Indonesia: a step in the right direction

Indonesia has announced that it will lift restrictions on overseas business ownership. Thirty-five sectors are to be opened up to full foreign ownership, while limits in dozens more sectors will be raised.

The changes, which have been discussed for months, were keenly awaited as a measure of whether President Joko Widodo is committed to major reforms in southeast Asia’s most populous country. Over the last couple of years investors have become increasingly uncomfortable with Indonesia’s slowing growth rate, which dropped to a six-year low in 2015.

“Investors and analysts welcomed the news, but some said the measures didn’t go as far as they’d hoped,” say Ben Otto and Anita Rachman in The Wall Street Journal. And certainly the changes aren’t dramatic, Juniman, an economist at banking group Maybank, told the paper.

However, they are an improvement that will help to attract more foreign direct investment. But more significant than any direct impact is the fact that they represent “a welcome shift away from protectionism” – something that the government has been flirting with in recent years, says Gareth Leather of Capital Economics. As such, they mark “another step in the right direction”.