190712 Joko Widodo
Joko Widodo Image Credit: Bloomberg

Jakarta: Indonesian President Joko Widodo vowed to implement a wave of reforms to attract foreign investment as he looks to unleash the potential of Southeast Asia’s biggest economy during his second term in office.

In an interview at his Jakarta office on Friday, the president — commonly known as Jokowi — pledged to quickly lower corporate taxes, ease stringent labour laws and lift curbs on foreign ownership in more industries. Emboldened by a landslide election win in April, the president insisted he had a mandate to push key reforms through parliament.

“I know better the problems,” Jokowi said, adding that “many young people” would fill his cabinet in a reshuffle in October. “Because this is my last term, so I have no burden. I have nothing to lose.”

Following a bitter election campaign that saw violent street protests, Widodo is pushing to bolster economic growth to protect against risks emanating from weakening global demand. Lower taxes may help Indonesia compete with regional rivals like Vietnam and Thailand in luring companies seeking to relocate businesses from China as it spars with the US on trade.

Indonesia’s rupiah gained 0.1 per cent after the president’s comments on Friday, erasing losses from earlier in the day. The currency is Asia’s third-best performer this year.

The country’s economy grew about 5 per cent in recent years, well short of the 7 per cent Jokowi targeted ahead of his first term. Already, projections for growth for this year and next year have been downgraded, presenting the president an early test before he is sworn into office in October.

In the interview, Jokowi said he would improve worker skills, overhaul the bureaucracy, increase revenue and build infrastructure “faster” in the next five years. He will widen the number of industries open to foreign investment, saying those in need of outside capital included petrochemicals, manufacturing and labour-intensive sectors like textiles, garments and footwear.