Indonesia’s economy has returned back on track following a period of lower growth last year due to the global economic crisis.
World Bank economist Timothy Bulman said in Jakarta on Thursday that the country’s economy is almost ready to return to the boom conditions prior to the 1998 financial crisis, when GDP growth often reached between 7 percent and 8 percent.
“The real economy has returned back to solid growth,” he told a seminar of the Institute for Development of Economics and Finance (INDEF).
The World Bank estimates the growth rate would increase to 5.6 percent this year, and to 6 percent in 2011 up from 4.5 percent in 2009. The bank is also upbeat that the country’s anticipated export volume is expected to return to pre-crisis levels during 2010, as the world economy gradually recovers and commodity prices rise.
Timothy suggests Indonesia creates a more conducive investment climate to attract both foreign and local investors, so that investment activities could contribute more significantly to the country’s economic growth.
“Indonesia has to be more aggressive in facilitating domestic and foreign investment.” Timothy said.
According Timothy, besides investments, Indonesia is ready for and needs breakthroughs like easing transport and logistic bottlenecks and connecting Indonesia’s domestic market and the regions.
Speaking at the same event, Ikhsan Modjo, the executive director of INDEF, agreed that the Indonesian economy had almost fully recovered from the crisis.
But, he warned much work still had to be done by the government to maintain upward trends, because inappropriate policies would undermine progress.
Ikhsan mentioned that wrong handling of negative impacts from the much criticized ASEAN China Free Trade Agreement (ACFTA) could drag down GDP growth.
“The government had to lower its entry barriers and operating costs. It has also to improve trade facilitation as well as to control the proliferation of non tariff barriers,” he said.
The government expects the GDP growth to increase to 5.5 percent this year.
However in order to achieve the target of bringing economic growth up to above 6 percent per year within the next five years, the government had to take more positive steps.
The government has finished drafting the second National Middle Term Development Plan (RPJMN) for 2010-2014. The blue print will be officially launched on Feb. 3.
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