the Indonesian government aims to boost its slowing economy by encouraging domestic consumption, the increase in government spending, and solicit investment .
The Minister of Finance of Indonesia Bambang Brodjonegoro
With a strong dependence on exports of commodities, investment ( FDI) foreign direct low, the increase in external debt, and foreign ownership of government bonds, Indonesia casting the shadow of a vulnerable economy this year. Despite these factors, the Finance Minister Bambang Brodjonegoro of the nation believes that the local economy will get back on track in 2016.
The government aims an economic growth of 5.3 percent this year . The projection is a slight increase in the overall growth of 4.79 percent of Indonesia in 2015, according to Central Bureau of Statistics (BPS) report, published February 5
"I predict economic growth Indonesia will be 5.2 percent this year, but the government's goal is to gain 5.3 percent. this could happen, but with several conditions, "said Eric Sugandi, Senior economist at the Institute Kenta, a research company based in Jakarta for politics, economy and trade issues.
to achieve the objective, Sugandi said the government must stimulate domestic consumption to increase spending public, and encourage investment of local people and foreigners.
"net exports from Indonesia decreased following the weakening of commodity prices on the world market. However, if the government focuses on these three key elements, the situation should get better, "said Sugandi." We must accelerate infrastructure projects that create new jobs, attract more domestic direct investment and foreign offering new action programs, and maintain a positive feeling about the consumption at the household level in Indonesia. "
to ensure a favorable investment climate, the government is easing procedures for granting licenses and offering tax incentives. such incitement is an amnesty law that the finance minister hopes will run smoothly through the House of representatives of the nation. if successful, it would spent in the current law this year.
tax amnesty, according Brodjonegoro, would actually be an effective way to improve compliance with tax revenues and Indonesia. the policy would target wealthy individuals who are less sensitive to economic fluctuations than larger firms are. People who bring their assets to Indonesia from Singapore, for example, would be compensated in the form of government securities, corporate securities owned by the state, and deposits a month in banks.
Brodjonegoro remains confident that the goal of Rp.1.360 trillion ($ 98.5 billion) of tax revenue will be achieved by the end of the year. The government will discuss several ways to reach the target, as extensification (adding sources of government revenue), optimization of the revaluation of assets (recalculate its assets based on the current value), and application the law on people who do not pay their taxes.
In terms of realization of the investment, the government aims to increase domestic and foreign direct investment by 14.4 percent to Rp.594.8 trillion (US $ 41.65 billion), up from its previous target of Rp.519 billion dollars (37.6 billion US $). Franky Sibarani, Head of Investment Coordinating Board (BKPM) of Indonesia, said recently that his organization would also focus on accelerating the investor commitment for 100 construction projects this year.
"BKPM would make them more effective investment license procedures do active marketing, realization care investments, and spread of investment in the whole society, especially the manufacturing industries labor-intensive. It will also seek more foreign investments net of Java, "said Sibarani recently at a press conference.
The BKPM says he will work to improve its procedure three hours needed to obtain an investment license and aims to expand its horizons in several foreign markets such as India, Hong Kong, Thailand, Germany, Vietnam, Netherlands, Canada, Italy, and Russia. It also hopes the archipelago can remain attractive to US investors, the UK, the Middle East and Australia.
To do well on government spending, Indonesia has set aside Rp.310 billion (US $ 22.46 billion) for infrastructure projects.
One such project is the US $ 5.5 billion rail at high speed from Jakarta to Bandung (co-financed by China), which should be operational in 2019. Another is the by building a synthetic rubber factory PT rubber Indonesia is Rp. 5600000000000 (US $ 435 million) in Cilegon, Banten. It is also building a ferronickel smelter in North Maluku worth more rp.1 trillion (US $ 72.46 million).
The government plans to allocate 6-7 percent of the . infrastructure budget in the villages in 2016, up from last year's 3 percent. The nation's health sector is expected to get 5 percent of the infrastructure budget.
Although the government's plan seems high, Indonesia has a legitimate hope radius. More than 50 percent of its population of 250 million is under the age of 30, which means that the majority will soon reach their first years of spending. The government aims to maintain the levels of domestic consumption across the burgeoning middle class of the nation and soon coming demographic dividend. Consumer spending accounts for about 55 percent of gross domestic product.
The BPS data shows household consumption suffered a setback last year, as it rose 4.96 percent in 2015, down from 5.14 percent in 2014. One reason for this is the fact that Kalimantan was once ranked as the third largest contributor to growth in Indonesia. After the collapse of oil and raw coal palm (CPO) prices last year, however, rich in Kalimantan resources fell below Sulawesi, Bali, Nusa Tenggara, Maluku and Papua.
"In order to maintain domestic consumption, the government could intervene on grocery prices, lower gas prices, and to open new infrastructure projects that create jobs," said Sugandi.
the government has reduced the rate benchmark interest by 25 basis points to 7.25 percent earlier this year. the reduction should support previous economic policies and declining rupiah primary reserves. in addition the low burden of public debt, the slash is also intended to help the periods of market turbulence Indonesia time
US Fitch ratings. - one of the three major credit rating agencies to States States - said the cuts would probably not stimulate bank lending significantly in the short term the agency recently lowered the outlook of the Indonesian banking sector to negative from stable, in line with an operating environment increasingly difficult.. He added that the quality of the bank's assets and profitability in Indonesia are expected to remain under pressure with NPLs rising again to 3.5 percent by the end of 2016, with the weakness concentrated in the mining sector.
Even with all the variables and risky speculation, Sugandi remains confident that Indonesia is still one of the most promising economies in ASEAN.
"Indonesia is the largest market in ASEAN and has the largest middle class that is growing continuously," he added. "Having these terms, Indonesia should make several improvements to its human resources in general, including the development of general skills of workers and the ability of the English language."
In the context of economic slowdown China, Indonesia hopes to change its exports and FDI strategy of creating an investment-based economy, one based on consumption.
the government is trying to make exports to the China as close as possible to the category of finished products or consumption. It also wants to attract more fully engaged foreign direct investors in Indonesia from China.