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Govt urged to pursue wider industrialization policy
The government’s focus on downstream metal industries has "little effect" on overall economic growth, according to Institute for Development of Economics and Finance (INDEF) senior economist Faisal Basri.
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Institute for Development of Economics and Finance (INDEF) senior economist Faisal Basri speaks at a press briefing on investment during election years at the JW Marriott hotel in Jakarta on June 7. (youtube.com/MediaIndonesia/-)
F
ocused on developing downstream metal industries, the government is not doing enough to support other manufacturing sectors, according to Institute for Development of Economics and Finance (INDEF) senior economist Faisal Basri.
The large number of investment deals in the segment had “little effect” on the overall economic growth because of the “high-cost economy” and “misdirected downstream initiatives,” Faisal said at a media event on Wednesday.
"Almost all foreign investors invest in the [sectors focused on the] domestic market. Exports are mostly from coal and nickel derivatives," he added.
The economist criticized the government over weak policy support for domestic production processes as it was focused on the downstream industry instead of wider industrialization to attract more foreign direct investment (FDI) to the country.
Indonesia’s FDI inflows surged by more than 40 percent to US$45.6 billion last year, according to Indonesia Investment Coordinating Board (BKPM) data, with downstream metal industries being a major draw.
However, “investment only contributes approximately 30 percent of gross domestic product [GDP],” Faisal pointed out.
He added that while foreign investment to Indonesia was increasing, the economic growth rate was still “only" at 5 percent.
