2013, Indonesia Still Optimistic

Entering 2013, should Indonesian remain be optimistic? The answer is absolutely, yes! Various institutions are very confident Indonesia's economy will grow above 6 percent next year. National Economic Committee (KEN) predicts Indonesia grew from 6.1 to 6.6 percent in the year of water snake according to Chinese tradition.  

Chairman KEN Chairul Tanjung states driving economic growth mainly from the consumption and investment sectors. Consumption will contribute 2.6 to 2.9 percent, investment (2.7 to 2.8 percent), and exports (0.0 to 0.2 percent).

Institute for Development of Economics and Finance (Indef) also predicts 2013 economic growth at 6.3 to 6.4 percent. Indef estimates investment and consumption to be the main driver of growth.

International agencies also believe the Indonesian economy will grow. World Bank report last October stated Indonesia will grew 6.3 percent in 2013. International Monetary Fund (IMF) estimates  Indonesia may grow 6.3 percent next year.

With many variations, all predictions expressed Indonesia's economy will continue to grow. However, economic challenges facing Indonesia is not easy.

Business obstacles in Indonesia have shifted. In previous years, the major problem are firstly corruption, secondly infrastructure, third corruption. Now, the bureaucracy becomes a major problem, then infrastructure and corruption. This means that eradication corruption is getting better, but bureaucracy has not improved significantly.

Minister of Administrative and Bureaucratic Reform Azwar Abubakar, says bureaucracy is still ineffective due to corruption, collusion and nepotism. Improving bureaucracy continues, such as rising salaries programs year after year for civil servants.

Unfortunately, some employees still grab with authorized manner official travel money. For 2010, based on the BPK audit, irregularities travel expenses reached Rp89, 5 billion around US$9.3 million.

For the first half of 2012, based on the results of BPK audit, irregularities travel expenses have reached a ceiling of Rp77 billion or US$8.2 million form Rp24 trillion or US$2.5 million budgeted for the trip.  

Infrastructure must develop for inviting business from abroad. Indonesian government launched Master Plan for the Acceleration of Development and Economic Development Indonesia (MP3EI) on May 27, 2011. Infrastructure of 135 projects worth more than Rp490 trillion or US$51 billion has been entering cornerstone phase.

Based on data from the National Development Planning Agency (Bappenas), infrastructure investment from the state budget, budget, state-owned and private shows an upward trend. In 2010, infrastructure budget reach Rp263, 9 trllion about US$27,4 billion. In 2011 investments reached Rp314, 1 trillion or US$32,8 billion.   

Infrastructure investment was set to Rp438, 1 trillion next year or around US$45, 6 billion. Bappenas requests local government could streamline the maximum budget to build infrastructure in the area.

The World Bank urged policymakers East Asia and the Pacific to continue to manage and suppress the growth of poverty. In an environment of global uncertainty, maintaining a consistent policy framework reforms will be important, especially in the face of the approaching 2014 elections in Indonesia. The election will vote for representatives and new president of Indonesia. In will be tough time for Indonesian government to stabilizing political situation.