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Growth does not happen by itself, says VP

We mean business: The Indonesian Investment Coordinating Board chief Gita Wirjawan (second right) talks on calculating the cost of doing business in Indonesia at a two-day Indonesia Summit held at the Shangri-La Hotel in Jakarta on Thursday

Aditya Suharmoko (The Jakarta Post)
Jakarta
Fri, March 26, 2010

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Growth does not happen by itself, says VP

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span class="inline inline-center">We mean business: The Indonesian Investment Coordinating Board chief Gita Wirjawan (second right) talks on calculating the cost of doing business in Indonesia at a two-day Indonesia Summit held at the Shangri-La Hotel in Jakarta on Thursday. Gita, who was speaking with (from left) Economist Corporate Network Director Ross O’Brien, Nokia Siemens Networks head of Indonesia sub-region Richard Kitts and Mercedes-Benz Group Indonesia president and CEO Rudolf Borgenheimer, talked about setting up businesses in Indonesia. JP/Ricky Yudhistira

Vice President Boediono has stressed the need to have infrastructure development implemented “without delay” to accelerate economic growth to 7 percent annually, from about 6 percent booked
in recent years.

“Growth does not happen by itself. To accelerate growth from the 6 percent range in recent years to 7 percent per year is going to require adding and upgrading infrastructure, from roads, railways, ports, power plants, to IT, without delay,” he said before investors at the high-profile Indonesia Summit held by Economist Conferences, a division of the Economist Intelligence Unit (EIU).

“We know that such a plan will require the private sector to play a major role. Our capacity to finance a large amount of infrastructure is quite limited compared to what is required.

We have worked hard to reduce barriers to private investment in general and infrastructure in particular,” headded.

According to the Investment Coordinating Board (BKPM), Indonesia needs to invest Rp 2,000 trillion (US$220 billion) every year including government expenditure and private investment to achieve 7 percent growth by 2014, the last year of President Susilo Bambang Yudhoyono’s second term.

Last year Indonesia’s economy grew by 4.5 percent due to strong household consumption, according to the Central Statistics Agency. The government estimates the economy will expand at 5.5 percent this year on the back of stronger investment and trade.

Some analysts said it might expand closer to 6 percent. They also said infrastructure should be improved otherwise the economy could not expand higher than about 6 percent.

BKPM’s head Gita Wirjawan said Indonesia would need US$140 billion in investment for the period
2010 to 2014 for infrastructure projects alone.

“The government is allocating $50 billion, the rest has to be funded by the private sector,” he said.

He is optimistic that the investment needed will be mobilized by promoting Indonesia globally. But Indonesia has yet to be picked up on the global investment radar due to lack of awareness he said.

The BKPM has built up intensive contacts with the International Finance Corporation to raise the global profile of Indonesia with investors, Gita said.

The BKPM has tried to cut the time to open a business in Indonesia to a maximum of seven days through its one-stop integrated service down from 40 days previously, he said.

Tanri Abeng, president commissioner at state-run telecommunications firm PT Telkom, said the government should oversee the implementations of policies issued.

Analysts say more often than not the government has issued good policies only to run at below expectation during implementation.

Industry Minister M.S. Hidayat, who was previously chairman of the Indonesian Chamber of Commerce and Industry, said the reform of labor law and of land clearance rules would ease businesses
expansion.

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