Fewer FDI restrictions in Indonesia – good!

This week, most western coverage of Indonesia has focused on it wanting to ban LGBT themed emojis. I would personally want a Government to be focused on getting important things right rather than interfering in peoples private lives, but there you go. The lesser reported news is actually some good news, that the Indonesian government has removed 35 industries from the “Negative Investment List”, which limits or shuts down completely foreign direct investment into certain selected sectors, such as oil, e-commerce and film.

The list exists because “The underlying principle is that if a business within a certain industry can be capably conducted by Indonesians, then that sector will be closed to foreign investment.” There is more efficient way of determining who can best provide goods and services, and you can bet it isn’t the incredibly frustrating Indonesian all bureaucracy.

Although some think FDI is terrible, and multi-national corporations are collections of evil people wanting to do evil things (in which case they probably could be classed as people not on board with the whole capitalism thing) they are probably wrong. Trade is good, protectionism is bad, and this economic modernisation, not liberalisation (?) as put by Pramono Anung, the cabinet secretary, should help further increase the amount of FDI flows into the country.

Indonesia still has 28 million below the absolute poverty line, and “approximately 40 percent of all people remain clustered around the national poverty line set at 330,776 rupiah per person per month ($22.6)”. Hopefully, sensible reforms like this one should help the country become the worlds 7th largest economy in 2030, with a corresponding decline in poverty and rising living standards for everyone else. The trade minister Thomas Lembong has moved away from the countries traditional protectionist stance, and although the country could go much further with regards to lowering import tariffs and following the how not to screw up your country handbook (cough Venezuela cough) this is a good start.


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s