RI growth 8 percent last year

JAKARTA (JP): Indonesia's economy last year grew by 8.07 percent, more than the 7.48 percent recorded in 1994, the Central Bureau for Statistics announced yesterday.

The bureau's chairman, Sugito, reported to President Soeharto at the latter's residence that Indonesia's per capita income had risen to US$1,023 last year from $920 in 1994.

"So based on our gross domestic product (GDP), our income per capita has passed the threshold of $1,000. However, based on our gross national product (GNP), our income per capita was still below $1,000, at $978 last year," Sugito said.

For the meeting with Soeharto, Sugito was accompanied by State Minister of National Development Planning Ginandjar Kartasasmita.

Sugito said that last year's economic growth rate was calculated on the basis of 1993 prices.

The government announced last August the revision of its calculation of the country's GDP by using 1993 prices, instead of 1983 prices. The revision resulted in a revised, statistically higher growth rate between 1989 and 1994, with an average of 8.3 percent per annum, as compared to the 6.9 percent based on 1983 prices.

Although Indonesia's economic growth and per-capita income went up, Ginandjar warned yesterday that development disparities between regions are still there.

He said Indonesia would still need foreign assistance to fund its development projects, especially for infrastructure in islands other than Java.

"We will continue our efforts to distribute our economic growth by expanding investment, especially in infrastructure, to islands other than Java," Ginandjar added.

Factors

Speaking on the factors contributing to GDP growth, Sugito explained that seven of the economy's nine sectors considered in the calculation, showed rapid growth last year compared to 1994, while the other two recorded slowing growth.

The fast-growing sectors included agriculture, mining, utility, trading, hotels and restaurants, transportation and communications, finance, and services. The slow growth sectors were the processing and construction industries.

The highest growth, 15.5 percent, was recorded by the utility sector, which includes electricity, gas and drinking water. This sector grew by 12.7 percent in the previous year. The lowest growth was recorded by the service sector, which grew by 3.77 percent last year, up from 2.77 percent in 1994.

The agriculture sector grew by 3.96 percent last year, compared to 0.55 percent in the previous year.

The food sub-sector, which contracted 2.1 percent in 1994, grew by 4.5 percent last year because of an increase in rice production, Sugito said.

The construction sector and the processing industry grew by 12.9 and 11.13 percent respectively last year, but their growth rates were less than the 14.9 and 12.5 percent they recorded a year earlier.

Slower growth in the processing industry was mainly due to a 4.65 percent drop in the production of liquefied natural gas.

Industrialization

Sugito said the economy was in transition towards industrialization, as shown by the declining contribution of the agriculture sector and the increasing contribution of the industrial sector to GDP.

Agriculture contributed 17.2 percent to economic output in 1995, compared to 17.4 percent the previous year, while the industry sector's contribution increased to 24.3 percent last year from 23.5 percent in 1994.

"If we look back on our economy in 1983, the industry sector contributed only 12.7 percent to the GDP. And in 1995, it's at 24.3 percent, almost double. Fantastic," Sugito enthused.

From last year's GDP of Rp 445.4 trillion (US$190.3 billion at current rate), 55.99 percent went on household consumption and 28.76 percent on investment.

Sugito said household consumption recorded a 6.25 percent increase last year, compared to 5.81 percent in 1994, while population growth only made 1.6 percent last year.

"This means that our consumption has continued to grow. And such consumption growth must have been enjoyed by the lower levels of society, because consumption at the top is already saturated. That's a good sign for Indonesia's economy," Sugito said.

He noted that investment grew by 3.39 percent last year, compared to 2.31 percent growth in the previous year. "It must be remembered that this growth is in investment realization, not approvals."

Sugito said such high and increasing investments will help push economic growth this year and in the coming years.

Supporting Sugito's argument, Ginandjar said such high levels of investment indicate that the country is becoming increasingly independent in its development.

"Our domestic capital to finance development continues to increase. So it's not true that we depend on foreign aid to finance development," Ginandjar claimed. (rid)