Mon, 06 Oct 2008
Jakarta, (ANTARA News) - State Minister for National Development Planning / Chairman of National Development Planning Board (Bappenas) predicted that the U.S. financial crisis would affect economic growth in Asia, including Indonesia.

"It will weaken economic growth, particularly in Asia. We have to keep an eye on it because we will be forced to re-direct our exports to new destinations, possibly to the Middle East," Paskah said before attending an economic ministers` coordination meeting at the Finance Ministry here on Sunday.

Previously, the government and the House of Representatives (DPR)`s Budgetary Committee had agreed a 6.3 percent economic growth assumption in the 2009 state budget. The target was higher than the government`s initial proposal at 6.2 percent.

The minister said that restoring the public confidence towards the US economic condition, particularly its financial sector, would relatively need time.

"It will take a long time. I predict it will take one to two years or even five years to restore the public confidence," he said.

He said that Indonesia had to keep an eye on the crisis particularly its impact on Indonesia`s exports to the United States.

It was expected that Indonesia`s exports to the United States would drop in line with the financial crisis.

"We have to be watchful about what is going on there despite the fact that our exports to that country account for only about 30 percent," Paskah said.

He said that the 2008 state budget would not be affected significantly because domestic demand at home was still relatively high.

The domestic demand still could be strengthened with increasing the government`s spending on its expenditures, including on the procurement of goods and services.

Other steps, he said, is to expand the government`s social safety net (JPS) program, not only direct cash assistance (BLT).

"We will discuss matters relating to the BLT with the DPR on whether it still could be extended for another three months in 2009," he said.(*)



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