Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

World

Indonesia has strong growth potential

JAKARTA, Nov 1) – Indonesia, Southeast Asia\’s biggest economy, can achieve strong growth if it reforms its bureaucracy, invests heavily in infrastructure and cuts greenhouse gas emissions, an OECD report said Monday.

The world\’s fourth most populous country weathered the global financial crisis well, and posted the third-highest real GDP growth in the G20 group of the world\’s largest economies, the Organisation for Economic Cooperation and Development said.

Indonesia now has "a unique opportunity to pursue its reform agenda and achieve lasting, strong and inclusive growth," it said.

GDP growth "is projected to accelerate to around 6 percent this year and next," the report added, but warned that "inflation pressures may re-emerge", so that authorities "should thus start to raise" interest rates before the end of 2010.

Echoing recent comments by the IMF, it said Indonesia would only fulfil its potential if it tackled "a number of weaknesses…still holding back progress".

"Changes to the policy and institutional framework will be necessary if Indonesia is to achieve its economic growth objective of 7 to 7.7 percent in 2014," and reach its poverty target of eight to 10 percent it said.

The poverty rate was 13.3 percent in March this year.

It called on President Susilo Bambang Yudhoyono\’s government to launch "a rapid implementation of bureaucratic reforms, to improve both efficiency and governance."

"Phasing out energy subsidies will free up fiscal resources," it added, and said that returns on investment in infrastructure "are likely to be large".

Advertisement. Scroll to continue reading.

Jakarta should also consider further relaxing barriers to foreign direct investment, the report said.

Foreign direct investment jumped by 32 percent during the first nine months of the year, to 111 trillion rupiah (12.4 billion dollars), including in real estate, mining, telecommunications and agribusiness.

The target of 130 trillion rupiah for the whole of 2010 should be exceeded, the government predicted Sunday.

The OECD said Indonesia also needed to take strong measures against deforestation and to protect its forests, the third-largest in the world after Brazil and the Democratic Republic of Congo.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...