Govt to boost investment to accelerate growth

The Jakarta Post, Jakarta

The government will work hard to try to boost investment in the second quarter of this year in order to accelerate economic growth following a dismal first quarter performance, Finance Minister Sri Mulyani Indrawati has said.

Sri said that weak investment was the main factor behind the slower economic expansion during the first three months of this year.

"We'll focus on investment, which is still weak," she told reporters Tuesday as quoted by Antara following a ceremony to inaugurate senior officials in their new posts at the ministry.

The Central Statistics Agency (BPS) reported Monday that the economy grew by 4.6 percent in the first quarter of this year from the same quarter of last year, the slowest growth in almost two years, as household consumption and investment weakened due to the impact of last year's two rounds of fuel price hikes and high interest rates, and the failure of the government to boost spending due to bureaucratic delays.

Sri Mulyani said that the slower pace of economic expansion had been expected.

But she expressed optimism that growth would be higher in the second quarter as consumer spending was once again on the rise while state ministries and agencies had started spending on development projects.

"What needs to be carefully observed is the investment variable. This means that we must work hard to improve the investment climate here," Sri Mulyani said.

She said that investment in the agriculture sector was already quite robust, while the most gloomy picture was found in the manufacturing sector.

She said that to help accelerate investment, the government would provide "facilities" to allow the banks to increase lending to the corporate sector, and would improve coordination with local administrations to eliminate investment hurdles and encourage companies to raise funds on the capital markets.

The government expects the economy to grow by around 6.2 percent this year from 5.6 percent last year, while it projects that Southeast Asia's largest economy will expand by 6.4 percent next year. Increasing economic growth is crucial to resolving the chronic unemployment problem in the country.
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