ADB Approves $500 Million Loan to Support Indonesia’s Development Agenda and Reform Priorities

By himalaya Diary News Service On Sep 25, 2023

Students and instructors at the Batam State Polytechnic's teaching factory work to mass-produce PCB's and microchips. The acquisition of this expensive production equipment was made possible through funding from the Asian Development Bank.

MANILA — The Asian Development Bank (ADB) has approved a $500 million loan on 22 September to support Indonesia’s development agenda and reform priorities in creating an enabling environment for investments, easing trade barriers, and upscaling enterprises. This second of three subprograms of the Competitiveness, Industrial Modernization, and Trade Acceleration Program (CITA) builds on the success of the first subprogram approved in October 2021.

The Government of Indonesia has undertaken a range of actions to improve the investment climate, as agreed under subprogram 2. Business license approvals have been made quicker through an update of the online single-submission, risk-based approach which integrates national, subnational, and ministries’ processes. In addition, to attract more investment and support Indonesia’s transition to a low-carbon economy, the government deepened subprogram 1 reforms and, among others, promoted investments in energy efficiency and created an enabling environment for more green investments. Foreign direct investment for the manufacturing of batteries for electric vehicles was also approved, including the signing of five high-value contracts, from which at least 49,000 jobs are expected to be created.

To ease trade barriers, the government implemented three new systems under the National Logistics Ecosystem Masterplan (2020–2024) to digitally connect the public and private sectors in the logistics chain, including rolling out an online payment platform for logistics services with six banks implementing a single operating system for port operators. The national single window was enhanced and the competitiveness of government procurement was strengthened.

As part of its measures to upscale enterprises, the government improved the entrepreneurial ecosystem and increased the capacity of enterprises to become more export and technology oriented, particularly those owned by women who are often neither fully aware of nor have sufficient capacity to participate in government procurement. A landmark integrated sex-disaggregated system for micro, small, and medium–sized enterprises was established, which will be used to track, analyze, and report on the performance of businesses owned by women.

“To achieve high-income status by 2045, the government anticipates that Indonesia’s gross domestic product must grow by at least 6.0% annually, significantly above the pre-pandemic average of 5.3%. Indonesia is making good progress in its recovery from the COVID-19 pandemic, but ongoing structural reforms are needed to boost its growth potential by stimulating investment, job creation, improved business climate, and trade,” said ADB Country Director for Indonesia Jiro Tominaga. “Policy reforms under the program will help Indonesia attract more investments, including in green and sustainable businesses, ease trade barriers, and empower local enterprises.”

CITA is in line with the Vision of Indonesia 2045 and the National Medium-Term Development Plan 2020–2024, and an integral part of ADB’s country partnership strategy for Indonesia, 2020–2024, particularly the strategic pathway on accelerating economic recovery and strengthening climate resilience.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.