Kwik optimistic economy will grow by 3.8% this year<\/p>\n
JAKARTA (JP): Coordinating Minister for the Economy, Finance
\nand Industry Kwik Kian Gie expressed optimism on Wednesday that
\nthe 3.8 percent economic growth target in the April-December 2000
\nbudget year would be attained.<\/p>\n
Kwik said that a 3.8 percent gross domestic product (GDP)
\ngrowth level would be crucial to creating more employment,
\npromoting investment and ensuring that domestic banks could
\nachieve a minimum 8 percent capital adequacy ratio (CAR) by the
\nend of next year.<\/p>\n
\"The 3.8 percent economic growth target in the April-December
\n2000 period can be obtained and can even be surpassed,\" he told
\nreporters after a Cabinet meeting.<\/p>\n
Kwik's comments were made amid increasing concern that the
\ngovernment might not be able to meet the GDP growth target this
\nyear, particularly due to the slow progress of the bank and
\ncorporate restructuring programs which discourage investment, a
\nkey factor for economic growth.<\/p>\n
Indonesia's economy plunged into a deep recession in 1998
\nfollowing the financial crisis that started in the middle of
\n1997.<\/p>\n
While the five-month old administration of President
\nAbdurrahman Wahid has been credited for its success in dealing
\nwith the political turbulence and empowering civil society,
\nanalysts are still concerned about the slow progress of the
\ndevelopment of the ailing economy.<\/p>\n
But Kwik said the economy reached rock bottom in the second
\nquarter of last year, although 1998's full year GDP growth was
\nrelatively low at 0.2 percent.<\/p>\n
Kwik conceded that a smooth progress in the government's bank
\nand corporate restructuring program was the key to attaining the
\neconomic growth target.<\/p>\n
He said that restructuring the ailing banking sector was
\npivotal to allowing new lending in order for the real sector to
\ngrow.<\/p>\n
He added that restructuring the foreign and domestic debts of
\nthe corporate sector would ensure the resumption of both domestic
\nand foreign bank lending.<\/p>\n
\"The resolution of private sector overseas debt will help
\nreopen access to overseas financing sources,\" he said.<\/p>\n
Kwik said that the economic growth in 2000 would, in
\nparticular, be led by consumption spending and exports.<\/p>\n
A higher-than-estimated oil revenue is expected to provide the
\ngovernment coffers with a huge windfall and will allow for
\ngreater spending to stimulate the economy.<\/p>\n
Kwik admitted that investment would not yet be significant
\ndespite the massive potential as reflected in the low ratio of
\nrealized foreign investment and approved foreign investment.<\/p>\n
Kwik said that foreign investment this year would increase,
\nwhile domestic investment by both the private sector and the
\ngovernment would remain stagnant or even decline.<\/p>\n
But he added that it would be difficult to push foreigners to
\nrealize their investment plans this year, particularly due to the
\nlooming uncertainty about the country's political situation and
\nthe fact that foreign investors might be more interested in
\nacquiring existing assets at bargain prices rather than embarking
\non greenfield projects.<\/p>\n
Kwik said that creating transparency in economic policy and
\nlegal certainty was another important factor to encouraging
\ninvestors to realize their plans.<\/p>\n
Kwik explained that even if the corporate restructuring
\nprogram did go well, new bank lending would likely not be
\nchanneled into new investment ventures but into manufacturing
\nplants that were suffering from idle capacity due to the lack of
\nworking capital loans.<\/p>\n
He said that in terms of supply, economic growth in 2000 would
\nbe particularly fueled by industry, and the agriculture and
\nservices sectors. (rei\/prb)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kwik-optimistic-economy-will-grow-by-38-this-year-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}