The government needs to boost the low confidence of business players and investors that has led companies to postpone investment and thus slowed the country'€™s economy even further, senior economists say.

Raden Pardede, co-founder and managing partner of CReco Research Institute, said recent surveys found that confidence among consumers, business owners and investors in Indonesia had been weak for almost one year.

Raden, who is also a former special staff member of the Coordinating Economic Ministry, said a number of purchasing manager index surveys had showed that the managements of various firms would probably postpone investments in new goods for the next few months.

'€œThere was an improvement in the consumer confidence index during August and September, but it remained lower than the level last year. Business owners tend to be in a wait-and-see mode, which is reflected in weak loan growth as demand for credit is low,'€ Raden said at the DBS Asian Insights Conference 2015 on Tuesday.

Raden praised the government for its good intentions as illustrated by its cutting of bureaucratic red tape and the deregulation it has carried out since September through several stimulus packages.

According to Raden, problems usually originated on the implementation level, particularly involving regional administrations. Such problems made the goal of reaching 7 percent economic growth by 2019 seem unachievable.

Raden said the central government had prepared a massive amount of investment to be transferred to the regions, but at least Rp 290 trillion that was sitting in regional banks had yet to be spent, either because of misunderstandings or a lack of coordination between the central and regional administrations.

'€œThere is an institutional problem in Indonesia regarding slow implementation, which has been criticized by President Joko Widodo himself. There is no country other than Indonesia where the president says one thing, but the governors say another,'€ he said.

Year-on-year (yoy) gross domestic product (GDP) growth in Southeast Asia'€™s largest economy stood at 4.73 percent in the July to September period, a slight increase from the 4.67 percent yoy growth posted in the previous quarter. It is, however, still lower than the 4.92 percent yoy growth booked in the same period of 2014.

Aside from weak economic growth, Raden said there were still external challenges to be faced as the US Federal Reserve (the Fed) was still delaying its rate hike at least until the end of December, while China'€™s economy was predicted to remain in decline next year.

'€œIf the Fed increases its funds rate by 25 to 50 basis points [bps] after December, there will be no chance for BI to either raise, moreover cut, its rates,'€ Raden said.

DBS Group research economist Gundy Cahyadi raised similar views that a BI rate cut would no likely happen in the short term, with Europe and Japan deciding to conduct quantitative easing or monetary relaxation, contradicting the Fed'€™s stance.

'€œWe are in agreement with BI'€™s decision to maintain its rates. So, it is difficult to see a movement in BI rates for next year as we need to maintain the stability of the rupiah and the economy,'€ Gundy said, adding that Indonesia'€™s gross domestic product would stand at about 5.5 percent next year, with a slight possibility of reaching almost 6 percent.

However, Sofjan Wanandi, Vice President Jusuf Kalla'€™s special economic advisor and a businessman himself, said the country'€™s economy was more stable and was running in the right direction. Thus, a BI rate cut of at least 25 basis points would be a good solution to help spur growth.

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