Jakarta, Jan 27 (Antara) -- The government has lowered its economic
growth assumption from 5.8 percent to 5.7 percent in its revised state
budget for 2015 after taking internal and external factors into
consideration.
Bank Indonesia (BI), the central bank of the country, has welcomed the
move, stating that Indonesian's economic growth assumption, which the
House of Representatives (DPR) and the government only recently agreed
to bring down to 5.7 percent, reflected the conditions of the global
economic slowdown.
The government and Commission XI of the DPR agreed to lower the
economic growth assumption from 5.8 percent in the state budget for 2015
to 5.7 percent in the draft of the revised state budget for the year.
"The 5.7 percent growth was decided upon after extra efforts were put
in to deliberate over the budget expenditure and quantitative easing in
Europe and Japan," Finance Minister Bambang Brodjonegoro explained
during a hearing with Commission XI of the DPR on Monday (January 26)
night.
This change will be taken to the Budgetary Body of the parliament for further deliberation.
Governor of Bank Indonesia Agus Martowardojo said that the government
could set a higher economic growth target by bringing about structural
changes in the expenditure sector. After all, it has adequate fiscal
room following the reallocation of the energy subsidy.
"External factors that the government should be aware of are whether
its sources of funding can be relied upon and whether the reallocation
of the fuel oil subsidy can be realized. This largely depends on what
project the government selects to complete in 2015," he added.
The baseline of the economic growth in 2015 is predicted to decline due
to global economic conditions, as well as the drop in worldwide
commodity prices, Brodjonegoro stated.
Despite the current scenario, the government is doing its best to boost
the economy as it still has fiscal room, which will be utilized for
infrastructure development, and financial additions from the monetary
stimulus from the European Central Bank.
"Due to the global economic downturn, the baseline of the country's
economic growth is 5.1 percent, with an additional 0.5 percent from
extra efforts towards changing the expenditure pattern and reallocating
the fuel oil subsidy, along with another 0.1 percent from predicted
positive impacts of quantitative easing," the finance minister pointed
out.
According
to Brodjonegoro, the most achievable growth rate in 2015 would be 5.6
percent because the monetary stimulus from Europe would not have
immediate impacts; it would need several years for the flow of funds to
reach Indonesia.
"We should not be too optimistic because there is a time lag of one
year. We should know this from our experience when the United States
conducted quantitative easing. That was back when the Chinese economic
growth was still high. Now, China's economy is not doing that well," he
remarked.
Furthermore, the government and the DPR agreed upon a number of other
macroeconomic assumptions, as well, during the hearing with Commission
XI that was chaired by Fadel Muhammad on Monday.
The rupiah exchange rate was set at Rp12,500 per US dollar, the
inflation rate at 5.0 percent, and three-month state securities (SPN) at
6.3 percent.
On the occasion, the commission also set development assumptions for
the government to achieve, according to which unemployment rate was set
at 5.6 percent, poverty rate at 10.3 percent, gini index ratio at 0.4
percent, and human development index at 69.4 percent.
The new macroeconomic assumptions were finalized after taking those set
by the previous government into consideration, along with suggestions
from Bank Indonesia and factions of the DPR that attending the meeting.
Factions of the National Mandate Party (PAN), the United Development
Party (PPP), and the National Awakening Party (PKB) initially proposed
the most realistic economic growth of 5.6 percent, but other factions,
at the beginning, agreed with the government's first proposal of 5.8
percent, as mentioned in the initial draft of the 2015 revised budget.
Following calculations, the rupiah exchange rate was set at Rp12,500
per US dollar, lower than the initial proposal of Rp12,000, because the
government believes that the rate was more realistic for the conditions
predicted for 2015.
All the macroeconomic assumptions will be taken to the DPR's Budgetary
Body for deliberation and drafting of the 2015 revised state budget. The
assumptions for oil lifting and the Indonesian Crude Price (ICP) are
still being debated by Commission VII of the parliament.
Besides coming to decisions on macroeconomic assumptions at the working
meeting, the government and Commission XI reached a number of other
decisions, as well. These included Commission XI's request to utilize
the available fiscal room to accelerate the rate of poverty alleviation,
lower the gini and human index ratios, reduce the structural and
regional gaps, and enhance employment and business opportunities.
Commission XI wants the fiscal room to be utilized for the benefit of
medium- and large-scale businesses and for the advancement of micro
businesses by providing them with an additional budget of Rp5 trillion
so quality economic growth can be achieved.
On the assumptions already set by the government, Bank Indonesia
observed that they reflected the government's understanding of the
global economic condition.
"I
see that the government, which set the economic growth target at lower
than 5.8 percent, showed its understanding of the fact that worldwide
economic growth is undergoing reforms that affect Indonesia's economy,"
Governor of Bank Indonesia Agus Martowardojo noted.
Martowardojo
also pointed out that Indonesia can use the momentum of the
improvements in the investment climate. This sector has always made high
contributions to the economic growth, besides household expenditures.
"If
the concept of an integrated one-stop service can be realized, it would
have good impacts on the economy. It has been a long-awaited structural
reform," Martowardojo said.
With regard to this requirement, Head of the Investment Coordinating
Board (BKPM) Franky Sibarani affirmed that the board will do its best to
accelerate the issuance of investment permits through an integrated
one-stop service (PTSP).
"We have been discussing ways to simplify the processes involved in
issuing investment permits. I believe we will disclose the number of
days required to issue a license in the near future," Sibarani stated at
the inauguration of the Jakarta branch of PTSP BKPM here on Monday.
He made the remarks while observing that many licenses that take
hundreds of days to be issued. A power plant investment permit, for
example, requires 52 licenses and 930 days for issuance.
"For the time being, I can assure you that only half of the 930 days
will be needed for a license to be issued. We are still discussing ways
to speed up the process," he added.
Martowardojo further noted that to expedite and simplify the process of
issuing investment permits, his side should coordinate with related
technical ministries.
Moreover, while inaugurating the Jakarta branch of PTSP BKPM, President
Joko Widodo urged the investment board to simplify and accelerate the
procedures involved in issuing investment permits in Indonesia.
"The inauguration of the integrated one-stop service is only the first
step. Later, I will order for the permit issuing processes to be
simplified and accelerated so that they will no longer be complicated,"
he stressed.
"While the economic growth of other countries declined this year, we
recorded a 5.1 percent growth, and have set a new target of 5.6
percent," the president concluded.
***3***
(T.A014/INE)
EDITED BY INE
(H-YH)
(T.A014/B/BESSR/A/Yosep) 27-01-2015 19:57:0 |
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