The PwC Economics and Policy team strongly believes in the role of the public sector in enabling conditions for sustainable economic development across Indonesia and, ultimately, in improving the lives of all Indonesian citizens.
We work with government organizations as well as international donor agencies in order to provide independent, rigorous, and practical advice across a broad range of economic and policy issues. Our advice is sought at many points of government decision-making, from strategy and policy development to the design and implementation of specific initiatives and programmes. Our assignments have sought to answer such questions as:
- What policy interventions are required in order to facilitate greater private sector investment in infrastructure?
- What are the impacts of particular government programmes, initiatives, and/or projects on particular sectors, regions, or the broader economy?
- What are the future skills that will be needed by the manufacturing workforce, as Indonesia pursues an Industry 4.0 vision?
- How can the Indonesian government optimize commodity revenues in a way that improves public financial resources while also supporting industry growth?
- Which infrastructure projects should the government prioritize in order to maximize the country’s productivity and socio-economic outcomes?
We seek to provide advice on these matters by employing specialist economic frameworks and analytical tools that enable us to develop objective insights into the impacts and trade-offs of particular courses of action.
PwC has worked closely with national and sub-national governments across most regions of Indonesia. The multilateral and bilateral development agencies we have worked with include:
- The World Bank Group;
- The Asian Development Bank;
- The UK’s Foreign & Commonwealth Development Office (‘FCDO’);
- Australia’s Department for Foreign Affairs and Trade;
- Japanese International Cooperation Agency (JICA)
As the Indonesian government works to accelerate the planning and delivery of much-needed infrastructure, we are working alongside it in order to develop solutions to some of the country’s most pressing issues.
We provide an end-to-end service offering, from analyzing infrastructure policy, and supporting the prioritization and planning of projects, to developing business cases for specific proposals. We cover a range of infrastructure classes, including:
- Transport;
- Water;
- Waste;
- Energy;
- Social infrastructure (health and education facilities); and
- Housing.
The government of Indonesia is prioritizing the tourism sector. Given that Indonesia has the largest multilingual population in the world, with 260 million inhabitants and a rich cultural and natural diversity, as well as government support. There is much potential for Indonesian businesses that are in the tourism industry. In 2019, Indonesia received 16.1 million international tourists, and it recorded more than 370 million domestic trips. The tourism sector has been growing at an average annual rate of 5.4% of total GDP. According to the World Tourism and Travel Council, international tourist arrivals were on track to reach 24 million by 2028.
The COVID-19 pandemic and accompanying travel restrictions are impacting the sector, however. Our expertise in Travel and Tourism is dedicated to supporting the Indonesian government and its ministries, provincial governments, state-owned enterprises, international development organizations, and the private sector as they regroup and be prepare to rebound once the pandemic is under control. Our expertise in Travel and Tourism includes the following:
- Destinations, sites, amenities, attractions, and their accessibility;
- Good governance and tourism institutions and organizations;
- Tourism-related infrastructure;
- Products and services relating to travel and tourism;
- The traveller experience;
- Digital transformations;
- Capacity building for tourism; and
- Health, safety, and environment standardization.
To learn more about our Tourism and Regional Development services, please click here.
Indonesia has made significant gains in terms of reducing poverty, more than halving its poverty rate in over the last two decades., Over 25 million Indonesians still live below the poverty line, however, with over 20 percent remaining vulnerable to falling into poverty. Given its gains in financial resources, the Indonesian government is continuing to expand its social protection and labour market programmes. One of the largest areas of expenditure involves cash transfer programmes, which provide a safety net to for those who are most disadvantaged. The government is also investing in labour market programmes, in order to support workers in their attempts to access quality employment opportunities – this being one of the most effective ways to alleviate poverty in a sustainable way.
We are able to provide technical assistance to the government as well as the donors who support such programmes. This involves, for example, providing general policy advice, analyzing and articulating economic cases for investment, and providing input – as supported by rigorous demographic and data analysis – on the design and evaluation of new programmes.
We work with companies to help them determine the value that their organization or industry contributes to the economy. Total economic footprints can be measured in a number of ways, but we primarily rely upon input–output modelling. This allows us to quantify the direct impacts of the activities of a particular organization or industry, as well as the multiplier effects arising from their spending on suppliers and the compensation of their employees.
We also work with firms on their interactions with the government as regulated entities. This could involve understanding the implications of a regulatory change, or even developing industry-led proposals with a view to anticipating or influencing regulatory change.
Our Services
- Project economics
- Microeconomic policy and regulatory reform
- Impact analysis and evaluation
- Economic modelling
Project economics
Business cases, including cost-benefit analysis, play a critical role in helping government and business evaluate and compare investment proposals, to ensure that society’s resources can be allocated effectively. Our teams are highly experienced in the development of robust business cases for Indonesia’s most significant infrastructure projects. Key elements of this process include:
- Building the strategic case - we work with our clients to articulate the case for investment. This can involve explaining and providing evidence of the key problems, challenges or needs being addressed by the proposal and what the intended benefits are.
- Financial and commercial analysis - we prepare robust analysis of infrastructure demand, revenues and costings, to understand the viability of the project.
- Quantifying the economic impacts - - we look at the broader socio-economic impacts of the project on key stakeholders, and quantify the cost-benefit ratio to determine whether a project offers a net benefit to the community.
Microeconomic policy and regulatory reform
We work with the government to assess the appropriateness of policy and regulatory settings across a range of sectors and regulated areas including infrastructure, resources, trade and labour markets. Whilst always grounded in economic theory, our analysis is tailored to the specific issues and objectives at the heart of the regulation being designed or updated. We draw on a range of quantitative and qualitative methods to develop the evidence-base to inform government decision making.
We also support regulated entities to understand the implications of regulatory change, including the potential financial impacts on their organization or industry more broadly.
Impact analysis and evaluation
Ongoing monitoring and evaluation is key to assessing the effectiveness and impact of public sector programs, and ultimately to realizing their full value. Evaluations also help to identify unintended consequences and where adjustments to program processes and activities need to be made.
Our team supports government and organizations within the development sector at various stages of the monitoring and evaluation process. For example:
- development of robust program logics which provide the critical foundation for evaluation
- development of performance indicators
- collection and analysis of primary data, including through the design and execution of surveys
- application of quantitative and qualitative assessment methods analytical mechanisms
Economic modelling
Our clients in government and business often seek our services when looking for a clearer picture of particular economic drivers influencing their policy or investment decisions.
We are able to draw on a range of economic methodologies and datasets, which can be tailored and applied according to our clients’ particular question or issue. For example:
- undertaking historical analysis and forecasting, at a macro and micro level, to provide insights into a market landscape and strategic opportunities for growth
- helping clients to understand consumer demand elasticity, in the context of changing regulatory settings and their impact on pricing (e.g. taxes or tariffs)
- unpacking the major drivers of industry trends or socio-economic outcomes e.g. through regression analysis.
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