Stanchart sees 2002 GDP growth at 3.8 percent

Stanchart sees 2002 GDP growth at 3.8 percent

Adianto P. Simamora, The Jakarta Post, Jakarta

Standard Chartered Bank said Indonesia's economy should be
relatively unscathed by the threat of a global economic slump and
grow by 3.8 percent next year, driven particularly by strong
domestic demand.

Standard Chartered economist Fauzi Ichsan said that a more
stable domestic political environment should revive consumer
confidence to spend more.

"Next year's gross domestic product (GDP) growth will be
particularly fueled by strong domestic consumption as the
political condition improves," Fauzi said on the sidelines of a
seminar.

He explained that domestic consumption would likely contribute
a hefty 75 percent to next year's GDP, compared to investment
with 18 percent and net exports with 8 percent.

The government forecasts 2002 economic growth at 4 percent
from an estimated 3.5 percent this year. Standard Chartered
estimates this year's growth at 3.3 percent.

Minister of Finance Boediono has also said that Indonesia
should be able to relatively cushion the impact of a global
recession on the back of stronger domestic demand.

The government initially targeted a 5 percent GDP growth next
year, but it later revised the figure down to 4 percent following
the Sept. 11 terrorist attacks on the U.S.

There have been fears that the global slump will deal a
serious blow to the country's economy as exports will be hard-hit
by the downturn in major markets, such as in the U.S. and Japan.

But Fauzi said that the Indonesian economic recovery would be
more dependent on reforms than on the world's economy.

"Only through reforms can the government stimulate a more
sustainable economic recovery," he said.

Separately, the chief economist of the United Nations Support
Facility for Indonesian Recovery (UNSFIR) Satish Mishra said that
Indonesia had become too reliant on foreign investments to bail
out the economy.

"You shouldn't have an entire economic policy based on the
thinking that if you could just get foreign investment all the
problems would be solved," he said on the sidelines of a seminar
on business and investment prospects.

Mishra said that the government should make economic policies
based not only on the interests of foreign investors, but also
domestic investors, labor unions and regional governments.

"I don't share the view that if there are no foreign investors
the country will be full of shoeshine boys," he added.

The government should explain the reasons behind the economic
policies to the public and "get the views of people whose lives
are affected," Mishra said, adding that this was what the
government had failed to do.