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Slower growth boosts Indonesia's SOE reform agenda

Friday, January 6, 2017

Subject

Outlook for restructuring state-owned enterprises in Indonesia.

Significance

Faced with slower economic growth, Indonesia is planning a major restructuring of state-owned enterprises (SOEs). President Joko ‘Jokowi’ Widodo’s government -- now in the third year of its five-year term -- plans by 2019 to increase the economic contribution of the public sector by improving the value, efficiency and debt leverage of SOEs.

Impacts

  • Even small improvements in SOE management are likely to deliver efficiency gains.
  • Any reduction in public sector red tape would improve the overall business climate.
  • Foreign investor interest in SOE reforms may be limited given that privatisation is not on the agenda.

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