ADB sees modest growth for RI this year<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
While investment has yet to pick up this year due to both
\ninternal and external factors, domestic consumption will remain
\nstrong as the backbone of the economy, enough to drive growth by
\n3.7 percent, economists at the Asian Development Bank (ADB) said.<\/p>\n
Amanah Abdulkadir, ADB's senior economic officer, said the
\nmodest forecast was based on the continuing gloomy outlook of the
\nglobal economy, coupled with slow progress in improving the
\ninvestment climate here.<\/p>\n
"So, we cannot hope for much from investment (to drive
\neconomic growth), especially when we see a decline in the global
\ninvestment portfolio from time to time. But consumption will
\nremain strong and be able to push the economy to grow by 3.7
\npercent this year," she said at a media briefing on Wednesday.<\/p>\n
She said that one of the signs of strong consumption was the
\nconstant increase in imports for capital goods.<\/p>\n
This means, she added, that local companies are preparing to
\nincrease their output capacity, which will keep consumer spending
\nhigh.<\/p>\n
Sharing her view was David Jay Green, country director for
\nADB's Indonesia resident mission, who said that there were still
\nplenty of weaknesses that needed to be addressed first if the
\ncountry wanted to jack up investment.<\/p>\n
Green highlighted at least four reasons why investors had been
\nshunning the country: one, concerns about security; two, policy
\nuncertainty, notably on decentralization and labor-related
\nissues; three, weaknesses in the financial sector; and finally,
\nweaknesses in governance, as was evident with the presence of
\nmassive corruption.<\/p>\n
"All this has resulted in foreign investment in Indonesia was
\none of the lowest in ASEAN. In fact, the country had experienced
\ndisinvestment since the crisis," he said in his paper, quoting
\ndata from the ASEAN Secretariat.<\/p>\n
As of June 2002, according to the ASEAN Secretariat, the
\ncountry lost US$1.2 billion of approved foreign investment.<\/p>\n
"That's why one of ADB's main programs to assist Indonesia is
\nto support and strengthen a long-term growth prospect through
\nproviding investment in infrastructure to help strengthen the
\ncountry's financial sector and encourage the private sector,"
\nGreen added.<\/p>\n
ADB is an important member of the country's major donors
\ngrouped under the Consultative Group on Indonesia (CGI).<\/p>",
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