'Trillion-Dollar Club'. We're in !
Indonesia's Trade Minister has hailed the country's entrance into an exclusive club - one in which South-east Asia's largest economy has joined such money-making giants as China, India and South Korea.
"We have just joined what people call the trillion-dollar club. Indonesia's GDP stands at a little bit more than US$1 trillion," said Mr Gita Wirjawan, who took over the trade portfolio in October last year.
"Some economists have projected that Indonesia's economy is expected to grow to US$9.3 trillion by 2030... staggering but not an impossibility."
In a speech to the Jakarta Foreign Correspondents Club, he also noted investment figures to be released by the end of the week will show a rapid spread of capital beyond Java, which is home to some 60 per cent of the population.
Other islands accounted for only 18 per cent of investment capital in 2009.
"In 2010, that rose to 33 per cent and figures for 2011 show at least 45 per cent," said Mr Gita.
Both he and Finance Minister Agus Martowardojo, who spoke yesterday at a separate briefing organised by the Fitch credit-rating agency, expressed optimism that Indonesia's economy will continue to grow rapidly in spite of the sputtering global economy.
Foreign direct investment was projected to soar with last month's upgrade of the country's sovereign debt rating to investment grade by Fitch, said Mr Agus.
This, he said, could help create good jobs for Indonesians, lift pay, reduce poverty, and beef up the country's foreign exchange reserves.
Preliminary figures show that the economy grew by 6.5 per cent last year. Fitch predicts it will grow 6 per cent this year and 6.5 per cent next year.
Indeed, Indonesia has been recording healthy growth from rising domestic consumption since 2010, after slowing slightly in 2009 at the start of the global crisis.
With a population of 240 million, about half of whom are part of a growing middle class, Indonesia is a lure for more foreign direct investments.
However, economists caution that the poor infrastructure, business uncertainties and uneven growth across the sprawling archipelago need to be addressed.
A recent World Bank report on the ease of doing business said Indonesia slipped to 129th place last year, from 126 in 2010.
Growth has also come against a backdrop of labour unrest across the country as workers push for a bigger piece of the pie through a higher minimum wage.
Farmers, meanwhile, have protested that their lands have been exploited or unfairly taken over by companies in the wake of a new land acquisition law passed last month to allow greater legal certainty for businesses.
Mr Gita said: "We have got to fix this. We cannot be presumptuous that people will continue to come in, we got to show that we are fixing this."
These are not his only concerns. Three months into the job, he has been roundly criticised for implementing measures seen as protectionist and radical.
Recently, he called for expanding curbs on imports and banned raw rattan exports to help local producers, a decision opposed by his predecessor.
Indonesian Chamber of Commerce and Industry (Kadin) vice-chairman Natsir Mansyur told The Jakarta Post that trade barriers might be counter-productive as they might invite retaliation from trading partners.
As for the financial system, Mr Agus noted that measures were being adopted to strengthen it, but cautioned that rapid capital outflows could weaken the rupiah.
He also acknowledged the key challenges of tackling corruption, raising incomes and fixing the inadequate infrastructure.
Fitch director of sovereign ratings Philip McNicholas called for more to be done. He said: "The government needs to focus on soft infrastructure, like human capital and a legislative framework to improve the investment environment."
?Zubaidah Nazeer & Zakir Hussain The Straits Times http://www.asianewsnet.net/home/news.php?id=26595