If the country wants a six-percent-plus economic growth, it needs to have productive investments."Jakarta (ANTARA News) - Indonesia needs higher investments in order to achieve its annual economic growth target of above six percent, according to World Bank executive director Sri Mulyani Indrawati.
"If the country wants a six-percent-plus economic growth, it needs to have productive investments. Relying solely on consumption could worsen the country`s balance of payment," she said at the 2nd Congress of Indonesian Diaspora here on Monday.
Mulyani, former economic minister of Indonesia, said the Indonesian government must improve the investment climate of the country in order to attract capital from foreign investors, especially into downstream sectors that can provide added value to Indonesian products.
She stated that there was plenty of room for improvement in Indonesia's industrial production output given the country;s large workforce. However, Mulyani continued, supply and demand must be designed in a way that supports the nation's manufacturing sector.
Noting that Indonesia`s exports and economic growth have been hit amid the prevailing global uncertainties, she said the Indonesian government must strive to maintain the country`s economic stability through the implementation of appropriate structural policies.
"Right now, the global economic situation has changed and the Indonesian economy has weakened due to external factors. It has been a challenge to safeguard the domestic economy from the impact of the US quantitative easing policy," she said.
Mulyani stated that the Indonesian government must make adjustments by taking into account external conditions, because the global economic situation is not similar to that of 2008 which had led to the financial crisis.
"Fiscal expansion and monetary policy will not always be the answer. Long and mid-term adjustments must be made in order to minimize the impact of global developments," she said.
Mulyani revealed that the World Bank was unlikely to change its projection on Indonesia`s economic growth for 2013, which has been set at 5.9 percent, adding that Indonesia's growth projection figures were still higher than those of other developing countries such as Brazil and India.
"For 2013, global conditions are likely to remain weak, and almost all developing countries have revised their growth targets. However, the Indonesian economy is expected to grow at 5.9 percent, which is still much higher than that of Brazil and India," she said.
(Reporting by Satyagraha/H-YH/INE/KR-BSR/A014)
Editor: Priyambodo RH
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