Govt eyes higher growth, more job-creation

Govt eyes higher growth, more job-creation

Dadan Wijaksana, The Jakarta Post/Jakarta

More jobs will be available next year if the new government
can reach its new target for economic growth, 5.5 percent, the
fastest pace since the crisis.

Betting on a revival of investment and progress in exports,
Minister of Finance Yusuf Anwar proposed the new growth target,
along with revised targets on other economic indices, to the
House of Representatives State Budget Commission on Thursday.

"Our new projection for growth is 5.5 percent, inflation is
targeted at about 7.0 percent. The oil price is assumed at US$35
a barrel," Yusuf told the lawmakers.

Under the original 2005 state budget, drafted by the previous
government and House members, the economic growth was forecast to
grow by 5.4 percent while inflation was set at 5.5 percent and
oil was set at $24 a barrel.

Yusuf -- accompanied by State Minister for National
Development Planning Sri Mulyani Indrawati as well as the
Governor of Bank Indonesia Burhanuddin Abdullah -- delivered the
government's new projections, having deemed the original figures
no longer suitable to reflect the latest economic development
trends.

On economic growth, Yusuf was optimistic that next year would
be a revival time for investment, as the new economic team works
to improve business climate here.

"This year, the economy is set to expand by 4.8 percent. And
with investment improving, as well as exports, I think the new
growth target for 2005 is within reach," he told reporters after
the hearing.

An assessment by Bank Indonesia, presented the day earlier at
the House, also sees a rise in investment next year, to be
supported in part by the government's plans to lure foreign
investment for massive infrastructure projects.

The economy over the past three or four years has been driven
mostly by consumption, which makes up about 70 percent of the
GDP.

The country's economy, with a GDP equivalent in value to some
$208 billion, has to speed up growth to incorporate an estimated
2.5 million new workers each year, not to mention about 40
million people -- of the total population of 230 million -- who
are either unemployed or earn less than $2 per day.

Economists have pointed out that a 1 percent rise in GDP could
employ approximately 400,000 new workers.

The government's optimism is supported by encouraging recent
data.

Growth has expanded by 5.03 percent in the third quarter of
the year, faster than the 4.54 percent in the second quarter, the
Central Statistics Agency (BPS) reported.

Elsewhere, for the 2004 state budget, Yusuf revealed that
full-year deficits could reach 38.1 trillion, or Rp 11.8 trillion
higher than initial forecast as the soaring oil price pushed up
the fuel subsidy.

The 2004 state budget had forecast a deficit of Rp 26.3
trillion for 2004, which accounted for 1.3 of GDP.

Aside from the higher allocation for the subsidy, which
increased by Rp 10 trillion, the deficit has been also hurt by
the lowered-than-targeted oil and gas revenues because of falling
output, Yusuf said.

The output was about 1.04 million barrels per day, short of
the budget estimate of 1.07 million.