Aditya Suharmoko, The Jakarta Post, Jakarta
As the government seeks to boost domestic industry in anticipation of a U.S. recession, businesses in turn want an increased effort made to reduce costs, help diversify export destinations, boost bank loans and empower small and medium firms.
Such efforts would ignite domestic industries and provide a shield against impacts of a U.S.-led global economic slowdown, thus fulfilling the government's economic growth target of 6 percent for next year, Indonesian Chamber of Commerce and Industry (Kadin) chairman M.S. Hidayat said.
In reducing the cost of doing business, in addition to cutting a long bureaucratic chain, the government should also expedite the development of infrastructure, particularly in rural areas, Hidayat said. A dilapidated rural road for example, would hamper the flow of goods and services, which means extra costs for businesses, he added.
"Exports should also keep growing, we aim to do this by diversifying the markets," Hidayat said of the need to gradually reduce dependence on foreign markets such as the United States.
The development of micro, small and medium-sized enterprises (SMEs) is also important -- SMEs represent more than 90 percent of the country's companies. Robust and more competitive SMEs will benefit the country largely, as the sector provides huge levels of employment, Hidayat said.
On bank loans, Hidayat is concerned that the global credit crunch will eventually make banks here more reluctant to extend loans.
"The liquidity squeeze should not cause priority sectors to stop growing," he said, adding that this should be the time for banks to help develop industries.
The central bank should even guarantee letters of credit for exports, he said.
Hidayat spoke after meeting with economic ministers and central bank governors to discuss measures needed for the country's domestic industry to weather the current global financial storm.
After releasing a series of regulations to protect the financial sector from external shocks, ministers and the central bank are now turning their focus to protecting the real sector.
Trade Minister Mari Elka Pangestu acknowledged Kadin's request as crucial to safeguard the economy from the global turmoil.
She said the ministry would establish a team to monitor the flow of goods in the country, in a bid to protect domestic industries, while maintaining export growth.
"We have three areas of focus: First, strengthening exports competitiveness; second, maintaining access to and diversifying export markets and third, securing domestic markets," Mari said.
Efforts to attract more investment in the country will also be intensified so as to generate activities in the real sector and create higher economic growth, Investment Coordinating Board (BKPM) head M. Lutfi said.
In particular, he said, the government would seek to attract investors to three sectors next year -- infrastructure, agriculture and energy -- with the main target being East Asian countries, particularly China, as well as European countries and the United States.
BKPM estimated investment would grow by about 10 percent next year, down from a forecast 12.5 percent in 2008. Between January and August this year, investment grew by 10.9 percent.