On Wednesday, the government announced what President Joko "Jokowi" Widodo called the first of a series of regulatory and bureaucratic reforms designed to boost business and economic activity and strengthen people's purchasing power, which has been eroded of late by the weakening of the rupiah against the US dollar.
"We are deadly serious in implementing these economic reform measures," Jokowi assured listeners early on in his policy announcement, apparently in a bid to reassure a nervous market.
Such a pledge is indeed needed amid the public's perception that the government does not have policy coherence, and that inter-ministerial coordination within the Cabinet is absent. Skeptics may comment that it is much easier to get rid of regulations than enforce them.
But getting out of the trap of excessive regulation and licensing red tape is now on top of the reform measures proposed by Jokowi to unleash business initiative long shackled by arduous, long-winded procedures. The government revised or simply annulled 89 regulations to make things easier for business, slashed the interest rate on credit for micro and small enterprises from 22 to 12 percent and cut the maximum amount of un-taxable income.
The procedures for the disbursement of village funds from the state budget were streamlined to accelerate cash injections into rural areas. "We also want to see to it that the bulk of the funds are spent on improving physical infrastructure in the villages," Jokowi said.
Again he assured people of his determination to push through reforms, saying that a special oversight committee would be set up to monitor the progress of this policy from month to month.
The first package also includes five major policy measures by Bank Indonesia to control inflation, stabilize the rupiah exchange rate and boost investment in the property sector, while the Financial Services Authority will make it much easier for non-residents to open foreign exchange accounts at local banks.
Consumers and businesses have been in a subdued mood as the rupiah has steadily declined over the past few months to as low as 14,200 to the dollar, the lowest point since the 1998 economic and political crisis.
It is sad to learn that the government has yet to issue presidential regulations to remove the bureaucratic inertia in budget implementation caused by the excessive risks faced by senior officials in making decisions on projects, contracts and other areas of budget disbursement.
The fiscal sector is now one of the few areas that can generate positive forces to restore confidence in economic outlook because the credit expansion rate will most likely be halved this year because of the low economic growth.
The presidential decree will provide a certain degree of discretion for senior officials to make decisions to speed things up in project tendering or contract negotiations without the risk of facing corruption allegations so long as the decision making process is both accountable and transparent.
Source: http://www.thejakartapost.com/news/2015/09/11/editorial-easier-do-business.html