Mandiri Investment Forum 2022

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The global economy in 2021 expanded more strongly than previously anticipated. Extraordinary supports from the governments and central banks in mitigating the impact of COVID-19 pandemic, and the vaccine roll-out along with public activity restriction easing in most economies have played a crucial role in the accelerated recovery. In 2022, the global recovery is expected to keep proceeding. However, some major issues have emerged following this recovery path, raising the need for some adjustments on the global policy measures. A boom in global demand has stretched the capacity of global suppliers and risen commodity prices. This supply bottlenecks have curbed the output growth and created inflationary pressure. The pressure in consequence is influencing the policy stance of major central banks. Global monetary policy normalization is then seen to soon take place.

Against these backgrounds, how does Indonesia retain stability without being counterproductive to the attempt of accelerating economic recovery in 2022? What strategies and innovations will be exerted to keep improving investment amid the risk-off sentiment?

Indonesia has effectively overcome a surge of COVID-19 infections in mid-2021 which forced the government to reimpose stricter public activity restriction, constraining the 2021 economic recovery. Indonesia’s economic growth is hence expected to accelerate in 2022 as economic conditions normalize and domestic reforms to improve the business climate spur investment. For 2022 fiscal policy, the government has upheld the theme of “Economic Recovery and Structural Reforms”. Structural reforms in company with the Law on Job Creation, the Indonesia Investment Authority (INA) and the Risk-based Online Single Submission (OSS) system remain the fundamental to recover and accelerate post-pandemic economic growth as it is vital in attracting investment. The fiscal policy architecture will be anticipative and responsive, while maintaining a balance between countercyclical capabilities and risk control efforts so that long-term fiscal sustainability can be maintained. Fiscal consolidation and reforms will continue to be carried out in a comprehensive, gradual, and measurable manner. For 2022 monetary policy, Bank Indonesia has highlighted the importance of strengthening policy synergy with the government. Bank Indonesia will direct its stance towards maintaining stability after various policy instruments are deployed to encourage national economic recovery. Such efforts are needed to prevent the impact of global stimulus exit policy. Macroprudential policies and the payment system in 2022, meanwhile, will still be pursued accommodatively for economic growth.

Furthermore, Indonesia’s economy continues moving to digitalization as the pandemic has fast forwarded the adoption of digital technologies (digital transformation). The government has been focusing on creating a digital ecosystem to increase connectivity, competitiveness, and growth. This gives a huge investment opportunity in digital infrastructures and information and communication technology (ICT) development. Demand for ESG investing in Indonesia also indicates an increasing trend, as it is proven to promote more sustainable growth.

The Macro Day of MIF 2022 will emphasize on the government’s strategies and policies to maintain stability in conjunction with continuing the structural reform agenda to spur economic recovery. The conference, moreover, will highlight potentials of the future economy, encompassing the digital economy and the green economy as the key engines of sustainable growth by discussing opportunities and challenges from investing in these sectors. As our contribution to resolve the challenges, MIF 2022 in general is designed as a venue for investors and policy makers to identify the investment obstacles as well as to formulate the approaches to resolve these hurdles. We expect that the Forum will grant contributions in making Indonesia’s economic growth not only increasing but also more sustainable going forward.

 

Macro Day

9 February 2022