US strengthens its economic relationship with Indonesia

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The USA is investing a lot in the future growth of economic ties with Indonesia, with emphasis on financial sector and infrastructures.

The relationship between Indonesia and the US could reach an economic value of almost US$132 billion in 2019, with a 46 percent increase from $90 billion in 2014, say the US Chamber of Commerce and American Chamber of Commerce (AmCham) Indonesia in their “US-Indonesia Investment Report 2016”.

Of course this prediction will be confirmed only if President Joko Widodo is able to achieve an economic growth of 7%, rising from 4.8% in 2015, which was one of the lowest percentages of the past 6 years, which is still remarkable when compared to the average growth, for example, of the European Union.

The US Chamber of Commerce considers this target achievable if the government is able develop new policies, including transparency and a further revision of the negative investment list (DNI), which governs the number and types of sector for foreign investment in Indonesia.

Indonesian government has already opened 35 investment sectors to foreigners since February 2016. These 35 sectors also include e-commerce, which is expected to grow exponentially in the next few years, becoming a primary target for US investors. The government has also made a huge effort to make it easier for foreigners to do business in Indonesia, by reducing the amount of bureaucracy.

Research by AmCham claims that these moves were perceived as being positive by more than 80% of US companies operating in Indonesia, which reported an improvement in the investment environment which, in turn, will lead to an increase in investments in the next five years, especially in agriculture, finance, information technology, telecommunications and consumer goods industries.

Indonesia’s ranking in the World Bank’s 2016 Ease of Doing Business report is 109 out of 189 countries, but this new and less bureaucratic approach will soon push Indonesia up in the rankings.

A further improvement of bureaucracy and possibly the abolition of the DNI could be the key in bringing Indonesia to its full potential within the next few years.