The Indonesian government intends to
"debureaucratize" itself in order to eliminate the high-cost economy
in the country, a senior economic minister said here on Thursday.
"Incentives for the business world need not always mean giving them fiscal
facilities. They can also come in the form of a debureacratization process to
overcome the high-cost economy," Antara news agency quoted Coordinating
Minister for Economic Affairs Aburizal Bakrie as saying.
However, the government's intention to
eliminate the high-cost economy could not be achieved in a short time.
"This goal cannot be achieved in one or two weeks' time because it will be
a matter of decades. But we are serious in our intention as the high-cost
economy will only lead to incompetence. All business circles want the
bureaucracy to work faster and more efficiently than it is doing today,"
he said. Indonesia has the largest economy in Southeast Asia and
is one of the emerging market economies of the world. The country is also a
member of G-20 major economies and classified as a newly industrialized
country.
It
has a market economy in which the government plays a significant
role through ownership of state-owned enterprises (the central government owns
more than 160 enterprises) and the administration of prices of a range of basic
goods including fuel, rice, and electricity. In the aftermath of the financial and economic
crisisthat
began in mid-1997 the government took custody of a significant portion of
private sector assets through acquisition of nonperforming bank loans and corporate assets
through the debt restructuring process. Since 2004 the
economy has recovered and growth has accelerated to over 6% in recent years.
Indonesia regained its investment grade rating
from Fitch Rating in late 2011, and from Moody's Rating in early 2012, after losing
its investment grade rating in December 1997 at the onset of the Asian
financial crisis which Indonesia spent more than Rp450 trillion ($50 billion)
to bail out lenders from banks. Fitch raised Indonesia's long-term and local
currency debt rating to BBB- from BB+ with both ratings is stable. Fitch also
predicted that economy will grow at least 6.0% on average per year through
2013, despite a less conducive global economic climate. Moody’s raised
Indonesia's foreign and local currency bond ratings to Baa3 from Ba1 with a
stable outlook
The high-cost economy is
generated by the illegal economic practices play an important role in helping
accelerate inflationary pressures, as well as a barrier to the fundamental
factors such as the exchange rate of the rupiah and the stock of goods and
money. the high-cost economy has big advantages compared to other costs that
actually occurred in this trend is the high barriers to entry of the industry
where cost issues are prominent and in the creation of large economies of scale
In relation to the size of the modern market of clean water, energy,
telecommunications and electricity is very expensive to build transmission
networks (water, gas pipeline, electricity and telephone lines).
