The planned increase in Indonesia’s value-added tax (VAT) rate from 11% to 12% could reduce the country's gross domestic product (GDP) by 21 trillion IDR (1.3 billion USD), economists warned.

Only 6.3 percent of the total small- and medium-sized enterprises (SME) of Indonesia are able to join the trade chain in Southeast Asia, which is far below the rate in other countries, according to economist Eisha Maghfiruha Rachbini from the country's Institute for Development of Economics and Finance (INDEF).

Indonesia’s new capital city will contribute only an additional 0.02 percentage point to the country’s economic growth, and the impact will also be short lived, according to Institute for Development of Economics and Finance (Indef) research.