http://www.bloomberg.com/news/2015-01-13/indonesia-tops-southeast-asia-luring-new-factories-survey-shows.html
By 2019, Indonesia will have 59 manufacturing plants set up, a 68% increase and this will lead Indonesia to surpass Malaysia and Thailand.
Indonesia is a mixed economy and revitalizing the economy has been one of the goals of the new Indonesian President Joko Widodo.
The President has been restructuring the fuel subsidies to increase budget for infrastructure, which should boost the economy. The government is also planning on starting a land bank to accelerate infrastructure projects.The Jakarta Composite Index (JCI) has also increased by 3% since the inauguration of the new President.
The British Chamber of Commerce predicts that investments in Indonesia will rise by 15% and the government will also cut permit procedures to make global trade easier.
By 2019, Indonesia will have 59 manufacturing plants set up, a 68% increase and this will lead Indonesia to surpass Malaysia and Thailand.
Indonesia is a mixed economy and revitalizing the economy has been one of the goals of the new Indonesian President Joko Widodo.
The President has been restructuring the fuel subsidies to increase budget for infrastructure, which should boost the economy. The government is also planning on starting a land bank to accelerate infrastructure projects.The Jakarta Composite Index (JCI) has also increased by 3% since the inauguration of the new President.
The British Chamber of Commerce predicts that investments in Indonesia will rise by 15% and the government will also cut permit procedures to make global trade easier.
7 comments:
It will be interesting to see if corruption will be affected by this growth!
I'm more interested about the impact of removing the fuel subsidies and how that will affect the economy overall.
It would be interesting to see if Indonesia's growth will remain continuous until 2019, with the influx of new factories.
The article mentioned that governments initiatives to help their economy by bringing in more companies but besides the initiatives, I wonder what else is attracting these companies. The reason this question arose is because of the labor laws that make it expensive to get labor. I am also curious to the exact policies that the government has imposed to make the country more attractive than its competitors. Overall, I think this is great for Indonesia but I am apprehensive about the future and policies as the large amount of factories come to the country.
It seems clear that Indonesia is trying to model itself after successful manufacturing countries in Asia, like Vietnam. While these new manufacturing plants will help bring in business, their success may end as soon as other Asian countries adopt policies that better suit manufacturers. Countries like Vietnam, Myanmar, and Bangladesh are all competing for manufacturing jobs, so I would expect them to challenge Indonesia.
Unfortunately the country that will win will probably be the one that pays their workers the least.
Indonesia benefits greatly from low manufacturing costs as well as low costs of labor. India is experiencing the same thing Indonesia is currently experiencing. It will be interesting to see how this sudden influx of FDI will impact the Indonesian economy known for ramped corruption as well as a loose set of labor laws. Competition for FDI is also fierce in this reason so if Indonesia wants to attract the best from around the world the government must support this initiative in some way, shape or form.
I agree with Luke's comment almost entirely, and would like to add that location probably plays a major role for Indonesia's growing economy. Being an island nation, port-to-port shipping/coastal factories likely decrease the cost of their goods even further.
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