Indonesia needs more reform to reach potential
Indonesia could exceed projections and grow up to 6.4% this year, says another banking report, while adding its voice to cautions that economic reforms must accelerate in order to do so. The country won’t see super growth of 8-9% without infrastructure and manufacturing industry development, continued land reform and increased government spending.
This report comes from UK-based Standard Chartered Bank (StanChart) and is the latest in a string of calls for Indonesia to improve its economic foundations to achieve its potential. Only 5% of US$145 billion in infrastructure projects earmarked for President Susilo Bambang Yudhoyono’s first term (2005-09) have been realized, and government spending was a deficit of 1.5% of GDP, less than the 1.8% or $14.5 billion. Even that is an improvement on 2010′s 0.6% despite a budget target of 2.1%, according to the Jakarta Globe.
The World Bank agreed with StanChart’s claims, keeping its growth projections at 6.5% for this year and next, and adding that “poor infrastructure was “one of the biggest obstacles to firms operating in Indonesia.” The Bank’s chief economist Justin Yifu Lin said Indonesia’s destiny was in Indonesians’ hands, and that with more government discipline it could replicate other Asian countries’ emergence from agricultural to developed economies and join the world’s top 10.
source & article: the Jakarta Globe
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