SBY’s Encore To Shed More Light on Plan For Economy

SBY PRESIDENCY

President Susilo Bambang Yudhoyono is expected to reveal more details on Friday about his economic master plan to turn Indonesia into one of the world’s top 10 economies by 2030.

In a special meeting at the Jakarta Convention Center, the president will provide updates on the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) , the blueprint that was announced last month.

Business leaders invited to Friday’s event expressed hope that Yudhoyono would clarify problematic aspects of the plan.

Zulkarnain Arief, a deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said one contention was financing — estimated to be as much as $300 billion — needed to fund the plan.

The government has said it can provide only 30 percent of the required investment, with the remainder needing to be covered by the private sector.

“How are they going to finance the remainder?” Zulkarnain said. “Kadin is committed to helping the state invest in projects under the master plan, but a lack of pro-business regulations, red tape and unclear incentives may discourage investors.”

Under Yudhoyono’s blueprint, six economic corridors will be established in particular provinces to promote key sectors: manufacturing, agriculture, fisheries, mining, tourism, telecommunications, energy and industry.

Sumatra will be developed as an agricultural and national energy center, while Kalimantan will focus on mining and energy.

The Sulawesi-North Maluku economic corridor will focus on agriculture and fisheries, Bali-Nusa Tenggara on tourism and supporting food self-sufficiency, Papua-Maluku on natural and human resources and Java on industry and services.

The plan’s main goal is to push per-capita income from around $3,000 currently to $26,000.

The government also plans to accelerate connectivity within the country by investing heavily in transportation and communications infrastructure.

This includes proposals to expand the Tanjung Priok port in North Jakarta, build a new international terminal at Soekarno-Hatta International Airport and expand the country’s road network, among other projects.

If implemented effectively, the economic master plan will propel Indonesia’s economy forward and place it among powerhouses such as India and Turkey.

Indonesia has been actively promoted as a possible addition to the BRICS countries and has received several upgrades from international ratings agencies. The country is now only one rank away from being declared investment-grade.

Economists have welcomed the government’s new economic push and the president’s focus on the issue.

“I expect Yudhoyono to give more fiscal space for infrastructure next year,” said Eric Sugandi, an economist at Standard Chartered Bank. “It should be done by reducing the routine expenditure, such as for new offices and travel and reducing subsidies.”

Haryanto Suganda, senior vice president and head of business banking at HSBC Indonesia, said the plan would be successful because of the country’s strong economic fundamentals.

“If we are able to maintain the interest rate at the current level, I am sure we will keep moving forward in the future,” he said.

Source: http://www.thejakartaglobe.com

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