A light-rail project in the Capital city of Indonesia has been given the green light by Joko Widodo, the current ruling Indonesian President. He broke ground on this project and promised a lot more to come, extending a drive to revive his economic agenda as he takes steps in preparing to unveil the first elements of an economic stimulus package.
Better known as President Jokowi, Joko Widodo officially signed off on the start of the Jakarta project this Wednesday by signing a presidential regulation to expedite the light rail transit on September 2nd. The construction on the 86 kilometer line in Jakarta will be beginning before the end of the year along with the planned construction of the rail projects in Sulawesi and Papua, the President said.
He added some more words to his speech to indicate his priorities and his nationwide focus.
“The most important thing is that all works must be started immediately,” Jokowi said. “And I want to convey that works of transportation infrastructure aren’t only in Java.”
The President has been struggling to overcome low government spending and public works which have proven to be huge bottlenecks in his efforts to rejuvenate Southeast Asia’s biggest economy.
Indonesia has been growing at is slowest pace since 2009. In the most recent weeks leading up to now, the President has been on a mission to break the impasse by reshuffling his economic team and forcing through the start of long-delayed projects, the likes of which are a power plant and dam. He had outlined in public the stimulus measures at 4pm local time on Wednesday.
Investors’ confidence in the Indonesian economy has taken a big hit over the past few months. It was not only due to the monumental challenges that the Indonesia’s current President faces, but it was also the threats in the form of a slowdown in China and the prospect of higher interest rates in the United States.
With the tough challenges faced from both the global and local economic situations, an approximate outflow of 1.5 billion USD has flowed out from Indonesian stocks and local-currency sovereign debt this quarter. The Indonesian rupiah has taken a nose dive as it went down 13% against the dollar this year.
“In the current global slowdown climate, not much can be done by the government,” said Wilianto Ie, the Jakarta-based head of research at PT Maybank Kim Eng Securities. In fact, authorities should do all they can to avoid introducing regulations that interfere with market mechanisms, he said.
The Jakarta Composite Index of shares rose 0.4% as of the midday break. This showed a rebound in regional shares as there is growing optimism that China will be able to finally stabilize its financial markets. The gauge is down 17 percent this year. The rupiah strengthened 0.1 percent to 14,268 a dollar and government bonds advanced, pushing the 10-year yield down one basis point to 9.09%.
Stimulus Package to Boost Indonesian Economy
The government has promised an economic stimulus package with the hopes that it will lure investment and revive Indonesia’s slowing economy.
The government announced late August plans to expand the existing tax holidays for industrial investors, describing it as an “appetizer” for a more comprehensive set of steps. Coordinating Minister for Economic Affairs Darmin Nasution said last week the president had asked ministers to focus on “deregulation” for the stimulus package.
Indonesian exporters should follow an existing recommendation and bring their earnings back home to boost domestic dollar liquidity, Jokowi said at a banking conference in Jakarta on Wednesday after the ground breaking.
The Jakarta light rail plan had been discussed as early as 2012, with the city needing to connect transport networks from Jakarta’s outskirts to all transportation modes in the capital, the president said Wednesday.