The Indonesian Chamber of Commerce and Industry (KADIN) has forecast that the country’s economy will grow between 5.2 percent and 5.8 percent this year, lower than its target of 5.8 percent.
According to KADIN Chairman Suryo Bambang Sulisto, the rupiah’s depreciation against the dollar, lower commodity prices and perception of difficulty in investment, especially in the mining sector, have weighed on economic growth. The government this month implemented a ban on raw mineral exports.
He said that in 2014, the primary sectors of agriculture and mining will grow modestly due to current problems, especially in the mining sector, which faces uncertainty over the value-added policy.
Meanwhile, the manufacturing sector will not grow higher than in 2013 due to challenges stemming from rising production costs, which are a result of the currency’s fluctuation and pressure on labour wages, he added.
Suryo said that the main driver of growth this year will come from the services sector, particularly from logistics and communications. Businesspeople also lamented the rising cost for financing which stemmed from the central bank decision to raise the key rate five times to 7.5 percent last year.
Didik Rachbini, KADIN’s chief economist, said that an internal KADIN survey found that the majority of business people believe that further monetary tightening will continue and result in dire consequences.
“Monetary tightening is only one of the available policies,” said Didik, adding that the government must pay greater attention on improving manufacturing by increasing state spending on infrastructure.
He called on all presidential hopefuls to be prepared in making difficult decisions to remove the fuel subsidy, which has been a burden on the state budget.-VNA
According to KADIN Chairman Suryo Bambang Sulisto, the rupiah’s depreciation against the dollar, lower commodity prices and perception of difficulty in investment, especially in the mining sector, have weighed on economic growth. The government this month implemented a ban on raw mineral exports.
He said that in 2014, the primary sectors of agriculture and mining will grow modestly due to current problems, especially in the mining sector, which faces uncertainty over the value-added policy.
Meanwhile, the manufacturing sector will not grow higher than in 2013 due to challenges stemming from rising production costs, which are a result of the currency’s fluctuation and pressure on labour wages, he added.
Suryo said that the main driver of growth this year will come from the services sector, particularly from logistics and communications. Businesspeople also lamented the rising cost for financing which stemmed from the central bank decision to raise the key rate five times to 7.5 percent last year.
Didik Rachbini, KADIN’s chief economist, said that an internal KADIN survey found that the majority of business people believe that further monetary tightening will continue and result in dire consequences.
“Monetary tightening is only one of the available policies,” said Didik, adding that the government must pay greater attention on improving manufacturing by increasing state spending on infrastructure.
He called on all presidential hopefuls to be prepared in making difficult decisions to remove the fuel subsidy, which has been a burden on the state budget.-VNA
