Technology policy likely to stay its course in Indonesia: Fitch Solutions

Joko Widodo, Indonesia's president, left, speaks during a first presidential debate in Jakarta, Indonesia, on Thursday, Jan. 17, 2019. Photographer: Dimas Ardian/Bloomberg
JANUARY 23, 2019 - 2:49 PM

The re-election of Indonesian President Joko Widodo is positive for the continuity of key technology policies and the growth prospects of the IT, consumer electronics and telecoms sectors for the country said Fitch Solutions Macro Research in a report on Jan 18. 

The report noted that president has been receptive to the idea of leveraging technology to boost the economy and has introduced stimulus packages and funding for tech projects and network infrastructure. That being said, macroeconomic headwinds, namely volatile currency and uncertain global growth, remain and could weigh on government spending around these IT initiatives.

The writers added that while policy devices to achieve the objectives laid out in Indonesia's Industry 4.0 initiative has not been made known, they believe more announcements will be made after the upcoming presidential elections if the president is re-elected.

The president launched this plan in April last year, with the industrial policy slated to be key in his efforts to move the economy up the value chain. Indonesia's policy centres around five key industries - food and beverage, chemicals, automotives, electronics and textiles.

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On the flipside, second-time challenger Prabowo Subianto's ascendancy as president would likely put a stop to these initiatives as his priorities are skewed toward heavy industries, such as the automotive and extractive sectors. Mr Subianto is also known to have a nationalistic agenda and could backtrack on investment reforms, potentially returning the telecoms and IT sectors to the negative investment list to limit foreign ownership. 

That being said, he is likely to commit funds to broadband expansion, as improvement of connectivity is highly correlated with government popularity, said the report.