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Stimulus to spur economy to 5%
NEW YEAR, NEW HOPE: Motorcycle drivers park their vehicles near a giant display in front of the Indonesian Stock Exchange on Jl
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NEW YEAR, NEW HOPE: Motorcycle drivers park their vehicles near a giant display in front of the Indonesian Stock Exchange on Jl. Sudirman, Jakarta, on Monday. The exchange’s Composite Index surged 6 percent on its first day of trading after being closed for the holiday period. (JP/Arief Suhardiman)
Having earmarked Rp 50 trillion (US$4.9 billion) for a stimulus package to help the country survive the economic crisis, the government said Monday the money could help the economy grow by as much as 5 percent this year and keep the unemployment rate flat.
At a time when most economies in the world are suffering severe slowdowns, and others are plunging into recession, a 5 percent growth would represent quite an achievement for developing nation Indonesia, acting Coordinating Minister for the Economy Sri Mulyani Indrawati said Monday.
“We take the moderate 5 percent as our working benchmark this year,” said Mulyani, who is also the Finance Minister, during a discussion with the media and analysts.
The government had earlier forecast the economy would expand by 4.5 to 5.5 percent with several reputable financial institutions, including the World Bank, the International Monetary Fund and the Asia Development Bank projecting figures of 5 percent or below.
On Sunday, President Susilo Bambang Yudhoyono said the government had allocated Rp 50 trillion this year to help the economy cope with fallout from the global financial crisis.
Around Rp 38 trillion of that money will come from what is leftover from the government’s 2008 state budget, and Rp 12 trillion from the 2009 state budget.
The stimulus will in part come in the form of tax reliefs, direct funding for certain business sectors worst hit by the crisis, additional financing schemes for infrastructure projects and net safety programs.
“With this stimulus, we hope the economy will keep on running and secure jobs for many people,” Mulyani said.
The government will ensure the stimulus be given only to industries that meet certain criteria, including industries that are mass employers or that produce primary goods or significantly contribute to exports, according to Industry Minister Fahmi Idris and Trade Minister Mari Elka Pangestu.
Mulyani said the decline in exports and investment would be compensated by an expansion of government spending and consumption, which she forecast would grow by 10.4 and 4.8 percent, respectively.
M.S. Hidayat, chairman of the Indonesian Chambers of Commerce and Industry, said the stimulus would help prevent a mass layoffs.
“As long as it is used properly and reaches its targets, the stimulus will significantly reduce layoffs this year,” Hidayat told a media briefing.
Mulyani said the stimulus would help reduce the unemployment rate to 8.34 percent by the end of this year, adding that the rate would reach 8.87 percent without the stimulus.
The Central Statistics Agency announced the “open” unemployment rate increased to 8.39 percent of the country’s total workforce of 111.95 million in August last year from 8.46 percent of the 111.48 million at work in February.
The open unemployment rate refers to the number of eligible workers aged between 15 and 64 that are unemployed.
Indonesian shares surged 6 percent, helped by news of easing inflation in December, which could inspire the central bank to cut interest rates later in the week, dealers said.
Traders also attributed buying to gains in most Asian markets amid hopes for strong action by the incoming administration of US president-elect Barack Obama to improve the US economy.
On the first trading day of 2009 the Jakarta Composite Index rose 81.93 points to 1,437.34 in moderate volume, with gainers leading decliners 123 to 32.
The rupiah ended at 11,125 to the dollar, the same level as the close of trade before the New Year break.
Indonesia’s inflation eased to 11.06 percent in December from 11.68 percent in November, mostly on lower fuel prices, which will likely prompt the nation’s central bank to cut interest rates when it meets Wednesday. (hwa)
