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Indonesia targets over $372 billion in investment to speed up recovery
At least 85 percent of the investment is expected to come from the private sector.
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A worker walks in an auto assembly plant in Bekasi, West Java. The deepest contraction in real investment expenditure in 2020 was recorded in investment on vehicles, followed by machinery and equipment. (Kompas/Totok Wijayanto)
M
assive investment is needed for the economy to grow by 5 percent year-on-year (yoy) in 2021, with a major contribution from the private sector, according to the National Development Planning Agency (Bappenas).
It further estimates that investment expenditure would have to be between Rp 5.81 quadrillion (US$372.97 billion) and Rp 5.91 quadrillion this year.
“To grow the economy, investment is needed,” National Development Planning Minister Suharso Monoarfa said in a virtual presser on Tuesday. “[In our investment expenditure target], the government’s share is only between 5 and 7.1 percent, state-owned enterprises between 4.9 and 8.1 percent, and […] 90.1 percent from the private sector — or at least 85 percent.”
The target marked at least an increase of 18.77 percent from last year’s investment expenditure — or gross fixed capital formation in current prices — of around Rp 4.89 quadrillion.
Indonesia’s real investment expenditure, which accounted for nearly one-third of the economy, was down by 4.95 percent last year from 2019. The deepest contraction was recorded in investment in vehicles, followed by machinery and equipment.
The decline in investment expenditure occurred as the COVID-19 pandemic pushed the country into its first annual contraction of around 2.07 percent last year since the 1998 Asian financial crisis. It was the largest contributor to the contraction last year.
Read also: Indonesia’s economy shrinks 2.07 percent in 2020
