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Economic Policy

Delivering strong, sustainable and inclusive economic growth requires a strong macro economic policy framework grounded in evidence. The economic support team is an in house analytical capability to support AIPEG engagement areas to build an evidence-base and maintain a forward looking agenda for economic reform. Central to AIPEG’s approach is Tim Asistensi (assistance team), a group of senior Indonesian policy experts. Tim Asistensi combines ‘just in time’ policy advice with deeper analysis on macro-fiscal issues and increasing competitiveness.

The economic team also supports Indonesia’s international engagements and cross-cutting issues of infrastructure investment, institutional capability and gender equality. AIPEG aims to contribute to the following outcomes:

  • Increase in evidence-based economic policy.
  • Increased effectiveness of participation in international economic forums including ASEAN, G20 and APEC.
  • Policy improvement in cross-cutting areas of infrastructure, institutions and gender equality.
Leveraging state assets for growth

The Indonesian government has many valuable assets and not all are fully utilised. A vacant building, for example, can be rented by a business to boost economic activity whilst at the same time generating revenue for the government. To achieve this, asset management practices need to consider the opportunity cost, or ‘cost of doing nothing’ associated with idle assets. The AIPEG infrastructure team worked with the Ministry of Finance to set up a new State Asset Management Agency. Launched in 2016, the agency has been capitalised with IDR 17.5 trillion (about AUD 1.75 billion) from the Indonesian budget. With its two main functions in asset management and land holdings, the agency will help generate additional revenues from idle assets and also accelerate land acquisition for infrastructure development for the benefit of all citizens of Indonesia.

Working women

In Indonesia, female labour force participation has remained flat for over two decades. At just over 50 percent, it is well below the ASEAN average of 64 percent. Research conducted by Monash University and AIPEG found that current levels of education provide little explanation for women’s low workforce participation. Educated young women are entering the formal workforce at the same rate as young men. Rather, Indonesian women often leave the workforce when married and do not tend to return to work at the same rates seen elsewhere in the world. AIPEG is investigating laws, policies, regulations and other measures that can support more women in work and help achieve Indonesia’s growth potential.