ECONOMIC GROWTH TO REBOUND IN SECOND QUARTER

By Andi Abdussalam

Jakarta, May 10 (Antara) - The Indonesian economy grew at a slower pace in the first quarter of 2015 with a growth rate lower than that in the corresponding period in the previous year.          The low global oil prices, declining of exports, weakening of the rupiah and the late disbursement of government budget for development have among other things, been attributed to the slower pace of the economy.          The Young Indonesian Businessmen Association (Hipmi) has attributed the current economic slowdown in the country to slow disbursement of state budget funds for various infrastructure projects.          The economic slowdown indicated by the first-quarter economic growth was inseparable from the weak performance of budget realization at central and regional levels, chairman of the Himpi executive board Bahlil Lahadalia said on Tuesday.          Although Indonesia's economic performance has slowed down over the past few months due to a number of factors, yet the government is convinced the country's economy will grow better in the second quarter of 2015.          In the second semester, the government will begin disbursing funds for infrastructure development. Finance Minister Bambang Brodjonegoro said the absorption of budget for infrastructure had been low because the Revised 2015 State Budget (APBN-P) was endorsed by the House only in February, 2015.            This month (May), the government is expected to begin disbursing budget for infrastructure development.  "We hope that in May the Ministry of Public Works and Housing, the Ministry of Agriculture and other ministries/state institutions will realize their infrastructure expenditure," said Finance Minister Bambang Brodjonegoro.          The realization of infrastructure projects whose funds is disbursed in May 2015 would help boost the economic growth in the following quarters. This will help boost the economy. But Bahlil Lahadalia of Himpi said the consumption sector also contributed to economic growth.          He said the economic growth both at regional and central levels still highly relied on the consumption sector.          "As a matter of fact, this sector also relies on government spending too much," he said.          The other indicators of economic slowdown in the first quarter of 2015 were a decline in food production due to the belated planting period and a shortfall in crude oil and coal production, he said.          As a result, oil refinery industry recorded negative growth, he said.          In addition, the slow distribution of goods resulted from the declining supply of imported goods and the low performance of the construction sector resulted from slow disbursement of budget funds for infrastructure projects, he said.          In the first quarter of 2015, the Indonesian economy grew at 4.71 percent as compared to the 5.14 percent in the corresponding period last year, said the Central Bureau of Statistics (BPS).          "The economic growth of China as the export destination of Indonesian goods coupled with the low global oil prices and declining export performance have affected the economy in the first quarter," BPS Chairman Suryamin remarked last week (May 5).          The Indonesian economy in the first quarter of 2015 grew by 4.71 percent year-on-year, down 0.18 percent from 5.14 percent recorded in the same period last year, he noted.          In response to the economic downturns, President Joko Widodo held a meeting with  Bank Indonesia (BI) Governor Agus Martowardojo to discuss the latest economic developments.          According to Martowardojo, to keep the inflation rate in check, the government will invite regional heads to a national coordination meeting at the end of this month.          "The president will lead the national coordination meeting. We need coordination among ministries and regional governments to control the inflation rate," he explained.          Inflation must be controlled because it reduces people's income. Therefore, a rise in the prices of goods and services will be burdensome due to the decline in the rupiah's exchange rate, he noted.        In an effort to increase exports, Indonesia will optimize efforts to expand its exports to non-traditional markets. "The economy of China which is one of our export destinations is still slowing down, so that we will optimize efforts to expand exports to non-traditional market," Leondard Tampubolon, the deputy for economic affairs of the National Development Planning Ministry, said.          The economic slowdown was also caused by the low absorption of infrastructure budget. Till April 27, infrastructure budget absorption reached only 2.5 percent, or Rp7.3 trillion of the total budget of Rp290.3 trillion. The slow disbursement was due to the fact that the 2015 Revised State Budget was approved by the House only in February. Yet, as the government has begun disbursing funds for development, the economic growth is expected to rebound.          BPS Suryamin said the realization of infrastructure projects whose funds is disbursed in May 2015 would help boost the economic growth in the following quarters.          Vice President Jusuf Kalla said the Indonesian economy must grow by more than 5 percent in the second quarter of 2015. "It must be above 5 percent. We must expedite the disbursement of funds from the budget for developmental projects," the Vice President added.          The BI has therefore predicted that the national economic growth will rebound in the second quarter of 2015 after contracting to 4.71 percent. "Government spending is expected to increase in the second quarter of 2015, which will serve as a stimulus to boost economic growth,"  Tirta Segara of BI remarked.          The same opinion is also expressed by  M. Misbakhun, a member of Commission XI on financial affairs of the House of Representatives. He said economic growth will improve in the second quarter of 2015 due to an increase in capital and routine expenditures in the budget.          He considered that the slowdown in economic growth did occur in the first quarter of 2015 as reported in the government statistics. Misbakhun noted that the global economic slowdown had an impact on Indonesia's economic growth in the first quarter.          "The slowdown is visible in the revised projection data related to Indonesia's export destination countries such as China and Singapore. Export projections for China were revised from 7.4 percent to 7 percent, while Singapore from 4.9 percent to 2.1 percent," he explained.          However, the government has completed the approval process for the 2015 revised budget in the House and it will begin disbursing funds for development projects.          "I am optimistic that the economic growth will be higher in the second quarter of 2015 if the technical constraints related to the disbursement of the revised budget in 2015 can be solved," Misbakhun noted.***3*** (T.A014/H-YH) (T.A014/A/A. Abdussalam/A/Yosep) 10-05-2015 23:41: