Domestic resources are expected contribute 93% of investment
Domestic resources are expected contribute 93% of investment
JAKARTA (JP): Domestic resources are expected to contribute 93
percent of the Rp 102.1 trillion (US$47.05 billion) in
investments needed for economic development this fiscal year,
Bank Indonesia Governor J. Soedradjad Djiwandono said here
yesterday.
"Foreign resources will likely contribute about seven percent
or Rp 6.7 trillion to this fiscal year's investments for economic
development," he said, during a seminar organized by the
Association of Alumnae of the Faculty of Economics of the
University of Indonesia, held at the Jakarta Hilton Convention
Center.
He explained that domestic resources are projected to provide
total investments of Rp 95.3 trillion this fiscal year, of which
Rp 67.4 trillion will come from the private sector and the
remaining Rp 27.9 trillion from the government's savings.
For comparison, the government, under its current budget,
expects to see savings of Rp 17.38 trillion this fiscal year.
The government's savings are the difference between its
revenues from domestic resources and its routine spending. The
government expects to obtain domestic revenues of Rp 59.73
trillion this fiscal year, besides its projected revenues of Rp
10.01 trillion from foreign aid, while it plans to spend Rp 42.39
trillion for routine programs, including spending for goods and
salaries and foreign debt repayment.
According to the National Development Planning Board
(Bappenas), this fiscal year's investments of Rp 102.1 trillion
will be part of the Rp 660.01 trillion expected during the sixth
Five Year Development Plan (Repelita VI) period, of which Rp
622.8 trillion will likely come from domestic resources and Rp
37.3 trillion from foreign resources.
Measures
Soedradjad said that in order to achieve the investment target
from the private sector, the government will take various
measures to improve protection of public funds, to promote the
development of alternative instruments for savings, to encourage
the increase in fund generation through capital markets, the
insurance industry and pension funds as well as to promoting the
development of the securities market.
Meanwhile, an official at the World Bank's Jakarta office,
James A. Hanson, said the government should tighten spending,
improve tax collection and encourage state-companies to finance
their own projects if it wants to increase its spending.
He said the government failed to achieve its targets in
savings collection in the last two fiscal years because its
expenditures, particularly those for personnel salaries, exceeded
its budgeted levels, while revenues from oil and gas were less
than expected.
"Domestic non-oil revenues, although larger than programmed,
did not make up the difference," he said. As a result, the
government's savings was about 20 percent to 25 percent below the
budgeted levels.
Soedradjad acknowledged that the government, in its effort to
increase savings, should improve tax collection, increase
revenues from state-owned companies, sharpen priorities in state
expenditures and gradually reduce subsidies.
He also said Indonesia's economy is expected to continue
enjoying high growth this year, thanks to increasing domestic
demand for goods and services and rising investments.
According to Repelita V, Indonesia's economy will likely grow
by six percent this year, as compared to 6.1 percent last year.
State Minister of Investment Sanyoto Sastrowardoyo said
recently that foreign investments, which last year declined to $8
billion from $10 billion in 1992, are expected to more than
double to $20 billion this fiscal year.
Domestic investments approved by the government during the
first seven months of this year reached Rp 33.2 trillion, as
compared to Rp 39.4 trillion in the whole year of 1993. (02)
Editorial -- Page 4