Indonesia’s macro-economic performance in the past 3 years had been
widely acclaimed by various international rating agencies. By the time Europe
and the USA were badly injured by debt crisis and fiscal crisis, Indonesia was
able to forge ahead with China and India.
Admittedly in the past 2 years Indonesia’s growth target had to be
revised from the previous 6.5 percent [2011] to 6.23% [2012] as world demand
dropped and export performance slumped. Impressive performance in direct
investment managed to compensate weakness in export. The Government’s financial
capacity had been able to cover up setback in export so economy was able to
grow above 6%.
For this year 2013, economic growth was projected to be around 6.3% -
6.8%, relying on domestic consumption which remained prospective. Direct
investment was projected to contribute significantly, strengthened by
Government’s expenditure while regretfully there was not much to be expected from
export. Even if export progressed, it would not be till quarter four of this
year.
As know, economic recovery in Europe was getting had to attain as Cyprus
followed by other countries in the continent was screaming for help in their
desperate need to obtain bailout. Cyprus’ adverse economic condition injected
negative sentiment to the world’s money market. Moreover some banks in that
country needed a helping hand lest they had to stop operations.
A well managed economic performance amidst tormented global economy was
the one point that attracted the world’s attention and high appreciation. After
the World Bank estimated Indonesia’s economic growth at 6.2%, next was
Citigroup evaluation which came up with a more fantastic report Indonesia’s
economy, based on GDP was predicted to be in world’s top ten position by 2025.
Indonesia would excel over two European economic powers France and
England Indonesia was rated as having great opportunities in many sectors
whereby to continue growth. The Indonesia Government in the APBN State Budget
2013 set target for economic growth at 6.8% this year.
Although the target was considerably high amidst the condition of global
crisis today, the Government would never give up jacking up economic growth.
Indonesia’s attainment of economic growth through 2012 was only 6, 23% which
was below the target of APBN-P 2012 of 6.5% and would serve as stimulator to
spur on growth through 2013. Through 2012, Indonesia’s GDP had come to Rp
8,241.9 trillion.
In Cities latest report entitled “ASEAN Economic Long Review Indonesia:
en route to a Top 10 World Economy by 2025” showed that by 2025 market share of
developing nations to world’s GDP was projected to increase to 85% against the
previous 39% in 2012. By 2025 Indonesia would be in the eight positions.
By that time Indonesia was predicted to enter the world’s top ten
positions flowing other emerging nations like China, India, Russia and Brazil.
By 2025, Indonesia’s per capita income was still below Malaysia and Thailand;
it was higher than the Philippines, Cambodia, Laos, Myanmar and Vietnam.
The heavy flow of foreign investments entering the ASEAN region could be
benefited by Indonesia as the biggest country in the region. Indonesia had many
premium sectors which could be developed on the upstream side or downside like
automotives, banking, telecommunication, industry, and property.
Every industry sector had its own challenges, like automotives which
needed more infra structure like roads in Jakarta and outer Jakarta. Efforts as
such would promote sales of automotives in Indonesia.
The only thing was that behind the bright prospects were great
challenges, for example challenges in the plantation sector and toll roads the
greatest handicap was in land buying which could hindrance foreign investment
process. In case of development in the downstream sector like plantation,
Indonesia was in need of palm processing plants which were controlled by
various companies registered at the Singapore Security Exchange.
Unlike Malaysia, Thailand and the Philippines who were relying on
technology and manufacturing sectors for export, Indonesia was still relying on
main commodities which constituted 50% of total output. Indonesia must jack up
export performance of other sectors by benefiting from foreign investment
storming the country.
For that matter Indonesia must reform the logistics and infra structure
sectors which were still inferior. Today Indonesia was in 59th position in
World Bank’s Performance Index behind the Philippines [52], Malaysia [29] and
Thailand [38]
Other pre-conditions were Indonesia’s long term political stability. So
far the political climate in Indonesia was still regarded as conducive to
economic heartbeat. Electoral outcome of some Governor and regional heads
sometime ago indicated democratic maturity of Indonesians. There were
tendencies to seek for new firm leaders.
However, the Government was expected to resist the temptation exercising
popular policy which would hold back trading and inflow of foreign investment
toward election year 2014. What should be citizen by foreign investors was
legal assurance for investors. The decision to dismiss the oil-gas Management
Board [BP Migas] sometimes ago generated a sense of legal uncertainty which
made investors lose confidence.
The conclusion was that Indonesia had escaped the global economic crisis
of 1998. The nation’s economic and political fundamental was strong and was on
the right track. Many circles believed that a strong, credible and legitimate
national leader was pre-requisite for continuing economic growth.
In tune with Citigroup view, the World Bank also estimated Indonesia’s
economy could grow well in the future; Indonesia’s economic growth was
projected to reach 6.2% this year.
According to the World Bank, so far Indonesia’s economic resilience was
praiseworthy, because economic growth was relatively stable although global
economy was losing steam. Indonesia could chalk up higher growth by running the
right policy. High urbanization flow could be benefited for promoting people’s
welfare by opening job opportunities.
This implied that Government must open as much employment opportunities
as possible to employ labor generations which increased time after time. In
their report of quarter I-2013 the World Bank focused on come aspects which
posed as economic prospect, among others slowdown in investment growth.
The biggest risk in short term growth was from domestic investment which
constituted 40% of growth in 2012. The burden from oil-fuel subsidy [BBM] was
to be watched as well. The World Bank observed that oil-fuel subsidy in 2012
which constituted 2.6% of GDP added pressure on overseas trade balance and
posed as notable burden to the fiscal sector.
Based on data of Indonesia’s economic growth in Quarter I-2013, the World
Bank observed there was increase of same pressures due to domestic economic
policy. Somehow by evident Indonesia was one of the developing countries in
Asia who were able to survive the torments of global economic crisis today. The
above factors were the reason why Indonesia had the potential of becoming
leader of the world.
Today the world’s economic propeller machines were drifting from the
West to the East [plus Brazil]. Countries of the emerging markets like China,
India and also Indonesia were the countries that the world pin hopes on, to
fill up minus growth in some countries. So the world had great confidence in
Indonesia, especially on the basis of economic and political stability.
Indonesia’s strong fiscal resilience today made economic stability well
maintained amidst global economic crisis that stormed other developing nations
in Asia. In addition to that, strong fundamental economy was supported by high
domestic consumption.
A condition as such would be appealing to other countries to invest in
Indonesia; this means that Indonesia had better chance to continue growing or
even become one of the leaders of economic growth in the world.
However, toward execution of the Democratic Feast next year, it was
about time to maintain favorable investment climate. A favorable investment
climate should be translatable as: legal certainty, clean bureaucracy, social
orderliness, security assurance and cool political climate. (SS)
Business News - April 01,2013
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