Govt prepares boost for real sector

The Jakarta Post , Jakarta | Thu, 05/31/2007 8:46 AM | Business

Ary Hermawan, The Jakarta Post, Jakarta

The government will soon issue a new economic policy package to help accelerate the pace of the economic growth, which is currently believed to be on course for 6.3 percent this year.

""The policy package will be issued some time next week,"" Coordinating Minister for the Economy Boediono told an investor forum Wednesday, adding that ""the package will be primarily aimed at boosting investment and invigorating the sluggish real sector.""

He said the new economic policy package would complement the packages on financial sector reform, infrastructure development and investment, and small and medium enterprises issued last year

""It will be an integrated package of economic policies, not separate policies as was the case before, because they are all mutually related,"" Boediono explained. He declined to go into the details of the package, but said that it would be basically designed to reform the above three sectors.

To improve the financial sector, he said, the government would focus on enhancing the roles of non-bank financial institutions, such as the capital market and insurance firms, which it was hoped would provide alternative financing sources for the industrial sector.

The government would issue new capital market regulations to strengthen anti-money laundering measures, and set out the fees for listing companies so as to encourage investors to buy shares, while at the same time providing fiscal incentives to firms wishing to go public.

Finance Minister Sri Mulyani Indrawati said the government hoped the capital market and non-bank financial institutions would be able to provide about Rp 210 trillion (about US$23 billion), or 16 percent, of the anticipated Rp 1,296 trillion in investment needed to achieve economic growth of between 6.6 percent and 7 percent next year.

Boediono had previously said the government planned to revive state credit insurance firm PT Asuransi Kredit Indonesia (Askrindo) and state investment firm PT Permodalan Nasional Madani (PNM) to help small entrepreneurs secure loans. These initiatives would now be incorporated in the SME policy measures.

As part of the SME measures, the government would also revoke or amend regulations that were inimical to the growth of small businesses, and support their technological development and help provide wider market access.

As for infrastructure development, Boediono said the government would upgrade its capabilities in preparing infrastructure projects before offering them to investors through public-private partnerships. ""We will modify the regulations, and focus on strengthening project planning,"" he said.

Muhammad Ikhsan, a member of Boediono's staff, said that the new regulations to be introduced would reduce the time required for business licensing from 97 days at present to less than 30 days.

""We want to reduce the cost of doing business here,"" Boediono said, adding that the new investment regulations contained in the package would constitute the ancillary regulations for the newly enacted Investment Law.

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