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NEWS UPDATES 17 August 2010

Indonesia president wants to “uncage” economy

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Indonesia's president said that he wants Asean’s biggest economy to stop being a "caged tiger" and unleash annual growth of nearly 8 percent by 2014.

"It's time that Indonesia not only walks, but walks faster and begins to run. It's time that we don't remain as a caged tiger but be a nation that is competitive on the international scene," President Susilo Bambang Yudhoyono said.

Yudhoyono said Indonesia should aim to hit growth of 7.7 percent in four years, which he said would create 10.7 million new jobs and slash poverty by 8-10 percent.

"With careful planning and proper implementation, we are optimistic in reaching the target," he said in a speech to parliament on the eve of Indonesia's Independence Day.

"Accelerating economic growth is expected to increase job opportunities and reduce the unemployment level," the president added.

Later Monday, Yudhoyono presented his draft budget for 2011 in which he forecast a deficit of 1.7 percent of gross domestic product next year, wider than the 1.5 percent gap expected this year.

He also proposed to increase capital spending next year by 28 percent to 121.7 trillion rupiah (13.5 billion US dollars), mainly to finance infrastructure projects such as irrigation, transport, housing, and water resources.

He added that total infrastructure investment between 2010 and 2014 is expected to be 161 billion US dollars.

Indonesia's infrastructure has suffered from years of neglect, which is hindering economic growth, and analysts blamed a lack of legal clarity and difficulties in land clearing as the main obstacles for investment in the country.

Yudhoyono said the government aimed to earn 1,086 trillion rupiah in revenue next year, and spend 1,202 trillion.

The government will finance the deficit by issuing bonds and borrowing from multilateral lenders, he said without giving details.

Indonesia's economy will likely expand 6.3 percent next year, faster than the six percent expected in 2010, with foreign investment soaring 46 percent in the first six months, as confidence grows after the global financial crisis.

The dollar is expected to average 9,300 rupiah next year, higher than the 9,200 predicted for this year.

Indonesia emerged safely from the global downturn and its stock market is one of the best-performing in Asia because of strong domestic demand and strong exports of resources such as coal, palm oil and natural gas.

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