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Stronger Investment and Export Growth Continue to Strengthen Indonesia’s Economy

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The Indonesian economy continued to expand at a solid pace during the third quarter of 2017 helped by commodity tailwinds and stronger domestic and external demand, according to the World Bank’s December 2017 Indonesia Economic Quarterly.

Real GDP growth increased from 5.0 percent in the second quarter to 5.1 percent in the third quarter of 2017. Investment growth rose to its highest level in more than four years and foreign direct investment recorded the largest net inflow in more than seven years. Export and import volumes registered double-digit growth for the first time since 2012.

“In addition to external factors such as higher commodity prices and stronger global growth, the solid performance of the Indonesian economy was also supported by a better business environment that is attracting more foreign direct investment, as well as more public capital investments, which is the direct positive impact of fuel subsidies reduction two years ago,” said Rodrigo A. Chaves, World Bank Country Director in Indonesia.

“This reflects the importance for the Government to persevere in implementing further ambitious reforms such as increasing tax collections and continuing to rationalize subsidies to accelerate infrastructure and human capital development .”

There are also signs that private consumption has started to recover. Sales of consumer durables such as car and motorcycles rebounded, with the latter jumping double-digits in the third quarter after three years of consecutive contractions.

Real GDP growth is projected at 5.1 percent for 2017, accelerating to 5.3 percent in 2018 driven by continued strong investment growth, further recovery in consumption, and an increase in government spending.

Effective government spending is also crucial to economic development. More than half of total government spending across all levels of government in Indonesia is conducted by sub-national governments, with 38 percent managed by district governments and 15 percent by provinces. This substantial allocation of resources to local governments, a product of Indonesia’s decentralization policy since the early 2000s, reflects the primary responsibilities of local governments to deliver basic services, notably health, education and local infrastructure.

Decentralization has increased opportunities for local solutions to local problems. Access to services has improved over the past 15 years of greater decentralization, but service delivery outcomes vary widely among local governments. The report, titled Decentralization that delivers, examines the wide-ranging performance of local governments and identifies mechanisms to help local governments perform better.

“Improving service delivery by local governments requires working on three i’s: more incentives for better performance in spending the resources the central government transfers to districts; more information for citizens and the central government to better monitor local government performance, and more interaction between citizens and businesses and their local governments and service providers to demand better quality,” said Frederico Gil Sander, Lead Economist for the World Bank in Indonesia.

The launch of the December 2017 Indonesia Economic Quarterly is part of Voyage to Indonesia, a series of events leading up to the 2018 IMF-World Bank Annual Meetings in Bali. The Australian Department of Foreign Affairs and Trade supports the publication of the report.

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Improved Skills and Job Opportunities for Youth in Maldives

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The World Bank Board of Directors today approved a $20 million financing to provide market relevant skills and increase employment opportunities for youth in Maldives.

Basic human development indicators are high in Maldives, with the adult literacy rate at 98.6 percent and life expectancy at 77.6 years. The new project will help the Government of Maldives accelerate human capital accumulation, increase employment opportunities for young people, promote equitable economic and social progress in the country, and fulfill the vision for a climate sensitive Blue Economy.

“The Maldivian youth hold the key to the country’s future prosperity,” said Idah Z. Pswarayi-Riddihough, World Bank Country Director for Maldives, Nepal and Sri Lanka. “We are happy to partner with the Government to develop ‘A 21st Century Skills Development Strategy’ and test a diversified approach to skills and entrepreneurship that are responsive to the demand-led labor markets and the needs of the local population, particularly the most vulnerable groups.”

This project will also focus on improving female labor-force participation in Maldives by fostering new skills development, such as programming bootcamps to empower young women to pursue home-based work in ICT-related services.

Shobhana Sosale, Adja Mansora Dahourou, and Harsha Aturupane, Project Task Team Leaders from the World Bank highlighted that “Diversified skills and entrepreneurship development will help Maldivian youth to become more employable, harnessing their contribution to the development of the country and promoting the well-being of their communities. We hope that the project can contribute to setting up strong decentralized skills and entrepreneurship ecosystems for accountable, effective and responsive lifelong learning and opportunities for youth.”

The new Enhancing Employability and Resilience of Youth Project will be co-implemented by the Ministry of Higher Education and Ministry of Economic Development along with island administrative councils, city councils, and women’s committees participating in the project. The total project cost is $20 million, including a $10 million grant and a $10 million credit from the International Development Association.

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IEA takes part in G20 Energy and Environment Ministerial in Japan

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The IEA's contributions to the G20 this year include a major report on hydrogen as well as work on innovation gaps and investment in low-carbon power. (Photograph: IEA)

The International Energy Agency has provided in-depth support for this weekend’s meeting of G20 energy and environment ministers, including the publication of a major new study on hydrogen’s potential role in global energy transitions.

