Sign up | Log in



Home  >>   Daily News  >>   Indonesia News  >>   Economy  >>   Indonesia should shift spending to growth
NEWS UPDATES 1 November 2010

Indonesia should shift spending to growth

Related Stories

October 28, 2010
Indonesia wants common Asean currency

October 7, 2010
Indonesia to sell 60 percent of oil stocks

October 6, 2010
Indonesia to raise sustainable economy issues

October 1, 2010
Indonesian growth forecast looks good

September  30, 2010
Indonesia set for rating upgrade

September 17, 2010
Corruption a threat to Indo economy

September  10, 2010
 Indonesia more competitive than ever

The club of developed economies, the Organization of Economic Cooperation and Development (OECD) ha s suggested that Indonesia shift government spending away from inefficient subsidies toward programs that will help the country meet its ambitious medium-term growth and poverty reduction targets

According to its Economic Survey of Indonesia 2010, the Organization of Economic Cooperation and Development (OECD) said the Indonesian economy had shown strong resilience during the global economic crisis, but it needed to cut energy subsidies to maintain sustainable economic growth.

Indonesia's real GDP grew by 4.6 percent in 2009 - the third highest level in the G20, after China and India - and is on track for a 6 percent growth rate this year and next.

"Indonesia's recent growth performance has been impressive, but there is no room for complacency," OECD Secretary-General Angel Gurr?a said during the launch of the report with Finance Minister Agus Martowardojo in Jakarta.

To capitalize on this opportunity, Gurr?a said the government had to pursue its reform agenda, including better tax collection and more effective government spending would free up funding for infrastructure, education and health care initiatives."

Topping the list of proposed spending reforms is the rapid elimination of consumer energy subsidies, which are expected to cost IDR 144 trillion (USD 15.7 billion) in 2010, or about 2.3 percent of GDP.

These subsidies keep energy prices artificially low, distort consumption and investment decisions and principally benefit wealthier households. The OECD welcomes the government's pledge to eliminate fuel subsidies by 2014. "Significant budgetary resources can be saved by phasing out these inefficient energy subsidies," Gurr?a said.

Ending energy subsidies would allow Indonesia to dedicate greater fiscal resources to its massive long-term infrastructure challenges, which are key to meeting future growth objectives, according to the report.

Indonesia's Medium-Term Development Plan calls for IDR 1 429 trillion (USD 157 billion) in new infrastructure investments over the 2010-14 period, representing just under a quarter of the current GDP.

Authorities expect public-private partnerships (PPPs) to fund nearly 65 percent of the projects, in sectors that range from road and sea transport to power and water supply, telecommunications and sanitation.

The OECD report says that the Indonesia's PPP goals would be difficult to achieve, unless existing regulatory uncertainty and barriers to foreign investment are reduced.

To boost chances of attracting much-needed private sector investment, a new OECD Investment Policy Review of Indonesia, also released on Monday, suggests Indonesia should lift restrictions on foreign investment, improve access to land, better enforce competition rules, further strengthen protection of investor assets and continue cutting red tape.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
  Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand