Thu, 10 Jul 2008
Aditya Suharmoko, The Jakarta Post, Jakarta

The economy has grown by 6.2 percent in the first half of the year on the back of strong consumption and investment, Finance Minister Sri Mulyani Indrawati said Wednesday.

"The growth in the first semester was boosted by private consumption, investment and exports. High import of capital goods indicates investment will increase in the third and fourth quarters," Mulyani told a press conference.

According to the ministry, the economy in the second quarter grew by 6.1 percent with private consumption growing by 5.3 percent, investment by 10.5 percent and exports by 12 percent.

Wednesday's presentation was a prelude to the Central Statistics Agency's (BPS) upcoming announcement of the official figure on economic growth.

Sri Mulyani said robust car and motorcycle sales contributed greatly to the high private consumption, which were supported by rising bank lending.

In the first semester, car and motorcycle sales grew by 40 percent from a year earlier, while bank lending recorded a growth of some 32 percent, far above the central bank's growth estimate of between 22 percent and 24 percent.

Sri Mulyani also said the country recorded above-expectation revenue in the first semester with tax collection growing by 50.3 percent from the previous year.

The ministry's directorate general of taxation, she said, obtained Rp 307.5 trillion (US$33.40 billion), with non-oil-and-gas income tax and value added tax contributing the most.

Non-oil-and-gas income tax grew by 39.4 percent from a year earlier, while value added tax grew by 48.9 percent.

"Income tax of the manufacturing industry -- food and beverages industry, chemical industry and electronic industry -- rose by 37.5 percent," Sri Mulyani said.

"Value added tax of the trade, hotel and restaurant sector rose 24.4 percent, supported by wholesalers and retailers. It proves that the micro sector is moving."

On the spending front, despite the revised 2008 state budget being wrapped up in April, the government still managed to spend 36.7 percent of state expenditure, from the total of Rp 989.5 trillion.

A third of the spending went to subsidies, with a fuel subsidy of Rp 60.5 trillion, an electricity subsidy of Rp 26.4 trillion and non-energy subsidies of Rp 4.8 trillion.



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