Indonesia’s macroeconomic fundamentals are sound and the economy continues to grow unabated despite the global economic downturn. The latest institution to give the country a thumbs up is the Asian Development Bank, which revised its 2009 growth forecast for Indonesia from 3.6 percent to 4.3 percent.
Passengers lining up on Monday to board a TransJakarta bus on Jalan Buncit Raya after a visit to Ragunan Zoo. TransJakarta is offering special Idul Fitri holiday services to the zoo and Ancol theme park through Sunday. (Photo: Afriadi Hikmal, JG)
The ADB said “robust growth in private consumption, underpinned by easing inflation and a surge in election-related government spending, drove better than expected economic growth in the first half of 2009.”
While we can take comfort in the knowledge that the country’s economy remains healthy, we must be cognizant of the underlying message in recent economic forecasts: The economy can continue to grow as a result of consumer demand, but unless public and private investment in infrastructure rises dramatically, the country faces severe bottlenecks down the road.
It’s thus heartening to note that industrial estate developer PT Jababeka is answering the government’s call for increased public-private sector partnerships to accelerate infrastructure development. Jababeka will form a consortium with other major industrial estate developers to build an integrated international dry port near Jakarta’s Tanjung Priok.
With nearly 70 percent of the country’s goods flowing through Tanjung Priok, the new $200 million port will ease congestion and allow importers and exporters to expedite the movement of goods in and out of the country. This will increase exports, which have fallen sharply, and lower transportation costs, making Indonesian goods more competitive.
It’s clear that more such projects are urgently needed. The National Development Planning Board (Bappenas) has been tasked with accelerating the development of key infrastructure projects in strategic sectors. The list is long — the country needs more sea and airports, roads and bridges, telecommunications networks and power and water plants.
Under the Bappenas plan, Jakarta will upgrade and build new sea and airports, as well as develop new highways given that most major industrial estates are situated near the capital. Private sector participation will be crucial for this plan to be realized.
But while this plan is under way, the government must also continue with efforts to streamline the bureaucracy and reduce red tape. Getting goods through customs remains one of the biggest challenges for exporters and importers alike. It must be noted that the rampant corruption of the past has been addressed, but bureaucratic bottlenecks remain.
Indonesia’s economic promise is clear for all to see. That promise will only be realized, however, with hard work and dedication to removing bottlenecks through improved infrastructure and by empowering the private sector to play a larger role in this effort.
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