JAKARTA(TheInsiderStories) – Indonesian Vice President Jusuf Kalla stated that increased domestic and foreign investment, along with exports, is an important factor in boosting economic growth in the third quarter (3Q) of 2017.

Chart of Indonesia’s State Budget

The country’s economy grew by 5.06 percent in the 3Q of 2017, Statistics Indonesia reported on Monday (6/11), and cumulatively grew by 5.03 per cent from January to September (9M).

The Bureau said that goods and services exports contributed 20.50 per cent to the structure of gross domestic product (GDP), non-oil & gas exports grew by 20.51 per cent while oil & gas exports grew by 3.20 per cent on an annual basis (YoY).

Kalla said that export performance could be improved by accelerating the completion of 16 international agreements, such as the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA) and the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

Statistics Indonesia noted that the Indonesian economy based on GDP at current prices in 9M stands at Rp3,502.3 trillion (US$259.43 billion).

 

The Bureau said, goods and services exports contributed 20.50 percent to the structure of gross domestic product (GDP), non-oil and gas exports grew by 20.51 percent while oil and gas export grew by 3.20 percent on annually basis (YoY).

Kalla said, that export performance could be improved by accelerating the completion of 16 international negotiations like the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA) and the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

Indonesian State Budget Data

Statistics Indonesia noted that the Indonesian economy based on GDP at current prices in 9M worth of Rp3,502.3 trillion (US$259.43 billion).

The World Banks Chief of Country Programs on Equitable Growth Youngmei Zhou said the Agency has noted a low contribution of foreign direct investment (FDI) to Indonesia, despite an improvement in EODB rank to 72 among 190 surveyed countries; his remarks came at a discussion on Indonesia’s Ease of Doing Business (EODB) ranking on Oct. 6.

Zhou remarked that the World Bank has identified several factors, namely, the restriction of foreign ownership in certain regions, discriminative screening of investors, restriction in land ownership, capital, as well as profits, as reasons behind the reluctant state of FDI in Indonesia.

Meanwhile, Bank Indonesia (BI) foresees the prospect of Indonesia’s economic growth as better in the fourth quarter, due to the increasing price of commodities and recovery of the world’s economy.

In its official statement, the central bank stated that investment will increase in the fourth quarter, in line with increasing exports, as a result of the acceleration of economic structural reforms and a conducive investment climate.

BI also admitted that in 3Q, growth of household consumption had been slower than in the previous quarter, but that there has been an improvement in government consumption, exports and investment.

Referring to BI’s final statement, realization of economic growth at 5.06 per cent in 3Q of 2017 was frankly lower than the bank’s expectation of 5.1 to 5.2 per cent.

Commenting on the Kalla, World Bank and BI statements, Finance Minister Sri Mulyani Indrawati stated that Indonesia’s economy is now in a much better position to weather any shocks from global market crises. The former Managing Director of the World Bank added that stronger global growth was beginning to feed through to Indonesia’s economy.

The government expects the country’s economy to grow 5.4 per cent in 2018, compared with this year’s target of 5.2 per cent, helped by a recovery in exports and investment.

Written by Linda Silaen, Email: linda.silaen@theinsiderstories.com

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