The chairman of the Investment Coordinating Board has said closer ties with the United States and President Barack Obama’s forthcoming visit should help push Indonesia closer to being a trillion-dollar economy within five years, despite that meaning a growth rate of up to 15 percent a year.
“I think there’s a good reason to feel optimistic,” Gita Wirjawan said. “The United States is important for us because it sets the tone for all the other investors and markets.”
The two countries are working out details of the proposed “comprehensive partnership” in advance of Obama’s March 20-22 visit, Gita said. Indonesia hopes to sign a framework agreement with the US to bolster economic, political and security ties.
Coordinating Minister for the Economy Hatta Rajasa has said the government was planning to capitalize on Obama’s visit by signing six bilateral agreements covering energy, forestry, natural resources, agriculture, oil and gas and education.
Indonesia is a $550 billion e conomy that Gita insisted could reach $1 trillion in five years, even though that would take annual economic growth in range of 11 percent to 15 percent.
Last year, President Susilo Bambang Yudhoyono promised to focus on eliminating bottlenecks and overlapping regulations to help lift economic growth to 7 percent or more by 2014.
US investment in Indonesia has fallen due to the global financial crisis and Indonesia’s failure to meet the standards expected by foreign companies.
“I think we made the mistake of making too many promises when it came to investment when we were not ready. The infrastructure was not ready,” Gita said. “The regulatory framework was not ready and we ended up underdelivering. I think we’re projecting the image of Indonesia with much more realism now. Positivity, with realism.”
Gita added that he hoped to clinch a deal with the US Overseas Private Investment Corporation during Obama’s trip.
“The visit of Obama will put Indonesia on a new stage. If we can get something signed with respect to investment opportunities I think that will change the perception of US companies,” Gita said. “We have to make sure we are competitive in terms of accommodating investors in this part of the world.”
He spoke after meetings with the World Bank, the International Monetary Fund, the International Finance Corporation and the private sector.
Although it could take years for Indonesia to see a significant increase in US investment, other Southeast Asian countries, China, Japan, India and Middle Eastern nations are already bringing in capital. “These have been guys who have been showing a lot of thirst for investments in Indonesia,” Gita said.
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