Tue, 14 Jul 2009
Aditya Suharmoko, The Jakarta Post, Jakarta

To investors engaging in the real sector, the game of wait and see does not end automatically with the grand finale of last week's presidential election.

Investment, although likely to improve, still craves the long-awaited boost from government infrastructure spending and a proper implementation of the stimulus plan.

President Susilo Bambang Yudhoyono and his running mate Boediono, the election winners according to quick counts by six polling bodies, bear the imminent task of providing clarity to investors on the realization of the infrastructure spending, a work left in limbo by the current administration.

"Investment is likely to increase, mainly because the election went well and because of a strong pro-Yudhoyono coalition in the House of Representatives," Hariyadi Sukamdani, deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said recently.

Nevertheless, investment will only reach its potential if the government manages to roll out the infrastructure spending as promised, he said.

Hariyadi argued infrastructure spending was the single most important factor to spearhead economic growth, as the "fiscal stimulus has lost its momentum because it is too slow and does not aim to correct problems".

Indonesia's economy is estimated to grow by 4.3 percent this year, according to the Finance Ministry, down from the 6.1 percent booked last year.

In the first quarter of 2009, the economy grew by 4.4 percent from a year earlier, supported by still-strong private consumption, based on the latest data from the Central Statistics Agency (BPS).

The ministry says the economy will slow in the second quarter, as usually happens seasonally, before speeding up in the second half as investments and exports recover.

At the beginning of the year, the government put out a Rp 73.3 trillion (1.4 percent of GDP) stimulus package to boost the economy amid the threat of crisis.

It includes paying the income taxes of employees of up to Rp 6.5 trillion, subsidizing diesel by Rp 2.8 trillion, and additional infrastructure spending of Rp 12.2 trillion.

The package, however, has not run as projected. The Rp 12.2 trillion infrastructure stimulus was designed to be in place by late March.

Bambang Susantono, infrastructure deputy to the coordinating minister for the economy, admitted the infrastructure stimulus was not yet optimal, citing data from the National Development Planning Board (Bappenas).

"Bappenas's evaluation will be the feedback. There will be a boost midway so the implementation *of the infrastructure stimulus* can be accelerated at the end *of the year*," he said.

Kadin's head of fixed committee on domestic trade, Bambang Soesatyo, was still hopeful about the government's stimulus plan.

"Kadin expects the new government to be more progressive in designing economic stimulus for 2010," he said.

"It is needed to avoid a prolonged crisis."

He added the unemployment rate had risen to nearly 9 percent due to the impacts of the global crisis as businesses suffered from a slump in demand due to declining purchasing power.

"Yudhoyono and Boediono need to announce the target of their 100-day programs," Bambang said.

"This will become relevant as Indonesia faces serious issues in economics."



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