Economic surveys and country surveillance

Economic Survey of Indonesia 2012


 Overview of the Economic Survey of Indonesia 2012 | Also available in Bahasa

OECD Economic Surveys: Indonesia 2012 | OECD Free preview | Powered by Keepeek Digital Asset Management Solution
Click to READ


The country is in a favourable situation to undertake necessary reforms  Real GDP is projected to grow at around 6% this year and next, led by robust domestic demand. Monetary policy should, as planned, ensure that inflation will remain on a downward trend, using interest rates, liquidity management and macro‑prudential measures. Indonesia’s infrastructure and social spending needs are substantial and will need to be efficiently financed. A substantial reduction in energy subsidies, which fail to achieve their social goals and have significant fiscal costs, would free up resources for pressing social and economic needs. At the same time, well targeted cash‑transfer schemes will be necessary to keep poverty from worsening and thereby help to overcome resistance to energy price increases. Wide communication on the gains and distributional benefits of this reform, together with a rule linking subsidised fuel prices to international oil prices that does not have to be renegotiated every year would ease implementation.

There is significant scope to raise revenues by improving the tax system and tax administration. Broadening tax bases and improving compliance, particularly by high‑income individuals, would make the system fairer. This should be achieved by allocating more audits where risks of underpayment are higher, making more intensive use of existing information, setting up more large‑taxpayer offices and enhancing administrative capacity. Removing exemptions and raising the tax rate on economic rents in the resource sector would generate higher revenues efficiently. Efforts to bring the self‑employed into the tax net should be reinforced

Faster productivity growth will boost living standards

Formalisation of workers and firms will be a key source of productivity growth and could be encouraged by preventing excessive increases in the minimum wage, introducing a sub‑minimum wage for youth and implementing reforms to make the formal labour market more attractive to workers and firms. One option to effectively protect workers against job‑loss risks in the future would be to introduce limited unemployment benefits coupled with individual unemployment‑insurance accounts. A simplification of the cumbersome licensing process would reduce the administrative burden facing companies.

Notwithstanding a vibrant financial sector, firms’ access to finance could be eased by making the information collected by the credit bureau available to all financial institutions. Underdeveloped financing sources such as venture capital and micro‑finance could be deepened by removing current restrictions to entry. The Master Plan for the Acceleration and Expansion of Indonesia’s Economic Growth, which is meant to speed up infrastructure development, can be supported by additional public outlays without endangering fiscal sustainability. A lack of qualified workers also hampers productivity gains, and public resources should focus on the most cost‑efficient programmes that manage to develop the skills of school dropouts and workers. Support to small firms could be made more effective by clarifying responsibilities within the central government and between it and local authorities, and by consolidating existing schemes. Relaxing those restrictions on inward direct investment that cannot be justified by public‑interest concerns and removing the non‑tariff barriers that are detrimental to trade and growth would also be useful.


Indonesia 2012 700 

‌‌‌Download underlying data


For further information please contact the Indonesia Desk at the OECD Economics Department.

The OECD Secretariat's report was prepared by Annabelle Mourougane and Jens Arnold under the supervision of Peter Jarrett. Research assistance was provided by Anne Legendre.

About Surveys

Previous Surveys on Indonesia

How are country surveys prepared?

The role of the EDRC (Economic & Development Review Committee)

