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ADB approves 500 mln USD loan for Indonesia to continue investment reforms

Xinhua, June 28, 2016 Adjust font size:

The Asian Development Bank (ADB) has approved 500 million U.S. dollars loan to Indonesia to continue the country's policy reforms to reduce barriers for investment and encourage more public-private partnerships (PPPs).

"Indonesia has been taking significant steps to improve the investment environment including removing barriers to PPPs and stripping away regulatory red tape," ADB's Indonesia Resident Mission Country Director Steven Tabor said in a statement released on Tuesday.

The loan, which is ADB's second under the Stepping up Investments for Growth Acceleration Program, will be complemented by co-financing of 224.6 million U.S. dollars equivalent from Germany's KfW Bankengruppe. KfW provided parallel financing of 245 million U.S. dollars for the first stage of the program.

"The 12 economic reform packages issued since September 2015 underscore the government's desire to dramatically improve the investment climate," Tabor said.

Cumbersome regulations and high costs of setting up and doing business have hindered new investment, with Indonesia ranked 109th out of 189 countries in a 2016 World Bank report for ease of doing business.

"Indonesia needs to create new engines of growth to return to a path of higher and more inclusive growth," Public Management Economist at ADB's Southeast Asia Department Rabin Hattari said in the statement.

"Private investment will be critical to fostering a more diverse and resilient economy," he added.

The first phase of the government's reform program saw the setting of higher foreign equity ceilings in land transport, shipping and management of ports, the establishment of a dedicated office to formulate land acquisition policy, and the development of a framework for e-procurement.

The second phase of reforms has taken further steps to ease restrictions on investment, streamline processes for starting and operating a business, and widen the remit for public-private partnerships.

The third phase of the program, to be carried out from July 2016 to June 2018, will see further measures to expand evidence-based reforms, improve ease-of-doing business, strengthen PPPs, and enhance Indonesian government's e-procurement system, according to the ADB. Endit