Indonesia’s economy expanded at its slowest pace for five years last year, official data showed yesterday, hit by political uncertainty and weak exports, putting pressure on the country’s new president to deliver much-needed reforms.
Southeast Asia’s biggest economy expanded 5 percent year-on-year, the statistics agency said, down from 5.8 percent in 2013, and the weakest pace since 2009, at the height of the global financial crisis.
The figures “help to underline the challenge facing Indonesian President Joko Widodo, who despite a promising first few months in office faces a tough challenge,” said Gareth Leather, Asia economist from Capital Economics.
Photo: AFP
Widodo, who won office partly on a pledge to revive the slowing economy, has promised to woo investors by cutting red tape and plowing money into overhauling the country’s aging infrastructure. He has already slashed crippling fuel subsidies that have in the past gobbled up 20 percent of the state budget, promising to divert the money toward boosting the economy and helping the country’s poorest.
While his early moves have been praised, analysts say that he faces a tough time to push through more reforms in a country plagued by corruption, where protectionist instincts are still strong and parliament is dominated by the opposition.
“Anything that requires legislation is going to be more difficult,” independent political analyst Paul Rowland said.
Indonesia’s economy, long a bright spot among the G20 nations, has been slowing in recent years as the price of its key commodity exports are hit by weakening demand in regional powerhouse China and other major markets. With exports subdued, there were also worries about a stubborn current account deficit and the impact of high interest rates put in place to shore up the rupiah, which has tumbled against the US dollar on expectations of tighter US monetary policy.
The economy was also dragged down by a long-running election season, which lasted six months and led many firms to hold off investment until a successor was known. However, investors have taken heart from the victory of Widodo, a reformist and former businessman.
His other early reforms have included the launch this month of a national “one-stop service” to simplify obtaining business permits.
Previously, firms often had to seek licenses from numerous different agencies and ministries before they could invest, a complex and time-consuming process.
Wellian Wiranto, an economist from OCBC Bank in Singapore, said last year’s growth figure looked like “quite a deceleration” compared with previous years and it would be hard for Indonesia to reach rates of 6 percent this year.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure