Text B, Paragraph 2
Additional reforms include upgrading old infrastructure and offering incentives to private sector firms to invest in projects that will improve productive capacity. Some government policies are already being implemented. These include a large power plant construction programme, tax incentives to infant industries such as oil refining to help attract more investment, and tax cuts for industries like transport, telecommunications, metal production and agricultural processing.
Draw a production possibilities curve (PPC) diagram to show the effect of the introduction of the large power plant construction programme on Indonesia’s potential output (Text B, paragraph 2).