale of the business world. This support is the second after previously there was ADB support in October 2021.
For information, there are three sub-programs that will be supported by ADB, including the Competitiveness, Industrial Modernization and Trade Acceleration Program (CITA/Competitiveness, Industrial Modernization and Trade Acceleration Program).
The program is also expected to provide support for Indonesia to improve the investment climate, starting from investment licensing and promotional methods to attract investment. This is expected to become Indonesia’s capital to increase income until 2045.
ADB Director for Indonesia Jiro Tominaga, said that in order to achieve high income status by 2045, the government anticipates that Indonesia’s gross domestic product will have to grow at least 6.0% annually, well above the pre-pandemic average of 5.3%.
“Indonesia’s progress has been good in recovering from the COVID-19 pandemic, but ongoing structural reforms are still needed to increase its growth potential by stimulating investment, creating jobs, improving the business climate and trade,” he said, quoted from an ADB release, Monday ( 9/25/2023).
“Policy reforms under this program will help Indonesia attract more investment, including in green and sustainable businesses, reduce trade barriers, and empower local businesses,” he continued.
The Indonesian government has taken a series of actions to improve the investment climate, as agreed under subprogram 2. Business license approvals have been made faster through updates to the online single-submission, risk-based approach that integrates national, regional and ministerial processes.
In addition, to attract more investment and support Indonesia’s transition to a low-carbon economy, the government is deepening subprogram 1 reforms and, among other things, promoting investment in energy efficiency and creating an enabling environment for more green investment.
“Foreign direct investment for electric vehicle battery manufacturing was also approved, including the signing of five high-value contracts, which are expected to create at least 49,000 jobs,” the ADB release said.
To reduce trade barriers, the government is implementing three new systems based on the National Logistics Ecosystem Structuring Action Plan (2020-2024) to digitally connect the public sector with the private sector in the logistics chain, including launching an online payment platform for joint logistics services with six banks, by implementing the system single operation for port operators. In addition, the National single window was increased and the competitiveness of government procurement was strengthened.
As part of its efforts to increase the scale of the business world, the government is improving the entrepreneurial ecosystem and increasing the capacity of the business world so that it can be more export and technology oriented, especially women-owned businesses, which are often unaware of or do not have sufficient capacity to participate in government procurement.
An integrated system of gender-disaggregated data for micro, small and medium enterprises has been created, which will be used to track, analyze and report on the performance of women-owned enterprises.
All these efforts are also in line with Indonesia’s 2045 vision and the National Medium Term Development Plan (RPJMN) 2020-2024, and are an important part of ADB’s Indonesian state partnership strategy, 2020-2024, especially strategic pathways to accelerate economic recovery and strengthen climate resilience.
ADB itself is committed to achieving a prosperous, inclusive, resilient and sustainable Asia and the Pacific, and continues its efforts to eradicate extreme poverty. Founded in 1966, ADB is owned by 68 members, 49 of which are in the Asia and Pacific region.
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