Sun, 26 Dec 2010

Jakarta (ANTARA News) - The domestic economy may grow 7 percent next year if the government is able to overcome constraints to the economic growth, the Indonesian Chamber of Commerce and Industry (Kadin) said.

"The economic growth in 2010 is quite good. Several agencies have predicted the economic growth will expand at a range of 6.3 percent to 6.5 percent next year. But Kadin believes the economy can grow by up to 7 percent if the required conditions are met," Kadin chairman Suryo Bambang Sulistio said on Thursday.

The conditions include construction of roads, ports and energy facilities as well as improvement of the national logistics system, he said.

In addition, the government, along with business players must work closely to solve a myriad of problems facing the business world, he said.

He said the chamber proposed 10 action programs to achieve the 7 percent economic growth next year.

Through the programs the chamber suggested that the government raise the deficit level to a minimum of 2.5 percent from 1.7 percent previously to ensure the availability of adequate funds to boost the real sector, he said.

"The government should prioritize the use of funds to develop infrastructure facilities such as ports, airports, trains and industrial estates," he said.

The chamber recommended that the government focus its development policy on the manufacturing industry which has high added value in the food, agricultural and mining sectors to reduce the country`s dependence on imported raw materials, he said.

"Kadin also proposes that the government provides fiscal and monetary incentives to support efforts to achieve energy and food self-sufficiency," he said.

He further suggested that the government improve macro policies in the investment, trade and banking sectors which according to him had impeded companies` efforts to improve their competitive edge.

In addition, the government should also encourage the banking industry to invest in the real sector particularly to finance the development of infrastructure facilities which had so far posed a hindrance to the economic growth, he said.

The government should also make an effort to cut the interest rate to below 10 percent to increase the competitive edge of the national industry, he said.

The other action programs were development of priority industries, campaign for the use of domestic products, and increased investment in regions, he said.

"If the proposals are implemented we believe the economic growth may reach up to 7 percent," he said.

The Indonesian economy grew 5.8 percent year-on-year in the third quarter of 2010.