INVESTMENT CONTRIBUTES SIGNIFICANTLY TO INDONESIA'S ECONOMIC GROWTH by Fardah

  Jakarta, Nov 11, 2017 (Antara) - The Indonesian government is optimistic of its economic growth, as the nation has managed to record a seven percent growth in investment this year, the highest over in the past several years.

         The country's economy grew 5.06 percent year-on-year in the third quarter of 2017, driven mainly by the consumption sector, and partly owing to the growing investment rate, according to the Central Bureau of Statistics.

         "The growth rate of 5.06 percent, perhaps, was not up to expectations, but some areas, in terms of the data, were very interesting. Investment grew seven percent, the highest in the past several years. This is what we want," Head of the National Development Planning Board and Minister for National Development Planning Bambang Brodjonegoro noted while opening the Indonesia Infrastructure Week 2017 in Jakarta on November 8, 2017.

         Moreover, the construction sector grew seven percent, and positive performance was also recorded in the manufacturing sector, which grew more than four percent, though not up to expectations.

         "The investment sector grew seven percent, the manufacturing sector grew four percent, and the construction sector also grew seven percent. This means there has been a lot of investment in the construction sector, either in property or infrastructure. We begin to see that investment in infrastructure is not only from the government but also from the private sector," he noted.

         Altogether, Indonesia's gross domestic product (GDP) structure by spending in the third quarter of 2017 was dominated by household consumption, reaching 55.68 percent of the GDP.

         Other components that contributed significantly are the gross fixed capital formation (PMTB), or investment, with a contribution of 31.87 percent; exports of goods and services, 20.50 percent; and government consumption, 8.80 percent.

         Earlier, Vice President Jusuf Kalla had remarked that the increase in domestic and foreign investment is important to boost economic growth.

         "Boosting growth requires more investment and exports," Kalla had stated on November 7, 2017.

         In fact, investment has grown positively in the third quarter owing to business confidence in the country's economic conditions, according to Indonesian Finance Minister Sri Mulyani.

         "Investment has grown seven percent due to the confidence of business players," she remarked here on Wednesday.

         She pointed out that the realization of PMTB growth, reaching 7.11 percent during the period, had surpassed the expectations of the government that had, in fact, only forecast it at some six percent.

         In view of this, she remarked that the government will continue to maintain the momentum, so that the spending component can steadily contribute to the national economy to ensure more optimal growth.

         Indonesia has recorded an increase in investment realization in the third quarter this year.   
    According to Thomas Lembong, chief of the Investment Coordinating Board (BKPM), the investment growth demonstrated that economic transformation, launched by President Joko Widodo, has begun to show results, which means consumption had shifted to production and investment.

         "The shift from consumption to production and from consumption to investment can be witnessed clearly," he revealed.

         Although investment growth in the third quarter was weaker than the first semester, Lembong stated that it was normal in view of the strong growth from the start of the year and also due to external influence.

         "I think the strong growth in the first and second quarters was due to the success of the tax amnesty program and the upgrading of rating by S&P. This was the base for comparing them. I think the trend from quarter to quarter is subject to fluctuation," he concluded.

         The realization of investment during the period was up 13.7 percent, to Rp176.6 trillion, as compared to Rp155.3 trillion during the same period last year, according to the BKPM.

         "The realization of domestic investment in the third quarter of 2017 had reached Rp64.9 trillion, while foreign investment reached Rp111.7 trillion," Azhar Lubis, the BKPM deputy for control of implementation of capital investment, stated.

         Hence, during the period from January to September 2017, the realization of investment had reached Rp513.2 trillion, comprising Rp195.7 trillion domestic and Rp318.5 trillion foreign investments, or 37.9 percent and 62.1 percent, respectively.

         "The total investment realization from January to September 2017 had reached 75.6 percent of the target set at Rp678.8 trillion for 2017," he noted.

         The realization of investment in the third quarter absorbed 286,497 workers, comprising 109,711 in domestic investment projects and 176,786 in foreign investment projects.

         "The figures showed that investment played a key role in creating jobs for people," he remarked.

         The BKPM recorded that the realization of investment in Java during the third quarter had reached Rp101.1 trillion, while it was at Rp75.5 trillion outside Java.

         As compared to the same period in 2016, the realization of investment in Java rose by 15.4 percent, while it was at 11.5 percent outside Java.

         In total, investment realization outside Java during the January-September 2017 period was recorded at Rp230.4 trillion, or 44.9 percent, while in Java, it was recorded at Rp282.8 trillion, or 55.1 percent.

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(T.F001/A/BESSR/F. Assegaf) 11-11-2017