The President Post 27th

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Display until October 12, 2011 /// N0. 27

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RI Economic Plan Offers Infrastructure Opportunities The President Post/Nandi Nanti

JAKARTA (TPP) – Prominent national and foreign businessmen have warmed to President Susilo Bambang Yudhoyono’s (SBY) grand economic plan with great enthusiasm.

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ofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), called on the government and business sectors to join hands for the national interest. “National businessmen must be involved in the development of Indonesia’s economy, we can’t rely fully on foreign investments,” he said. Meanwhile, US-based financial services firm J.P. Morgan plans to team up with the government in the Indonesian Economic Expansion and Acceleration Master Plan, known better as the MP3EI. "I look forward to set up a solid partnership with the Indonesian government in implementing the program," said JP Morgan Chase & Co., Jamie Dimon, after meeting with the President in August. Jamie added that Indonesia is among the prospective emerging countries as regards investment on energy, infrastructures and oil.

called for “de-bottlenecking, acceleration and expansion of Indonesia’s national development” between 2010 and 2015. If executed well, the three main elements of the MP3EI — developing six economic corridors, upgrading infrastructure and strengthening the local talent pool — will reap huge rewards for Indonesia, says Ramesh Divyanathan, president director of BMW Indonesia.

Chief of the Capital Investment Coordinating Agency (BKPM), Gita Wiryawan, said the meeting between the President and J.P. Morgan was aimed at finalizing the implementation of the MP3EI program. In a related development, Singapore Venture Capital Association (SVCA) is ready to invest billions of dollars to help finance projects in the MP3EI, said Amir Sambodo, Special Staff of Coordinating Minister for Economic Affairs. On May 27 the government released an initiative known as the MP3EI, which, at a cost of Rp 4,000 trillion, aims to boost the country’s GDP to $4.5 trillion by 2025. The master plan will establish six economic corridors, each with specific advantages. Sumatra has been pegged as a center for agriculture and energy, Kalimantan for mining and energy, Sulawesi and North Maluku for agriculture and fisheries, Bali and Nusa Tenggara for tourism and food production, Papua and Maluku for natural and human

resources and Java for industry and services. In the program, 17 infrastructure projects valued at Rp 190 trillion are scheduled to start this year, with the government having earmarked Rp 135.8 trillion for capital spending. The chairman of the Indonesian Chamber of Commerce and

Industry, Suryo Bambang Sulisto, said the nation’s private sector stood ready to invest $150 billion in the government’s master plan for growth. “To some extent, an economic blueprint has been on the cards since September 2009 when President Susilo Bambang Yudhoyono

The MP3Eis designed to see the Indonesian economy grow in order to reach "advanced economy" status by 2025. It focuses on 22 economic activities and six economic corridors throughout the country, and outlines strategies to strengthen national and international connectivity while enhancing human resource capacity. The plan is quite ambitious but reflects the current optimism in Indonesia today. It aims to make Indonesia, the 17th largest economy in the world last year, one of the world’s 10 biggest economies by 2025, taking GDP to $4.5 trillion and increasing the per capita income from $3000 now to $15,000. To achieve this, the master plan seeks to raise average annual growth to 8-9 percent between 2015 and 2025, from around 6 percent now. The MP3EI also sets

the target of bringing inflation down from 6 percent now to 3 percent by the middle of the next decade. At the MP3EI launch, Yudhoyono identified 17 projects worth Rp 190 trillion ($22.26 billion) in the plan that are expected to start this year, some of which had already been announced. They include hydroelectric and solar power plants; oil palm developments; a steel mill in East Java; new roads including toll motorways; mining projects; expansion of broadband internet; and nickel, cobalt and aluminium factories. Another major project that the government has pledged to launch this year is the long-awaited Sunda Strait Bridge that would link Java and Sumatra, Indonesia’s most populous islands. The bridge is expected to cost Rp 150 trillion ($17.57 billion) and has been subject to planning delays. “Foreign direct investment has shown positive increases, demonstrating the level of interest from companies looking to capitalise on the growth of the region,” Mike Gundy, the president-director of BlueScope Steel Indonesia, the local wing of an Australian metals company, said.

Hatta Rajasa, the coordinating minister for the economy, said that “with the MP3EI, we hope there will be more jobs available. In 2010 we absorbed 3.3 million more workers.” According to the plan, 44 percent of the funding is expected to come from the private sector. As far as state commitments, the State Enterprises Ministry had pledged $100 billion, but Yudhoyono doubled the target to $200 billion. Hatta said the government and entrepreneurs had agreed on the need for Rp 1,993 trillion in investment through 2014 in four sectors: agriculture; industry and tourism; mining and energy; and 881 regional infrastructure projects. “We are coming out with the MP3EI because we want to accelerate and expand certain sectors of our economy, with clear orientation and timeline – who does what, who invests and how much and where,” Yudhoyono said. “The MP3EI is not a law, but I hope that it becomes our commitment. Let us implement this even though it is not a law. “We should make this plan binding for all, the central and regional governments and the business sector,” the president said.


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