Indonesian presidential bet Jokowi eyeing to pull the trigger on fuel subsidies cut

Less dependence on foreign investments also proposed.

According to DBS, the presidential front-runner and incumbent Jakarta governor Joko Widodo (widely known as Jokowi) may change policies regarding fuel subsidies and foreign investors’ dependence that may change the business and economic development in Indonesia.

Recent media interviews and an opinion piece in a leading local newspaper provided some hints of Jokowi’s eco¬nomic policy leaning. Firstly, fuel subsidies will be gradually reduced. Secondly, depend¬ence on foreign investors will be diminished.

Here’s more:

Reducing fuel subsidies is a crucial task. Such a move will be widely seen as a positive, even if there will be short-term implication on inflation.

Yet, fuel subsidies cut has always been a controversial issue. At least on a couple occasions during President Yudhoyono’s terms, a pro¬posed bill to raise subsidised fuel price was rejected in the parliament.

In those occasions, Jokowi’s PDIP was in the opposition camp. It remains to be seen if the party’s position will change if Jokowi were to be elected as the President.

The comment regarding foreign investors is equally important, amidst concerns of rising protectionism in the country. Interestingly though, it is not a call to reject foreign investment across the board.

Foreign investment is still seen as crucial for economic development but there is a need for more to be channelled into industries that will create more value-add and more jobs. Simply put, more emphasis is needed in sectors such as manufacturing and services and away from mining and natural resources.