Jokowi aims for 7 percent annual growth
The Jakarta Post
President Joko 'Jokowi' Widodo said on Tuesday that he expected the economy to grow annually by 7 percent within the next three years, a goal he considers 'realistic' as the government is pushing infrastructure development.
Jokowi held a meeting on Tuesday at the Presidential Office with several officials and ministers, including Bank Indonesia (BI) governor Agus Martowardojo and chairman of the Financial Services Authority (OJK) board of commissioners Muliaman D. Hadad, to discuss the government's economic goals during his tenure and how to achieve them through coordinated action.
'Every year, we want better economic growth. At least, within the next three years, the [annual] economic growth should amount to better than 7 percent. Although it is a tough, heavy [job] we will pursue it,' Jokowi told a press conference on Tuesday after the meeting at the Presidential Office.
The economy has expanded by between 4.5 to 6.5 percent annually in the past decade, which analysts have said is insufficient to reduce poverty and create jobs.
Jokowi said the government would push for the infrastructure-development programs, including railways, toll roads and seaports, as well as dams, to begin early next year.
He encouraged ministries to start the projects immediately. '[The infrastructure programs] will trigger economic growth. Do not start those projects in mid year,' he added. 'Because the absorption of the budget will determine whether or not our economy grows next year.'
The Transportation Ministry ' which had been allocated a total of Rp 44.93 trillion (US$3.6 billion) in the 2015 state budget before the government decided to slash fuel-subsidy spending ' has requested an additional Rp 27 trillion for 2015 for railway and seaport projects.
Analysts have said that infrastructure-related sectors will continue to be the stars in next year's stock trading, thanks to the government's commitment to boosting infrastructure, which will also spur investor confidence in Indonesia's overall economic outlook.
Agus said Tuesday's meeting acknowledged that the biggest challenge to meeting such growth was indeed how to optimize government spending following the fuel-subsidy cut, by transferring the spending on unproductive activities to productive ones.
The Finance Ministry has previously predicted that Jokowi's move to increase fuel prices by 31 percent to Rp 8,500 per liter could save the state budget Rp 120 trillion annually, while BI estimated the move could reduce the current-account deficit by at least $2 billion.
'One thing, we need to ensure is that the Rp 120 trillion savings are spent on productive sectors,' Agus said.
According to Agus, the meeting also discussed how to ease red tape in doing business, as well as how to develop financial markets, also expected to become the backbone of the country's economy.
'The President emphasized that he wanted stability in the financial sector,' Agus added.
Muliaman said the government was optimistic that the country would see improvements in fundamental financial conditions at the end of this year, adding that expansion of the financial market would be an important item on the agenda next year.
'We will also seek and develop alternative financing options for infrastructure projects other than bank loans,' he said, saying that capital markets and insurance could be such alternatives.
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