SBY: We’ll Spend To Prop Up Economy

The Jakarta Globe, Ardian Wibisono, 21 December 2008

 

Susilo Bambang Yudhoyono (JG Photo)

 

The national government will continue to provide fiscal incentives and speed up infrastructure development in the next two years to maintain domestic real sector momentum amid the global economic crisis, President Susilo Bambang Yudhoyono said on Sunday. 

The policies are aimed at maintaining consumer buying power through job creation, which will also help the private business sector survive the ongoing turmoil, he said. 

“Our homework is first to maintain real sector movement through whatever fiscal incentives are needed,” Yudhoyono said during an address to the fifth annual meeting of the Indonesian Chamber of Commerce and Industry, or Kadin. 

“We also have decided to intensify and expand infrastructure development .?.?.?. I have checked each project one by one, where it will be located and how many workers it will employ.” 

The government has set aside Rp 100 trillion ($9.2 billion) for capital spending in 2009, mostly for infrastructure development, said Finance Minister Sri Mulyani Indrawati. 

Yudhoyono also said the government is considering slashing fuel prices again as well as continuing to work with public and private companies to prevent mass layoffs. It may also lower prices on staple food items including cooking oil. 

The president called for further cooperation between his government and the private sector, which he asked to continue giving supporting and advice on riding out the crisis. 

His comments appeared to represent a shift in government attitudes toward the private sector, given that previous administrations did not fully engage with Kadin. 

“I would like to state that in such difficult times and with the full challenges right now, the government and the business world represented by Kadin need to continue to cooperate in building a partnership to seek solutions and manage the problems we are facing right now.” 

Mohammad S Hidayat, the chairman of Kadin, said he supports the government’s plan to maintain consumer buying power, which could bolster the domestic market given that exports are slowing. 

“The only thing to resolve decreasing export performance is to strengthen the domestic market. This is because seeking new markets for exports takes longer than a year,” he said. “It takes quite a bit of time and support from our national banking network abroad.” 

Hidayat also called on the government to take protectionist measures by banning imports of some goods that are already produced domestically. 

“There should be a regulation for that, but it should exclude imports of production goods and raw materials for domestic industries,” he said. 

Sofyan Wanandi, chairman of the Indonesian Employers Association, said the government should only give incentives to sectors that create jobs and use locally produced raw materials, including the domestic housing industry. 

Winang Budoyo, an economist at PT Bank CIMB Niaga Tbk, said the strategy to focus on infrastructure projects and fiscal incentives would be welcomed as the country cannot rely on exports to support growth next year. 

“The government must be all out to strengthen the domestic market and consumer demand so that growth will not fall sharply,” Winang said. He expects economic growth to slow to 5 percent in 2009, down from about 6 percent this year.

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