Government eyes higher growth in manufacturing<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government aims to boost growth in the country's
\nmanufacturing sector -- the largest contributor to gross domestic
\nproduct (GDP) -- to an average of 8 percent per year in the next
\nfive years, from about 5 percent currently.<\/p>\n
Speaking to legislators on Wednesday, Minister of National
\nDevelopment Planning (Bappenas) Sri Mulyani Indrawati said such
\ngrowth was needed to help push the economy to grow at pre-crisis
\nlevels.<\/p>\n
According to the Central Statistics Agency (BPS),
\nmanufacturing makes up about 30 percent of annual GDP. But,
\nwhile it was growing by 10 percent to 11 percent before the 1998
\neconomic crisis, it had not reached those levels since.<\/p>\n
\"From 1998 onward, the sector's growth averaged about 5
\npercent. Not only that, the decline has also been highlighted by
\ncapital outflows and relocations of many businesses (out of the
\ncountry),\" Sri Mulyani said during a hearing with the House of
\nRepresentatives' Commission XI on financial affairs.<\/p>\n
\"We aim to reach 8 percent growth. But obviously we need more
\ninvestment flows to do that, especially from the private sector
\nas the government's financing ability is very limited.\"<\/p>\n
A more robust growth in the manufacturing sector, in which
\nmany companies are labor-intensive, would eventually be
\nbeneficial in helping contain the massive unemployment problem
\nhere, she added.<\/p>\n
The country's economy needs to grow by at least 6 percent per
\nyear just to keep up with the millions of new workers entering
\nthe job market annually. However, the slow progress in investment
\nhas hurt prospects for growth.<\/p>\n
Investment, or gross fixed capital formation, makes up about
\n18 percent of total GDP, BPS data showed.<\/p>\n
\"We aim to increase that to 24.4 percent by 2009. Improved
\ninvestment, along with improving exports, is the best answer to
\ngenerating economic growth to the pre-crisis level.\"<\/p>\n
She did not elaborate on what to do to attract investment, in
\nwhich she added, Indonesia would need well over US$100 billion
\nover the next five years to reach an average economic growth of
\n6.6 percent -- the target this government has pledged to meet.<\/p>\n
As for exports, notably non-oil and gas commodities, she said
\nthe government wanted to boost the growth from only around 2
\npercent in 2004 to 8.7 percent by 2009.<\/p>\n
With investment and exports improving at that pace, the
\neconomy should grow by 6.6 percent in 2009, added Sri Mulyani.<\/p>\n
The economy is likely to grow this year by about 4.8 percent.<\/p>\n
Elsewhere, aside from strengthening the manufacturing
\nindustry, the government was also committed to boosting the
\nperformance of the agriculture sector, which is set to decline
\nthis year by 2.9 percent due to a number of problems.<\/p>\n
Previously, growth in that key sector averaged 3.3 percent,
\nSri said.<\/p>\n
Problems that have been detrimental to accelerating growth in
\nthe sector include farmland conservation, massive migration from
\nrural to urban areas, lack of access to water supplies and
\ninadequate irrigation facilities.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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