From: The Jakarta PostBy Aditya Suharmoko and Mustaqim Adamrah, The Jakarta Post, Jakarta
Economic ministers held their last meeting Wednesday and left plenty of homework for their successors, with unresolved problems ranging from boosting infrastructure, reform of the bureaucracy, to revitalizing the real sector.
While over the past five-year period the government has been relatively spot-on in terms of macroeconomic policies, classic problems hampering growth in the real sector have been largely unresolved, chairman of the Indonesian Chamber of Commerce and Industry, MS Hidayat, said Wednesday.
With regard to revitalizing the real sector, as well as eliminating classic problems such as legal uncertainty and overlapping regulations, Hidayat suggested that, in order to have a more vibrant real sector, the government needs to change its mind-set to develop the nation’s processing industries, rather than just being satisfied with robust primary industries.
“A sound primary industry is good, but in order for our industry to expand significantly there is the need to develop the processing industry as well, so that the country can also enjoy the added values,” Hidayat said in an interview.
“What we have at the moment is, basically, we export our raw materials. Industries in other countries then process them into end-products and sell them back to Indonesia at far higher prices. This needs to change.”
If all efforts to revitalize local industries are addressed by the next government, along with continued bureaucracy reform and an infrastructure boost, Hidayat said, Indonesia would definitely enjoy faster economic growth.
A faster growth in the next five-year period is indeed one of the utmost priorities for the next government, said Finance Minister Sri Mulyani Indrawati Wednesday, after a coordinating meeting with all economic ministers.
Mulyani, also the acting coordinating minister for the economy, told reporters that in the five years under the administration of President Susilo Bambang Yudhoyono and Vice President Jusuf Kalla, the government considered that reaching a 6 percent growth was “not enough” and poverty reduction was below expectation.
“I think there are many higher targets that we want to achieve, like the 6 percent growth, which is not considered enough. It’s homework [for the next government],” Mulyani said.
Yudhoyono, who will run for a second term, and vice president-elect Boediono have promised to enable Indonesia to reach a 7 percent growth within the next five years.
Mulyani shared Hidayat’s view that there were matters to be resolved by the next government to speed up the development in the private sector, such as improving the professionalism of bureaucrats, as well as intensifying growth-boosting infrastructure projects.
Mulyani said that “Bureaucracy functions, structural issues like land clearance [for infrastructure projects]” should be under review accordingly. To have higher growth, ministers need to accelerate bureaucracy reform, which critics have said undermine the economy. More capital is needed to revitalize industries, which await government and private sector cooperation, she said.
“The government’s position in the economy and its collaboration with the private sector for the sake of the people will be important.”
The economy grew 5.6 percent in 2005, 5.5 percent in 2006, 6.3 percent in 2007 and 6.1 percent