Savings and Investment in Indonesia

35 Pages Posted: 19 Feb 2021

See all articles by Andriansyah

Andriansyah

Ministry of Finance - Indonesia; AMRO

Date Written: November 1, 2016

Abstract

The main objective of this paper is to understand domestic savings and investment in Indonesia. The level of savings in Indonesia is relatively high by international standard. However, the savings through banking sector are more dominant than non-banking savings. This leads to the scarcity of long-term savings which are essential for long-term investment, especially in infrastructure, that ultimately benefit growth and development. One of the keys to promote long-term savings is through mandatory savings. At the same time, institutional investors such as insurance companies and pension funds must be encouraged to invest in long-term instruments. The role of financial sector plays a crucial role in providing such instruments. Therefore, policy recommendations must be directed to fiscal policy through tax incentives for stimulating long-term saving and investment; social welfare policy for encouraging contractual saving and developing long-term domestic institutional investors; financial market deregulation for increasing access to financial services and increasing competition among financial service providers; and coordination among sectors

Keywords: Savings, Investment, Financial Sector, Fiscal Policy, Indonesia

JEL Classification: E21, E22, G20, G28

Suggested Citation

Andriansyah, Andriansyah, Savings and Investment in Indonesia (November 1, 2016). Available at SSRN: https://ssrn.com/abstract=3736572 or http://dx.doi.org/10.2139/ssrn.3736572

Andriansyah Andriansyah (Contact Author)

Ministry of Finance - Indonesia ( email )

Jakarta
Indonesia

AMRO ( email )

10 Shenton Way #11-07/08
MAS Building
Singapore, 079117
Singapore

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