Tax reform and transparency would strengthen Indonesian economy, says OECD

16 Oct 18

Wide-ranging reforms are needed to make Indonesia’s economy more sustainable and resilient, the OECD has said.

In a report, the Paris-based organisation said the Indonesian economy was steady, offering millions of people access to public services and curbing poverty.

But it highlighted that reforms could boost growth and government revenue to allow for more investment in infrastructure and increased spending on health and social services.

In its latest Economic Survey of Indonesia, the OECD suggested the southeast Asian country’s economy would be more resilient to future shocks if it reform tax to increase government revenue and introduced more transparency and improved governance of state-owned enterprises.

It also called for reforms to employment regulations to bring more workers into formal employment and simplification of business regulations.

“The Indonesian economy is growing at healthy rates, and a demographic dividend will further boost growth in the coming years,” OECD secretary general Angel Gurria said, presenting the survey in Bali at the IMF-World Bank annual meeting on Wednesday.

“The challenge going forward will be to create the conditions to ensure that future generations have the opportunities for a better life.

“Infrastructure, education, health and job quality still pose important challenges that must be addressed to ensure that Indonesia achieves sustainable and inclusive growth,” he added.

The OECD’s recommendations came just weeks after Indonesia was hit by a devastating earthquake and tsunami, which killed more than 2,000 people on the island of Suawesi on 28 September.

The OECD chief said the economic survey promotes policies that are designed to improve Indonesia’s resilience to risks such as climate change.

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