JAKARTA. The World Bank is calling on Indonesia to improve its investment climate to lure more investment into infrastructure development.
World Bank Group president Jim Yong Kim advised the government to provide a clearer calculation of risks and returns on investment. Furthermore, it should only offer project guarantees where necessary, so that they did not function as a subsidy.
"By using that principle, you can maximize the government’s support, so you can distribute the budget to the other projects. Tools like the guarantee fund cannot be used as a way of subsidizing private-sector investment," Kim said at the Indonesia Infrastructure Finance Forum in Jakarta on Tuesday.
The leader of the Washington-based institution is on a two-day visit to Indonesia to discuss policy reforms with high-ranking officials, including President Joko “Jokowi” Widodo and Finance Minister Sri Mulyani. The declared goal is to increase state revenue and spend it more efficiently.
Kim also advised the country to reduce privileges for state-owned enterprises (SOEs) over private firms to create healthy competition, cut red tape and further develop the capital market, which could provide long-term hedging for investors. (lnd)
