Lead Economist of the World Bank Ndiame Diop said here on Tuesday that investment would be the main driver of economic growth in Indonesia.
"The investment sector accounted for 40 percent of the national gross domestic product (GDP) during the third quarter of 2012," he noted.
Diop stated that the economic recovery of Indonesia`s trade partners would also support the nation's economic growth through increased exports.
"These factors have helped Indonesia achieve fast economic growth over the past few years, as investment reached a third of the total goods and services expenditure in Indonesia and increased 10 percent year-on-year during the third quarter," he pointed out.
"Favourable policies attract investors to a country," Diop noted.
He stated that the government should effectively communicate the benefits of its new regulations in order to create and maintain a conducive investment climate in the country, which in turn would lead to strong economic growth.
"However, there are many challenges facing the investment sector one of the biggest being the minimum wage standard issue," Diop pointed out.
"For the example, the regional minimum wage (UMR) in Jakarta has increased by 44 percent, reaching Rp2.2 million, which is much higher than that of other countries. This will significantly affect Indonesia's investment and business competitiveness," he said.
"The authorities should work towards a minimum wage negotiation process that is holistic, technical and inclusive, involving all stakeholders, including the informal sector's employees and labourers," Diop continued.
He stated that Indonesia's economic growth would also be significantly influenced by global economic developments, given that its main trade partners were China, the US, and European countries.
"At this time, the negotiations regarding the fiscal cliff in the US, the economy crisis in Europe and the economic slowdown in China have not significantly affected the GDP growth of Indonesia," Diop said.
Therefore, he urged the government to step up efforts to ensure that the Indonesian economy continued to grow at the projected rate.
"Given the uncertainties surrounding the global economy, this is not the right time to feel satisfied," Diop said.
(A060/INE/a014)
Editor: Suryanto
Copyright © ANTARA 2012
