RI`s economy may grow 7 pct in 2012

Jakarta (ANTARA News) – The Indonesian economy in 2012 may grow faster than the government-set target of 6.7 percent thanks to the country`s strong economic fundamentals, a lawmaker said.

“The government still has wide room to boost the economy to grow to 7 percent,” Andi Rahmat of the Prosperous Justice Party (PKS) said at a House plenary session on the draft 2012 state budget on Tuesday.

While domestic economic growth still relied on household consumption, fiscal stimulus would be very effective to boost the economic growth rate, he said.

To that end, the PKS faction in the House of Representatives expressed hope that budget allocations for capital expenditure in 2012 which reached Rp168.1 trillion or 2 percent of gross domestic product would be raised by 2.5-3 percent.

“This can be done without having to increase the budget deficit. The tax ratio should be raised to 13 percent from 12.6 percent previously and spending on goods should be reduced to Rp120 trillion or 1.5 percent of GDP and spending on salaries to Rp200 trillion or 2.5 percent of GDP,” he said.

The tax and bureaucratic reforms would hopefully generate Rp62.9 trillion to the fiscal stimulus so that capital expenditure could be raised to Rp231 trillion or 2.9 percent of the GDP, he said.

Despite the global uncertainties due to debt troubles in the US and Europe, PKS still considered the economic growth target of 6.7 percent realistic, he said.

Meanwhile, Fayakhun Andriadi of the Golkar Party faction said the economic growth target of 6.7 percent was low. Therefore, the government should encourage investors to switch from the financial sector to the real sector.

“The growth target is still low and the government should benefit from the current momentum to achieve an economic growth rate of 7 percent by encouraging investors to invest in the agricultural and manufacturing sectors to create more jobs and reduce poverty rate,” he said.(*)