There were four factors which constituted the growth assets of a nation,
namely public consumption, government’s spending, direct physical investment
and international trading [import & export] in the past two years when the
world’s economy was sullen, the import-export factor could not be expected too
much.
In fact there was one factor to pin hope on, i.e. government’s
expenditure, but whatever the reason, realization of government’s expenditure
was allays below the planned budget. Many people were wondering how such could
happen: plenty of money, but not spent. The answer was perhaps poor managerial
capability of the governors, but in general it was truly puzzling.
Were the high ranking government officials afraid of law enforcement
actions by the ant graft bodies so the governors refuse to take lead in project
management in their respective office? That was probably the answer, but the
fact was nearly every year there was surplus of money, which was unspent
budget.
In the case then public consumption could be the source to pin hope on.
Now the people are purchasing power especially that of the emerging middle
class was at the peak of strength. Whatever the consumer goods, from expensive
to cheap items, were bought by the people because they could afford it. It came
as no surprise that domestic consumption still constituted the highest of
state’s asset.
Not ignorable was the contribution of direct investment, because it had
its direct impact on economy. Direct investment had its broad impact from
factory building and expansion, opening of employment opportunities, promotion
of welfare and reduction of poverty.
Thanks fully foreign perception of Indonesia’s economic prospect was
today still positive. Indonesia’s rating of investment grade was a motivation
for investors to invest their capital in Indonesia. The latest news was that
foreign capital in Indonesia made their highest quarterly record in the past 3
months of this year. The attainment underscored investor’s growing interest in
the emerging middle class in Indonesia.
The investment coordinating board [BKPM] reported that the total foreign
investment in Indonesia over the period of January-march this year rose by
27.2% to Rp65.5 trillion, which was an increase of 22.9% in quarter IV of 2012,
when foreign investment came to Rp56.8 trillion.
BKPM’s report had it that domestic investors invested their capital of
Rp27.5 trillion over the same period. In the previous year, the amount was
posted at Rp19.7 trillion total investment in quarter l 2013 in Indonesia rose
by 23.8% to become Rp93 trillion.
Date of foreign investment [PMA] signaled that foreign investors were
willing cast aside the grievances that Indonesia was getting more protective
was and was not doing enough renovation of bad infra structure. In the future,
many analyst and economist rated that inflow of PMA would keep increasing was
expecting it to reach USD 30 – 35 billion USD.
The condition generated optimism about attainment of 2013 investment
which would meet target of Rp390.3 trillion against the previous year amounting
to Rp313.2 trillion. It was noteworthy that now investment orientation was
shifting from plantation sector to manufacturing.
Certainly the shift was a positive thing because with the downturn of
primary commodity price in the world market. Dependency on natural resources
and plantation commodities must be reduced. On the contrary, the manufacturing
industry must be jacked up because they created better stability and all the
ensuring positive impact.
Since 2004 last, the government and business world were losing steam in
developing the national manufacturing industry and tend to expand business in
natural resources. Now that commodity price slumped, many companies were having
setback in business so they were led “back to the straight path” and turn to
manufacturing.
There was a growing interest among foreign investors in Indonesia since
Fitch ratings and moody’s investor’s service promoted Indonesia’s rating from
sovereign credit to investment grade by and of 2011 and early 2012.strong
consumer’s demand, stable economic growth amidst economic slowdown in the
western states, and abundant natural resources enhanced investors zest.
According to Mc Kinsey Global Institute report of September 2012,
increased income would increase Indonesia consumers to 90 million in 2030. The
figure outnumbered that of any country except china and India meaning business
in Indonesia was still highly prospective.
However the World Bank still warned Indonesia in their “Indonesia
economic quarterly” that it seemed investment would be hampered by failures in
regulations, wrong policy making and uncertain condition toward general
election of 2014.
Indonesia had to face strong competition from other export-oriented
countries by the time workers’ wages, at minimum regional wages was having
significant increase.
Minimum regional wags increased by 18% in all of Indonesia by 2013. In
some cities and regencies the increase could even be as high as 50%. The World
Bank’s warning must be responded properly by the government so continuity of
economic development could be well underway.
So far Japan was the biggest PMA investor Indonesia in the first quarter
with total investment in the automotive sector amounting to USD 1.2 billion.
Next was South Korea with total investment of USD 800 million and the third
place was Singapore with investment of USD 600 billion.
By sector, over that period invested foreign capital including miner
industry totaled USD 1.4 billion, chemical and pharmaceutical industry totaled
USD 1.2 billion and the metal, heavy industry and electronic industry came to
USD 1.0 billion.
From the above picture, Indonesia had reason to be confident that the
6.2% - 6.5% growth would be attained, relying on direct physical investment as
main contributor after domestic consumption. Investment was estimated to
contribute around 35% while domestic consumption contributed 60%; government
spending constituted 10%. Meanwhile contribution from overseas trading [export
minus import] by net the percentage was negative, around 5 %.(SS)
Business News - April 26,2013
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