The Jakarta Post
In order to survive the global economic slowdown, the country must intensify efforts to boost foreign investment while at the same time increasing domestic production, a former finance minister has said.
Economist Chatib Basri, who served as finance minister from 2013 to 2014 under president Susilo Bambang Yudhoyono's administration, said the government’s development programs, such as infrastructure projects, could potentially attract foreign investment. He, however, said more must be done as the nation needed investment equal to 6.6 percent of gross domestic product (GDP) to improve its annual economic growth by 1 percent.
“There are two ways to escape from the 5-percent growth [cycle], by increasing investment or boosting domestic production so that we can reduce the 6.6 percent ratio to 5 percent,” Chatib said at the UOB Indonesia Economic Outlook 2017 forum in Jakarta on Wednesday.
Amid a weak global economy, the nation saw its GDP grow by only 4.79 percent last year, the lowest rate in six years. The government is targeting economic growth of 5.2 percent this year and 5.1 percent in 2017.
Chatib said the government currently was on the right track with its efforts to remove red tape, establish vocational training, and loosen the negative investment list. But these policies would take time to have an effect.
To create immediate impact, he suggested the government initiate cash-for-work programs, in which local residents, for example, would be paid to build irrigation networks, roads, or bridges.
“Such programs, however, must directly be controlled by the central government. We actually have the Village Funds program, but it doesn’t work because village chiefs are not used to planning and handling [development] projects," he said. (hwa)
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