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Indonesian govt to lower growth target amid worsening economic outlook
Publication Date : 23-08-2013
In response to surging inflation, weak exports and the widening of the current account deficit the government reviewed its growth target.
Industry Minister MS Hidayat, in Jakarta on Thursday, said that President Susilo Bambang Yudhoyono would announce a new growth target along with the new economic stimulus package on Friday.
Hidayat said the target would be lowered from the current 6.3 per cent but he declined to elaborate further.
According to him, the new economic policy package would include tax breaks to help labour intensive industry cope with high operational costs so the dismissal of workers could be avoided.
Indonesia’s economy grew below 6 per cent in the second quarter of this year for the first time since 2010.
Gross domestic product (GDP) rose only 5.81 per cent in the three months ending June 30 from a year earlier, below the government’s target of 6.3 per cent for 2013.
The World Bank also cut its forecast for Indonesian growth in 2013 to 5.9 per cent from a previous estimate of 6.2 due to its dulling economic outlook.
Coordinating Economic Minister Hatta Rajasa said that the government’s economic team had finalised three points policy relaxation, easing of restrictions and revision of the negative investment list for the new economic policy package.
“We have also discussed topics related to investment already in the pipeline. We will be examining all the hurdles before we release the list. We hope by doing this, our current investments as well as those in the pipeline would run smoothly,” he said at the ministry in Jakarta on Thursday.
In addition to a more conducive policy to boost investment, the economic policy package would also include a number of monetary and non-monetary programs to stabilize the falling rupiah and the drop in share prices.
Hatta added that the ministry was still reviewing one or two items on the negative investment list as it was obliged to complete the list ahead of the upcoming ASEAN Economic Community, saying that the list must be “investment-friendly”.
Besides members of the economic team in the cabinet, senior executives from the Indonesian Employers’ Association Sofyan Wanandi and Anton Supit were also invited to attend the meeting.
Apindo chairman Sofjan said his organisation had conveyed their suggestions and recommendations so that the new economic policy would benefit all business players.
In order to help stabilise the stock market, State-Owned Enterprises Minister Dahlan Iskan said his office had asked state-owned enterprises listed on the exchange to buy back their shares using internal cash.
Dahlan said publicly listed state enterprises had already obtained shareholders’ approval for the buyback programme during their latest general shareholders’ meeting.
“They do not need to hold another meeting. For those who have not held the meetings, I give them my approval,” he said at the Coordinating Economic Ministry in Jakarta on Thursday.
He declined to provide details of the amount of funds allocated for the buyback.
Dahlan did say that the government would also come up with policies regarding government bonds and small-order execution pension funds.