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Indonesian president warns on growth

August 16, 2012
JAKARTA: Indonesia risks losing a “golden opportunity” to boost economic growth if it fails to improve infrastructure and streamline investment regulations, President Susilo Bambang Yudhoyono warned today.

Last year, Southeast Asia’s largest economy grew at a robust 6.5 percent and foreign direct investment was a record US$20 billion.

But Yudhoyono said investment and growth were both at risk without a good investment climate and improved infrastructure.

“We realise that we still have a number of constraints regarding the investment climate and legal uncertainties that many have complained of,” he said in a speech to parliament on the eve of the country’s independence day.

“This has the potential to create uncertainty… and loss of opportunity to achieve higher and better-quality growth,” he said.

A secure investment climate and easier business permits would not only encourage more investment in Southeast Asia’s largest economy, they would also speed up the development of infrastructure, he said.

“The potential and opportunities will spread across our country, which will certainly attract investments. This is a golden opportunity that must not be wasted,” he said.

“The availability and quality of infrastructure is a necessary condition to optimise the golden opportunity”, he added.

In his wide-ranging speech, he also stressed the need to eradicate corruption and added that “the law must be enforced… and should provide a deterrent effect”.

Investors consistently cite corruption and lack of reliable infrastructure as major hurdles to business, in a sprawling archipelago of 17,000 islands where companies are sometimes forced to build their own roads, bridges, railways and ports.

The economy is projected to grow at around 6.5 percent again this year.

Yudhoyono is expected to unveil the draft budget for 2013 later today.



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