The Government and Bank Indonesia Agree Six Strategic Measures to Accelerate Manufacturing Industry Strengthening Efforts - Bank Sentral Republik Indonesia
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November 20, 2019
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The Government and Bank Indonesia along with the Indonesian Financial Services Authority (OJK) have agreed 6 (six) strategic measures to strengthen manufacturing industry performance in order to stimulate strong, sustainable and inclusive economic growth.  The six strategic measures are as follows:
 
1)     Increase the efficiency of logistics through infrastructure development, including the Patimban Deep Sea Port and supporting infrastructure.
2)     Enhance the investment climate through implementation of the Online Single Submission (OSS), Version 1.1, licensing system.
3)     Support regulatory and policy program harmonisation in order to increase manufacturing productivity, including the promulgation of super deductible tax regulations and amendments to existing regulations that support green, or eco-friendly, vehicles.
4)     Support payment system availability by: (i) expanding Local Currency Settlement arrangements for bilateral international trade; (ii) expanding the Local Currency Settlement framework for investment (Malaysia, Thailand); and (iii) developing the payment system by expanding the National Clearing System (SKNBI) and launching the Quick Response (QR) Code Indonesian Standard (QRIS).
5)     Stimulate uptake through green financing by relaxing the loan-to-value (LTV) ratio and down payment requirements as well as expanding the Macroprudential Intermediation Ratio (MIR) and scope of funding sources.
6)     Support manufacturing industry trade and investment promotion by: (i) facilitating negotiations to become a supplier for global brands; (ii) expediting ratification of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) and Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA); (iii) utilising the Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA); (iv) organising the West Java Investment Summit (IRU-RIRU-GIRU); and (v) facilitating exhibitions, trade missions and business matching, including the Trade Expo Indonesia in Jakarta.
 
The aforementioned measures were agreed at the (Rakorpusda) Coordination Meeting between the Central Government, Local Government and Bank Indonesia held on 4th September 2019 entitled "Manufacturing Industry Development to increase Sustainable and Inclusive Economic Growth" in Jakarta. Rakorpusda was officially inaugurated by the Coordinating Minister for Economic Affairs together with the Governor of Bank Indonesia, with the Industry Minister, Minister of Trade, Minister of Transportation, members of the OJK Board of Commissioners, officials from the Ministry of Finance, Ministry of Public Works and Housing as well as other government ministries and institutions in attendance along with provincial heads from West Java, Central Java and East Java, representing Indonesia's manufacturing heartland.
 
Participants of Rakorpusda also agreed a coordinated, integrated and sustainable manufacturing industry development strategy supported by the active involvement of industry players.  Product development will initially focus on the automotive industry, textiles and textile products as well as footwear, together with other downstream and upstream industries.  The measures will also prioritise integrated interregional development based on product linkages, encompassing West Java, Central Java, East Java, Banten and South Sumatra.
 
Agreement was reached after Rakorpusda conducted an assessment of the outlook and challenges facing the manufacturing industry and agreed a strategy to accelerate future development.  The assessment strengthened confidence in the need to bolster the manufacturing industry considering the sector's strategic role in terms of deep and strong linkages to various other economic sectors, which will have a multiplier effect on economic growth and support further improvements in Indonesia's current account.
 
Kicking off the Rakorpusda activities is a national seminar entitled "Increasing Cross-Sector Interlinkages to support Automotive, Textile and Footwear Industry Development", with officials from the Ministry of Industry and various players from the manufacturing industry as speakers along with business players, economists and academics as seminar participants.  The national seminar agreed: (i) efforts to improve the business and investment climate in order to attract investors; and (ii) a development strategy to increase priority manufacturing industries towards Making Indonesia 4.0, which will be used as inputs underlying policymaking to strengthen the local value chains of the automotive, textile and footwear industries. Rakorpusda concluded with the signing of a memorandum of understanding between Bank Indonesia and the Ministry of Industry as the basis for both parties to strengthen coordination and synergy in the execution of respective duties to strengthen the manufacturing industry.
 
The Central Government, Local Government, Bank Indonesia and Indonesian Financial Services Authority (OJK) will conduct periodic monitoring and evaluation activities concerning program synergy in order to strengthen manufacturing industry performance and stimulate strong, sustainable and inclusive economic growth as a joint commitment.
 
Jakarta, 4th September 2019
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