From GoI

Growth Rate Starts to Rise

Gross domestic product grew 3.49% in the third quarter from the second quarter, faster than expected, as the World Bank said in a report that the economy was in position to boost growth to between 6% and 6.5% next year. Compared with a year earlier, GDP grew 5.52% last quarter, outpacing a downwardly revised 5.08% on-year growth figure in the second quarter.

Growth was strongest in agriculture, which put on 5.36% during the quarter, and the lowest was mining and extractive industries, with growth of 1.12%, according to the Central Statistics Bureau. Compared with the same period last year, GDP was up by 5.14%.
Non-oil and gas growth was 5.66%, while the real sector, not including the banks and other financial institutions, grew by 5.31%.

The World Bank, in a report on Tuesday (14/11/06) said easing monetary policy may help boost public spending and private sector expansion.

It said earlier on Tuesday that the economy may grow 5.5% this year, a slight easing from 5.6% in 2005, before picking up to 6.2% in 2007. The government’s revised budget estimate for the full year is 5.8%.

“Both fiscal and monetary policies are now supportive of higher growth. Bank Indonesia should have room for further easing into 2007 as inflation continues to fall. This should spur demand for corporate investment and recovery in consumer durables,” the World Bank said, according to Reuters.

“The current policy momentum will increase investment and bring the economy into the 6% growth range by early 2007 and growth for the year as a whole should be 6% to 6.5%.”
BI Governor Burhanuddin Abdullah said Thursday Indonesia's policy interest rates could ease into single digits by the end of the year.

"The possibility is there," he said on the sidelines of a central bankers' conference, but added that it will depend on economic developments in November and December. "We hope we will see single-digit interest rates by the start of next year," he said.

The Investment Coordinating Board (BKPM) was upbeat, predicting that investment would grow by 12.5% on this year’s figure, although one official said investment so far had been below expectations.

In 2007, a significant growth is expected in the investment sector with progress made in improving the investment climate and the offer of fiscal incentives, the official said.

A finance ministry document circulated to the media states that the government is planning to offer tax incentives to 15 industries in a bid to boost investments.

Among those that will receive the incentives are the food, textile, pulp, chemical, rubber, metal and steel, machinery and electronics industries, the document said, according to XFN-Asia.
The government also plans to offer tax incentives to nine industries in certain regions, the document said. The purpose is to encourage companies to relocate or establish plants in those regions, it said, adding however that the exact locations have yet to be determined.

Mitsubishi Corp. announced that it would double its investment in Indonesia in the coming years, as part of its aim to become involved in new projects in the country's energy sector.
Mitsubishi board chairman Mikio Sasaski met President Susilo Bambang Yudhoyono, expressing his company's interest in new oil, gas and electricity projects offered by the government, Antara reported.

Sasaski discussed progress made in the construction of a liquefied natural gas (LNG) facility in Tangguh, Papua with the president.

He said he was confident construction of the project, of which Mitsubishi is a shareholder, would be completed in 2008.
Mitsubishi has stakes in the Tangguh gas field and other oil and gas projects in the country and now it wants to expand its operations to the electricity sector, building independent power plants, said Energy and Mineral Resources Minister Purnomo Yusgiantoro, who took part in the meeting.
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