Business confidence up in Q3: BPS

The Jakarta Post, Jakarta

Business confidence throughout the country improved during the third quarter from the previous quarter, the Central Statistics Agency (BPS) reported on Friday.

The agency said the business index for the July-September period rose to 111.36.

"This indicates that business conditions in the third quarter were generally better compared to the second quarter," the BPS said in its latest quarterly business confidence survey.

The agency said improving business confidence was primarily the result of three factors: higher operating revenue, higher production capacity and an increase in the utilization of labor.

BPS also said that the business confidence index could improve further in the fourth quarter on expectations of rising orders from the domestic and overseas markets, and a continued increase in the sale price of goods.

The business confidence index is an important tool for determining the appetite of the business sector for making new investments, a crucial factor in economic growth.

While investment has lagged over the past several years due to the deteriorating investment climate at home, there are indications of rising investment activity in the BPS' third quarter economic growth report.

The BPS said the economy grew at a faster rate of 5.03 percent in the third quarter compared to the same period last year, partly due to a surprising 11.32 percent increase in investment during the quarter.

The World Bank, however, has warned that despite signs of increased investment, the government needs to push ahead with its economic reforms and continue improving the investment climate.

The economy over the past several years has grow at an average of 4 percent per year. Growth has been mainly driven by higher domestic consumption, as investment and exports have been weak.

The new government of President Susilo Bambang Yudhoyono has vowed to repair the domestic investment climate, generate economic growth of more than 6 percent per year and help resolve the country's chronic unemployment problem.

Elsewhere, the BPS also said the consumer confidence index during the third quarter improved from the second quarter, mainly due to higher household income and stable consumer good prices.