Novia D. Rulistia, The Jakarta Post, Jakarta
Despite the pleas of business players, the government is unlikely to increase spending for infrastructure development, with the President insisting on securing the state budget in the midst of global price inflation.
Addressing the Indonesian Chamber of Commerce and Industry (Kadin) national coordinating meeting on Monday, President Susilo Bambang Yudhoyono said it was impossible to increase infrastructure spending further.
"We have already increased this year's infrastructure budget compared to last year. Now, with fuel prices going up, securing the state budget has become our foremost priority," Yudhoyono said.
Earlier, Kadin chairman Mohammad Hidayat demanded the government double its infrastructure spending, as part of the group's eight recommendations to the government.
"We want the government to increase its infrastructure budget from the currently 3 percent of GDP to 6 percent," Hidayat said.
He said doubling infrastructure spending was crucial to achieving this year's GDP growth target of 6.4 percent to Rp 4,484.37 trillion.
"It needs around Rp 1,200 trillion of investment if we want to reach the target, and with the current infrastructure spending allocation, it will be very hard for the government to fulfill the expected investment," he said.
It has been agreed that the total infrastructure spending is 10 percent lower than the Rp 4.6 trillion stated in the initial 2008 state budget.
In addition to accelerating infrastructure spending in support of the economy, Kadin also recommended more attention to domestic food and energy security to anticipate a global economic slowdown.
Other Kadin recommendations include agriculture revitalization, food security, competitiveness in domestic products, lifting the oil production target to 1.1 million barrels per day, infrastructure improvement and easier credit access for small and medium enterprises.
Hidayat said solid cooperation between the government and business players in enhancing the domestic economy was crucial in achieving economic targets.
Yudhoyono welcomed increased involvement by business players in strengthening the domestic economy, saying the country could no longer rely on exports for economic growth.
"It's time for all of us to develop the national economy ...," Yudhoyono said.
"With a total population of 220 million people, rich natural resources and large geographical size, we definitely can develop (the economy), although the results may only be felt in the next five or 10 years."