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Capital Markets

Asia: Taxing times for Indonesia’s new finance minister

Technocrat Bambang Brodjonegoro has plans to turn the country’s state-owned enterprises into regional, if not global, leaders. But the fall in the oil price could quickly scupper his ambitions, unless he can improve Indonesia’s terrible record on tax collection.

Bambang Brodjonegoro-600
© Darren Whiteside / Reuters

Indonesia's new finance minister Bambang Brodjonegoro

When Indonesia’s man-of-the-people president Joko Widodo, known as Jokowi to his millions of followers, swept to power on a populist wave last year, things looked pretty rosy for him and for Indonesia.

Oil was tracking just shy of $100 a barrel, good news for Asia’s only Opec member, while the global prices of the other commodities Indonesia had come to rely on – coal, palm oil, tin, LNG – were holding close to historic highs.

What a difference six months makes. As commodity prices have plummeted – oil by a budget-wincing 50% – so too has gloom descended over Indonesia, which had once been seen as the near-miracle developing economy fast becoming a middle-income powerhouse alongside the established Brics of Brazil, Russia, India and China.

“To be honest, we are in a bit of a difficult situation,” says Jokowi’s new finance minister Bambang Brodjonegoro. “The president wants to translate his vision and mission into the budget.” 

Jokowi built his presidential tilt around delivering improved infrastructure and services to the capital as mayor.

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