JAKARTA (TheInsiderStories) – The Indonesia Government believed the investment realization will boost the economic growth in the second half (H2) of this year, said one senior official on Tuesday (8/8). For that, Government will release a new economic policy package focus how to solve investment licensing problem.
In the H1 of 2017, the country’s gross domestic product (GDP) grew by 5.01 percent compared to a year ago in the same period. Coordinating Minister for Economic Affairs Darmin Nasution said, the economic growth should be encouraged at least 5.3 percent in the remaining second half of this year to meet the target of 5.2 percent at the end of this year.
“We will launch a major program, package to accelerate investment, maybe the new policy will launch next week,” He told press at the State Palace.
The new economic policy package will cut licensing time and complexities, so the investors can immediately start construct projects or factory and handle of licensing simultaneously. Therefore, the central government have to communicate with the local governments.
Deputy of Economic Affairs Ministry Edy Putra Irawadi said, the government will issue temporary licensing certificate to speed up investment realization. This idea appears after seeing the low of investment realization, compared to investment plans.
“The investment plan only realized of 31 percent as whole while the foreign investment plan just realized of 27 percent,” he said.
As consequence, the government efforts to attract foreign direct investment (FDI) is not optimal yet. Bearing status as one of favorite destination to investment, Indonesia only absorb 1.97 percent of total FDI that reach US$1,471 billion in year.
Therefore, the government will apply single submission licensing in one door through Indonesia Investment Coordinating Board. Currently, investors are facing hundred of licensing, including in ministries level. The government, Edy stated, will also give accompaniment to the investors that invest big money.
President Joko Widodo previously urge the local government administrations to cut licensing time for investment amid the technology development. The investors, he said, often take months or even years to handle licensing so they are hesitant to invest in Indonesia.
“A lot of investors is in front of our door that already queuing to invest in our country. The problem is in our own, which there is complicated regulation and we can not make a fast system to serve them,” he said.
In the first half of 2017, the investment grew by 5.07 percent or faster compared to the same period of last year that grew only 4.42 percent, driven by an increase in building as well as equipment and industrial vehicle investment.
The increase of investment in the H1 is affected by the increase of government capital expenditure through infrastructure development. The government capital expenditure in first half reached Rp47.5 trillion or up to 6.98 percent year-on-year.
President has said, Indonesia currently has two very good momentums that have to be capitalized on, namely economic growth and the people’s trust to the Government. Indonesia’s economic growth, the President said, is higher than that of many other countries.
“We must capitalize on and make the most of such a momentum,” He said in his remarks at the 1st National Leadership Meeting of the Hanura Party in Kuta, Bali (4/8).
The second momentum, the President further said, is the people’s trust to the Government.
“Based on a survey done by the Gallup World Poll and the OECD, Indonesia has the highest trust from the people compared to other countries,” the President said, adding that Indonesia gets 80 points along with Switzerland, followed by India and Luxembourg get 73.
“We must not be pessimistic because the international community looks up to us and envy our economic growth and the high trust given by the people to the Government,” the President said.
Meanwhile, Chairman of The National Development Planning Agency is preparing a program to drive up the country’s current economic growth levels such as the commodity and property sectors.
According to Bambang Brodjonegoro, to achieve the economic growth target at 5.2 percent in the revised 2017’s State Budget, the economy must grow by 5.4 percent in the second semester. Investment realization, He continued, is expected to become a booster, besides the consumption by the government and the private sector.
“We need to focus more on realizing the investment. Major investments are in infrastructure and tourism. We see that the two sectors are the main attraction for foreign investors,” said Bambang.
He stressed, that while attracting investment into the country, the focus must be on two main things, ease of investment climate and give a business certainty for investors.
The Central Bureau of Statistics recorded that performance in investment has contributed to economic growth in the second quarter of 2017 spurred by investment in buildings, vehicles, and other equipments.
In addition, investment was supported by the governments capital expenditure in the 2017 state budget, amounting to Rp35.7 trillion, or an increase of 4.36 percent, as compared to the same period last year. (RF)