Urging a more competitive mentality
nationally, Finance Minister Agus Martowardojo warned that Indonesia’s
shrinking trade surplus may slow the country’s economic expansion and prevent
it from reaching its growth target of 6.7 percent this year.
The
month of April saw Indonesia run a trade deficit of $641 million after running
a $1.7 billion trade surplus the month prior. While still maintaining an
overall trade surplus of $2.1 billion through the first quarter of 2012, that
figure was 74 percent smaller than the same period last year.
Agus
said the current global crisis was heightening economic competition among
nations.
“The
global crisis is making competition tighter and the impact would be that our
goods would not be absorbed by the global market if we cannot improve our
competitiveness,” Agus said on Thursday evening.
He said
that if the crisis was not protracted, Indonesia would have no problem meeting
its growth targets, especially since it did not rely heavily on exports. He
said proof of the country’s economic resilience was in investment, which grew
by 12 percent in the first quarter of 2012.
The
government would provide economic stimulus by earmarking Rp 25 trillion ($2.65
billion) to accelerate the development of infrastructure, a challenge that
needed to be urgently addressed, Agus said.
“We
will also increase the level of non-taxable income, of course with the hope
that the people would be encouraged and impact on economic growth,” he said.
Agus
said the government will also work to achieve a better absorption level for the
budget, which routinely sees annual allocations go unspent by various
ministries or levels of government.
He said
stimuli were needed so Indonesia could compete with other nations, especially
in light of its impending integration into the Association of Southeast Asian
Nations economic community. The 10 member states of Asean hope to integrate
their economies, removing tariffs and other non-tariff barriers to trade, by
2015.
“Even
though the aims are good, if it is not prepared well, then we will feel the
impact,” Agus said. “We have to increase our competitiveness; faster, more
detailed in our work and in creating new opportunities.”
The
economic integration of the region, he said, was aimed at turning Asean into an
economic force capable of competing with other economies globally, he said.
Agus
said domestic companies had an advantage over those in other countries because
of strong demand from Indonesia’s domestic market. The minister advised
domestic firms to concentrate on Indonesian consumers before eyeing expansion
abroad.
“Going
international will not only add to our foreign exchange but our competitiveness
will also increase,” he said.
Ivan
Dasa Saputra
Business & Investment Opportunities
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