Wed, 08 Jan 2003

Economy grows by 3.6 percent in 2002: Govt

The Jakarta Post, Jakarta

The economy grew 3.6 percent last year, slower than the government's target of 4 percent, according to a preliminary estimate released by the Ministry of Finance.

The government did not provide the reasons behind the slower growth, but analysts have said that various uncertainties both at home and overseas were negatively affecting the economy.

The most profound one is the government's failure to jack up investment and export performances, which have been dwindling over the past couple of years.

Economic growth during these periods has mainly relied on consumption.

Investments, for instance, dropped significantly last year.

The Investment Coordinating Board (BKPM) reported that foreign direct investment approvals fell by 35 percent to US$9.7 billion in 2002 from $15 billion the previous year. Domestic investments were even worse with approvals plunging by 57 percent to Rp 25.26 trillion from Rp 58.6 trillion.

Exports in the first 11 months of last year also declined to $51.92 billion from $52.10 billion a year earlier.

Experts have said that lingering labor conflicts, security problems, poor implementation of regional autonomy and corruption were among the domestic factors discouraging investments and slowing down exports.

To make matters worse, the Indonesian economy in 2002 had to weather the storms created by the devastating bomb blasts in the famous resort island of Bali.

The economic impact of the blasts was so powerful it did not only hurt the country's tourism sector -- which traditionally is one of the main sources of foreign exchange revenue -- but also created more jitters for investors to invest in the country.

The severe impact of the Bali tragedy was reflected in the government's decision to revise downward its economic target for this year from 5 percent to 4 percent.