BKPM expects higher investment this year

BKPM expects higher investment this year

The Jakarta Post, Jakarta

Investment is expected to keep growing this year despite
heightened political concerns during the general election,
Investment Coordinating Board (BKPM) chairman Theo F. Toemion
said.

Theo said on Tuesday that investment was projected to
contribute between 25 percent and 28 percent of this year's gross
domestic product (GDP).

He explained that the increasing stability in the
macroeconomic arena and the strong rally in the stock market
would encourage new investment in the country.

He declined to disclose the targeted figures for domestic and
foreign direct investment this year.

Investment has been weak since the country plunged into an
economic crisis in the late 1990s. This has been the result of
various problems, including a lack of legal certainty, lingering
labor conflicts, rampant corruption and red tape, and an
ineffective and corrupt bureaucracy.

The lack of investment has resulted in the economy growing
only around 4 percent over the past couple of years, which is
considered insufficient to absorb the huge number of people
currently unemployed.

Last year, investment only contributed around 17 percent to
GDP, compared to domestic consumption which accounted for around
78 percent.

Some experts have said that in order for the economy to return
to its pre-crisis growth levels of around 7 percent, investment
will need to contribute around 35 percent to the economy.

But they acknowledged that boosting investment would not be an
easy job as fixing the institutional problems in the country
could not be done overnight.

Some predict that pre-crisis growth levels might only be
achieved in the next two years as investors will only start
making new investments in the second half of next year with a new
government already in place.

This year, the economy is forecast to grow by around 4.8
percent.