Timetable of EDRC Meetings

Contact us


Indonesia - projections note

Economic surveys

Structural reforms


Product Market Regulation

Statistics & Data

Product market regulation

Projections - key variables

Useful links

Economics Glossary

External links to macroeconomic reports and data

OECD Economics Department homepage

More on Indonesia




Countries list

  • Afghanistan
  • Albania
  • Algeria
  • Andorra
  • Angola
  • Anguilla
  • Antigua and Barbuda
  • Argentina
  • Armenia
  • Aruba
  • Australia
  • Austria
  • Azerbaijan
  • Bahamas
  • Bahrain
  • Guernsey
  • Jersey
  • Bangladesh
  • Barbados
  • Belarus
  • Belgium
  • Belize
  • Benin
  • Bermuda
  • Bhutan
  • Venezuela
  • Bosnia and Herzegovina
  • Botswana
  • Brazil
  • British Virgin Islands
  • Brunei Darussalam
  • Bulgaria
  • Burkina Faso
  • Burundi
  • Cabo Verde
  • Cambodia
  • Cameroon
  • Canada
  • Cayman Islands
  • Central African Republic
  • Chad
  • Chile
  • Chinese Taipei^Taipei
  • Colombia
  • Comoros
  • Cook Islands
  • Costa Rica
  • Côte d'Ivoire
  • Croatia
  • Cuba
  • Cyprus
  • Czech Republic
  • Democratic People's Republic of Korea
  • Democratic Republic of the Congo
  • Denmark
  • Djibouti
  • Dominica
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Eritrea
  • Estonia
  • Ethiopia
  • European Union
  • Faeroe Islands
  • Micronesia
  • Fiji
  • Finland
  • Former Yugoslav Republic of Macedonia
  • France
  • French Guiana
  • Gabon
  • Gambia
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Greenland
  • Grenada
  • Guatemala
  • Guinea
  • Guinea-Bissau
  • Guyana
  • Haiti
  • Honduras
  • Hong Kong (China)
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iraq
  • Ireland
  • Iran
  • Isle of Man
  • Israel
  • Italy
  • Jamaica
  • Japan
  • Jordan
  • Kazakhstan
  • Kenya
  • Kiribati
  • Korea
  • Kuwait
  • Kyrgyzstan
  • Lao People's Democratic Republic
  • Latvia
  • Lebanon
  • Lesotho
  • Liberia
  • Libya
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Macau (China)
  • Madagascar
  • Malawi
  • Malaysia
  • Maldives
  • Mali
  • Malta
  • Marshall Islands
  • Mauritania
  • Mauritius
  • Mayotte
  • Mexico
  • Monaco
  • Mongolia
  • Montenegro
  • Montserrat
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Nauru
  • Nepal
  • Netherlands
  • New Zealand
  • Nicaragua
  • Niger
  • Nigeria
  • Niue
  • Norway
  • Oman
  • Pakistan
  • Palau
  • Palestinian Authority
  • Panama
  • Papua New Guinea
  • Paraguay
  • China (People’s Republic of)
  • Peru
  • Philippines
  • Bolivia
  • Poland
  • Portugal
  • Puerto Rico
  • Qatar
  • Moldova
  • Congo
  • Romania
  • Russia
  • Rwanda
  • Saint Helena
  • Saint Kitts and Nevis
  • Saint Lucia
  • Saint Vincent and the Grenadines
  • Samoa
  • San Marino
  • Sao Tome and Principe
  • Saudi Arabia
  • Senegal
  • Serbia
  • Serbia and Montenegro (pre-June 2006)
  • Seychelles
  • Sierra Leone
  • Singapore
  • Slovak Republic
  • Slovenia
  • Solomon Islands
  • Somalia
  • South Africa
  • South Sudan
  • Spain
  • Sri Lanka
  • Sudan
  • Suriname
  • Swaziland
  • Sweden
  • Switzerland
  • Syrian Arab Republic
  • Tajikistan
  • Thailand
  • Timor-Leste
  • Togo
  • Tokelau
  • Tonga
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Turks and Caicos Islands
  • Tuvalu
  • Uganda
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • Tanzania
  • United States
  • United States Virgin Islands
  • Uruguay
  • Uzbekistan
  • Vanuatu
  • Viet Nam
  • Wallis and Futuna
  • Western Sahara
  • Yemen
  • Zambia
  • Zimbabwe
  • Curaçao
  • Bonaire
  • Saba
  • Topics list