Under Japan’s G20 presidency, the ministerial meeting took place in the town of Karuizawa.

The IEA report on hydrogen – The Future of Hydrogen: Seizing Today’s Opportunities – analyses hydrogen’s current state of play and offers recommendations for its future development and how it can help to tackle critical energy challenges. The IEA carried out the study at the request of Japan’s G20 presidency. It was launched Friday by Dr Fatih Birol, the IEA’s Executive Director, alongside Mr Hiroshige Seko, Japan’s Minister of Economy, Trade and Industry.

The IEA provided several other important contributions to the G20 this year at the presidency’s request, including an analysis identifying more than 100 innovation gaps across the energy system and recommendations for how to fill them; a report on securing investment in low-carbon power generation; and other activities and analyses to encourage greater international collaboration on data gathering.

The IEA’s G20 work also involves tracking progress towards phasing out inefficient fossil fuel subsidies that encourage wasteful consumption. This is done through an annual update in the World Energy Outlook, the IEA’s flagship publication, and a joint report with the Organisation for Economic Co-operation and Development.

At the ministerial meetings in Karuizawa, Dr Birol presented findings from the new reports and spoke about other important topics, including energy access in Africa, tracking progress towards clean energy goals and developments in the global trade in liquefied natural gas (LNG). (Slides from his two presentations are available here and here.)

On the sidelines, he held bilateral meetings with ministers from several countries, including Australia, Brazil, India, Indonesia, Japan, Saudi Arabia and Singapore.

The IEA also supported the official side events of the ministerial meetings: the G20 Natural Gas Day, the G20 Energy Efficiency Financing Summit and hydrogen investor events in Japan. The IEA’s contributions to this year’s G20 are the latest instance of the agency’s active support for a range of G20 meetings and work streams over the past 10 years.

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Special Course on “China’s Foreign Policy and Economy-2019” Launched in Armenia

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The “China-Eurasia” Council for Political and Strategic Research in cooperation with the Armenian State University of Economics, started the “Rethinking China’s Foreign Policy and Economy-2019” Special Course.

The main aim of this special course is to introduce China’s Foreign Policy to those who are interested in China and its politics, providing them with solid knowledge and information about this great power, which increases its economic and political influence in the world through its Belt and Road Initiative.

The special program conducted by Armenian, Chinese and foreign scholars, who cooperate with the “China-Eurasia Council for Political and Strategic Research, Foundation and have solid professional background of doing research on issues related to China’s foreign policy and economy.

As a result of competition only 32 young specialists won the opportunity to be invited to participate as students in this significant course.

During the opening ceremony of Special Course, Vice-President of the National Assembly of the RA Lena Nazaryan spoke about the importance of deepening Sino-Armenian relations. She mentioned that the current government stresses the importance of further development of relations with China. Mrs. Nazaryan talked about the visit of the Prime Minister of Armenia Nikol Pashinyan to China. During her speech, she introduced also the results of the negotiations with the Vice Chairperson of the Standing Committee of the National People’s Congress of the of the People’s Republic of China (PRC) Shen Yueyue during her official visit to Armenia. The Vice-President talked about the necessity of further cooperation with the academicians particularly stressed the importance of the Initiative of special course “Rethinking China’s Foreign Policy”.

In turn, His Excellency Chinese Ambassador to Armenia Mr. TianErlong presented the main directions of China’s foreign policy, spoke about the goals and success of the “Road and Belt” initiative. Mr. Tian Erlong mentioned about peculiarities of the Chinese foreign policy: Five principles of peaceful coexistence. Talking about the Armenian-Chinese relations, he mentioned about the great potential of two countries that still must be used and developed.

The head of the “China-Eurasia” Council for Political and Strategic Research-Dr. Mher Sahakyan noted that considering the growing role of China in the current world order, it is a necessity to study and understand this country, deepen relations between Armenia and China. He expressed hope that the participants of the course “Rethinking China’s Foreign Policy and Economy” will use the knowledge gained within the framework of this program to further develop Armenian-Chinese relations for the sake of Motherland.

In turn, professor, Dr. Ruben Hayrapetyan stated: “I think that organizing such kind of trainings is of great importance for our country. It is now that we must decide how and with what kind of effectiveness, we will pursue our foreign policy as human resource is the most important one. For the development of the latter we are obliged to transfer and disseminate the skills and capacities that will provide a significant result in long term prospective throughout such kind of trainings. Cooperation with China has always been and will continue to be one of the priorities for our country. Thus, as a result of the course, we expect that participants will have a greater opportunity to contribute to the development of Armenian-Chinese relations in all directions thanks to their knowledge gained.

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