From: By Achmad Sukarsono
With the country set to emerge a â€świnnerâ€ť from the global financial crisis, the economy has the potential to expand â€śsignificantlyâ€ť by more than 7 percent, according to Joachim von Amsberg, the World Bankâ€™s representative in Jakarta.
However, corporate executives say this will only be possible if the government manages to soon fix the nationâ€™s woefully congested roads, neglected ports and aging power plants.
The praise came on the same day that the International Monetary Fundâ€™s country representative said that the Indonesian economy now had the chance to become a â€śsuperstarâ€ť performer.
Von Amsberg said Yudhoyonoâ€™s almost certain re-election victory would give him a mandate to double spending on roads and power to $140 billion by 2014, and pull 33 million people out of poverty in the process. He predicted that growth would likely come in at 4 percent this year, while Yudhoyono says it could even hit 4.5 percent.
Faster growth and a â€śmaturing democracy together put Indonesia in an incredibly exciting position to come out as a winner from this global turmoil,â€ť von Amsberg said in an interview on Thursday in Jakarta. â€śIt shows that Indonesia is a positive outlier in the world right now.â€ť
The move to increase deposit insurance, boost coordination with the central bank and strengthen bank supervision had helped the nation largely avoid the worldwide credit crisis, von Amsberg said.
The country had managed to avoid recession, unlike many of its neighbors that rely more on exports. Declining interest rates had also helped boost spending, which accounts for more than 60 percent of gross domestic product.
The countryâ€™s $433 billion economy expanded 4.4 percent in the first quarter from a year earlier, compared with a 6.2 percent contraction for Malaysia and Thailandâ€™s 7.1 percent slump. The central bank has cut its benchmark interest rate by 2.75 percentage points since December.
â€śTo guard growth, spending must be increased,â€ť said Elvyn G. Masassya, investment director at PT Jaminan Sosial Tenaga Kerja, the countryâ€™s biggest pension fund manager. Masassya, who manages about $6.9 billion in assets, said he expected the Jakarta Composite Index to extend its gains by 20 percent as Yudhoyono continued policies to boost growth after his re-election victory.
Boosting investment in roads, ports and power plants needs to be among Yudhoyonoâ€™s top priorities, according to nine of 11 chief executive officers contacted in the past month by Bloomberg News. He also needs to improve transparency in the legal system and reduce corruption to attract global investors, the survey found.
â€śIf the new government shows decisiveness in overcoming some bottlenecks, that will be a huge statement,â€ť von Amsberg said.