Indonesia Hits $1-Trillion GDP Benchmark
Investvine, A Company of Inside Investor, Ltd.
Jan 09, 2018

Indonesia, Southeast Asia’s largest economy, for the first time crossed the $1-trillion mark in its GDP revenues, reaching an estimated $1.004 trillion as per the end of 2017.

However, the mood remained subdued as economic growth was likely lower than the 5.2 per cent initially projected for last year, according to figures released by Finance Minister Mulyani Indrawati on January 2.

One of the reasons determined is that tax discipline in the country of some 260 million people remained weak. Despite having the fourth-biggest population in the world, in Indonesia the government manages to collects only little tax from its citizens. Government revenue was 14 per cent of GDP in 2016, lower than that of Indonesia’s regional peers and a key obstacle to faster growth and credit-rating upgrades.

Indrawati said the government needed to strike a balance in chasing its revenue goals, and doesn’t want to increase pressure on companies that are already taking strain because of volatile commodity prices. As a result, overall tax income was $5.9 billion short of its target last year.

She pledged that In the future, the government will improve its tax collection process and coordination between agencies.

Apart from the lower tax take, the government also underspent on its budget, resulting in an estimated fiscal deficit of 2.6 per cent of GDP compared with a previous forecast of 2.9 per cent. The government is mandated to keep the shortfall under 3 per cent of GDP.

Fresh impulses could come from large public infrastructure projects. For example, in Jakarta, a new airport rail connection just went into operation, and the Indonesian government plans to operate airport trains in at least three more cities, namely Padang in West Sumatra, Palembang in South Sumatra and Surakarta in Central Java to ease the notorious traffic gridlocks there.

Apart from that, more public investments are expected in roads and highways, ports, airports, other railways, as well as water supply and power plants.

- ASIA TODAY News Global Distribution

Company Investvine, A Company of Inside Investor, Ltd.
Contact Imran Saddique