Friday, May 27, 2011

Indonesia Unveils Giant 2025 Economic Plan

The government on Friday outlined its blueprint for the country’s development over the next 14 years, presenting a series of startling numbers, including some Rp 4,000 trillion ($470 billion) in investment and a predicted 550 percent rise in GDP.

The Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) would see 17 infrastructure projects worth a total of Rp 190 trillion start this year, said Hatta Rajasa, coordinating minister for the economy. The projects are part of the Rp 4,000 trillion investment plan.

Launching the master plan — a part of Indonesia’s bid to become one of the world’s 12 largest economies by 2025 — President Susilo Bambang Yudhoyono outlined five major obstacles: slow bureaucratic processes, selfish regional governments, investors failing to meet commitments, unfavorable policies and political gridlock.

“We can’t predict what will happen 15 years from now,” Yudhoyono said. “There are two possibilities, Indonesia can successfully implement this master plan and achieve its goal or it can fail. I am not about to see it fail.

“Our future is negotiable and it’s up to ourselves and God to change the future.”

The master plan foresees per-capita income soaring to up to $16,00 in 2025 from last year’s $3,000, and gross domestic product possibly reaching up to $4.5 trillion in 2025 from $700 billion in 2010, when the economy was the world’s 17th largest.

“It’s impossible to achieve our long-term economic goals without the master plan,” Yudhoyono said. “We also can’t rely wholly on market mechanisms. The government’s role, as a visible hand, is important.”

The blueprint is based on six economic corridors, each with specific competitive advantages. Sumatra has been pegged as a center for agriculture and energy, Kalimantan for mining and energy, Sulawesi and North Maluku for agriculture and fisheries, Bali and Nusa Tenggara for tourism and food production, Papua and Maluku for natural and human resources and Java for industry and services.

The MP3EI earmarks Rp 544 trillion for infrastructure projects through 2014, with state companies pledging to contribute Rp 836 trillion and business groups, represented by the Indonesian Chamber of Commerce and Industry (Kadin), promising to invest Rp 1,350 trillion over that period.

Kadin chairman Suryo Bambang Sulisto said the plan had been a long time coming. “We see this not only as a plan to accelerate development, but a golden opportunity to invest,” he said. “Private sector participation sends a strong signal to foreign investors that the government is going all out in implementing the master plan.”

Investors and local businesses have long complained about infrastructure inadequacies and bottlenecks in the economy.

Important legislation needed to boost infrastructure development, such as the land acquisition law, also remains uncertain, and overlapping bureaucracies due to decentralization continues to hinder investment. Jakarta Globe

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