The Jakarta Post
Despite the projection of an economic slowdown in the coming months, the country is in a position to experience better conditions next year as the government has successfully managed to maintain the growth rate at 5.6 percent this year ' an accomplishment that will continue to attract foreign investors.
Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulisto said the success of the government in maintaining the growth of the economy would boost confidence among investors.
'Indonesia is in a far better condition compared to most European countries, which only experienced growth of 1 to 2 percent this year, ' Suryo said at the CIMB Niaga Economic Outlook 2014 seminar: 'Indonesia: Sustaining Growth Story amidst Challenges' on Thursday.
Earlier this month, BI announced that the country's growth in the third quarter had reached 5.6 percent. BI also projected that the growth rate would revolve around 5.5 percent to 5.9 percent in 2013.
Meanwhile, the Finance Ministry projected that Indonesia could achieve a growth rate of 6 percent in 2014.
Suryo said keeping the trust of investors is crucial amid a bleak global economy resulting from the US government shutdown as well as the Federal Reserve's plan to cut its economic stimulus.
Meanwhile, National Economic Committee (KEN) secretary Aviliani said that the political and economic conditions in the US could trigger capital inflows to Indonesia in the near future.
As a result, she predicted that the rupiah exchange rate could improve to below Rp 10,000 per US dollar as capital from investors flowed to Indonesia.
'This situation could make the government complacent,' she said, adding that 'hot money' was not supposed to be the main factor for reducing the current account deficit.
Aviliani suggested that the current account deficit should be settled by improving the service sector, such as the food and beverage industries as well as industries related to lifestyle.
'I think the service sector will be the quickest source of money for the country,' she said, adding that it could help boost the country's economic growth.
Meanwhile, a senior official at the Finance Ministry, Bambang Brodjonegoro, said that his ministry and the House of Representatives were confident that the country's economic growth rate could reach 6 percent in the 2014.
To achieve that goal, he said his ministry would boost investment and production by easing the process for investors to obtain business licenses.
'We will also reduce imports of oil and gas by substituting them with bio-fuel,' he said.
Bambang added that the government would not sacrifice the country's economic growth in its efforts to stabilize the rupiah.
CIMB Niaga chief economist Winang Budoyo meanwhile said that the plan of the Federal Reserve to end its monthly bonds purchase had caused Indonesia's foreign exchange (forex) reserves to dwindle.
He said, however, that the situation would not impact Indonesia in the long term.
Winang added that Indonesia would experience short term impacts due to the global economic slowdown.
He said that the main concern of investors was the stability of the rupiah, as money would likely come and go from emerging markets. (tam)
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