Government expects GDP to grow 3%

JAKARTA (JP): Finance minister Bambang Sudibyo said on Monday the economy was expected to grow by 3 percent in 2000, lower than the 4 percent forecast made by the Central Bureau of Statistics (BPS) last week.

Bambang said that based on the 1993 constant prices, the country's real gross domestic product (GDP) was expected to grow to Rp 387.4 trillion (US$53 billion) in 2000 from Rp 376.1 trillion in 1999.

"The real GDP growth in 2000 is expected to be around 3 percent," he told the House of Representatives Commission IX for financial and development planning affairs.

He added that GDP would grow by 3.8 percent in the April 2000 -December 2000 budget year.

The bureau announced last week that GDP grew by 0.23 percent last year, compared to a contraction of almost 14 percent in 1998.

It said strong fourth quarter growth led by household consumption and government spending had been the major factor behind the economy's push into the black.

It was optimistic the economy would grow by 4 percent this year as the bank and corporate restructuring programs gain momentum.

Excise tax

Meanwhile, director general of customs and excise Permana Agung said the government would delay the implementation of the new excise tax policy on cement, tires and soft drinks.

"We'll not impose the excise tax on April 1 because we have to discuss it again with the related industries," he told reporters on the sidelines of the hearing session.

Permana recently told the House the government was considering imposing excise tax on the three products in a bid to raise around Rp 2 trillion to help finance the April-December 2000 state budget.

He said that cement for low-cost housing and tires for public transport vehicles would be exempted from the excise tax.

Permana declined to disclose the level of the excise tax.

But he said the government would proceed with the plans to increase the excise tax on cigarettes on April 1 but did not give further details.

The excise taxes on cigarettes currently range from 20 percent to 36 percent.

So far the government has only imposed excise taxes on cigarettes and alcohol.

Separately, the Indonesian Association of Soft Drink Producers visited the House's commission IX on Monday to lobby the legislators to delay the new excise tax policy due to the current economic situation.

Chairman of the association Mugijanto said imposing excise taxes on soft drinks amid soaring production costs would badly hurt the local soft drinks industry.

He pointed out that even without the planned excise tax, soft drinks had been adversely affected by the reimposition of import duty on sugar, and increases in electricity tariffs and wages beginning in April. (rei)