Jakarta (ANTARA News) - The World Bank has predicted that investment`s contribution to Indonesia`s economic growth this year will increase to 11.7 percent from 2.9 percent a year earlier.
The central and regional governments` consumption expenditures were expected to increase in 2007 so that it would raise investment, World Bank economist William Wallace said here Thursday.
Private investment would increase but state investment would slightly fall in 2008 so that investment growth would drop slightly to 9.3 percent, he said.
The slowdown in investment in 2008 would also be the result of investment`s high contribution to the gross domestic product, he said.
"Investment was very low in the four quarters of 2006, so it is not difficult to increase in the first quarter of 2007," he said.
He said the downward trend in lending rates which was expected to raise the private sector`s consumption expenditure would also boost the investment growth.
"The decline in the benchmark interest rate will prompt banks to lower their lending rates," he said.
He said the new investment law was not enough to improve the country`s investment climate as other laws such as taxation and manpower laws needed to be amended.
"The key is to improving the country`s infrastructure as one of the factors to improve the investment climate," he said.(*)