Business People Remain Pptimistic about Economy

KOMPAS/P RADITYA MAHENDRA YASA

An aerial photograph captures the development of an industrial area on April 8, 2019 in Kaliwungu district, Kendal regency, Central Java. A section of the fish ponds and marshes along the northern coast of Java was acquired for the development as part of the government’s infrastructure strategy to attract investors.

Despite uncertainties in the global economy, Indonesian business people remain optimistic. They believe that the Indonesian economy has great potential to grow further.

JAKARTA, KOMPAS — Today, Wednesday, Indonesia holds a presidential election. Whoever is elected as the president and vice president, business people will rely on them to improve the country’s economic condition.

Moreover, this election was held amid uncertainties in the global economy, partly due to the trade war between the United States and China, which has yet to subside, and the escalation of geopolitical conflicts in a number of countries.

In January this year, the World Bank revised its forecast for global economic growth from 3 percent to 2.9 percent. The International Monetary Fund (IMF), which in January cut its global economic growth forecast from 3.7 percent to 3.5 percent, revised it again to 3.3 percent in April.

The decline in the global economic growth is feared to have an impact on world trade. Undersecretary in charge of macro economy and finance at the Office of the Coordinating Economic Minister, Iskandar Simorangkir, said last week that Indonesia needed to pay attention to the impact of the slowing global economy on its exports.

In the 2019 State Budget, the government has targeted 5.3 percent economic growth this year. However, despite the uncertainties in the global economy, a number of business leaders, when asked to comment on the economic situation on Tuesday, said that they remained optimistic. They believe that Indonesia has great potential to further grow.

PT Adaro Energy president director Garibaldi Thohir said that whoever won the 2019 presidential election, the elected president should continue the existing policies. Policy consistency is important for investors to ensure legal certainty and a conducive investment climate for doing business.

He expressed optimism that Indonesia had the prospects to achieve even greater economic growth. "I am optimistic, with the continued development of infrastructure and electricity supply, Indonesia can maintain its economic growth momentum, especially if the election runs smoothly," Garibaldi said in Jakarta.

He said that one of the most important things in maintaining economic growth momentum was to ensure legal certainty for investors. Amid the slowdown in global economic growth, Indonesia needs to further increase exports and foreign investment.

New investments, said Garibaldi, could create new jobs and boost purchasing power and consumption. Thus, the economic growth will further increase. Based on data from the Statistics Indonesia (BPS), Indonesia\'s gross domestic product (GDP) grew by 5.17 percent in 2018 to Rp 14.83 quadrillion (US$1.05 trillion).

Data from the Investment Coordinating Board (BKPM) show that investment realization in 2018 totaled Rp 721.3 trillion, comprising Rp 392.7 trillion in foreign investment and Rp 328.6 trillion in domestic investment. According the data, the new investment provided employment for 960,052 people.

The president director of PT Toyota Motor Manufacturing Indonesia (TMMIN), Warih Andang Tjahjono, said that one of the biggest issues at the moment was the country’s trade deficit. "All countries are trying to make their trade balance positive," Warih said in Tangerang, Banten. Indonesia\'s trade balance incurred a deficit of $8.57 billion in 2018.

The deficit occurred due to a $12.46 billion deficit in the oil and gas trade balance, which could not be covered by the $3.97 billion surplus in non-oil and gas trade. According to Warih, extra efforts were needed to reduce imports so that the trade deficit can be reduced more quickly. However, in the long run, exports must be increased to improve the country’s trade balance.

"Exports can only be done by industries, especially those that can bring added value. So, industry is a key factor in Indonesia\'s future economic growth," he said. With regard to this problem, Warih said that the economic agenda of the elected president should be focused on strengthening the manufacturing sector. Regulations, fiscal incentives and infrastructure must be used to attract investors to develop industries in Indonesia. According to BKPM data, Singapore was the largest foreign investor in Indonesia in 2018, with a total investment of $9.2 billion in 4,946 projects.

KOMPAS/ERWIN EDHI PRASETYA

Workers sew garments on Feb. 13, 2019 at a textile factory belonging to PT Sri Rejeki Isman Tbk (Sritex) in Sukoharjo, Central Java. The textile and textile products industry has broad opportunities in domestic and export markets, but faces challenges in efficiency amid global competition.

All sectors

Meanwhile, founder and CEO of Bhinneka.com Hendrik Tio expressed hope the elected president and vice president would provide business and security certainty. In addition, he also expressed hope the economic policies and regulations introduced by the elected president would take into account all businesses, including electronic commerce or e-commerce.

According to Hendrik, e-commerce businesses in Indonesia had the brightest prospects. As an example from 2018, he said that Bhinneka formally opened its online store Bhinneka Official Store on Lazada\'s e-commerce platform. With this collaboration, Bhinneka has expanded its market reach and proved that e-commerce players can support each other.

"In 2019, several cooperation projects were launched and not only carried out by Bhinneka. So, business certainty and security are needed," he said.

The president director of national flag carried Garuda Indonesia, I Gusti Ngurah Askhara Danadiputra, said that amid the stagnant economic growth, business people needed to innovate to develop their businesses. Therefore, the government’s support for the business world is quite important. "The aviation business, which must always prioritize safety, must also develop an integrated logistics service to support the e-commerce business.

If, in the past, the airline focused on the transportation of passengers from one point to another, now it must do something else. "The airline has the advantage of being able to connect the archipelago with its ability to deliver goods in less than 24 hours to all regions of Indonesia," Askhara said.

Askhara said that the aviation industry in the country required regulatory support from the government because it needed a large amount of new investment to procure new technology and aircraft. "Government support for the aviation industry is needed to help aviation companies become global

players and be able to compete, and bring the national red and white flag to all corners of the world," he said.

Domestic Economy

Meanwhile, the director of Ciputra Group, Harun Hajadi, said the growth of the property sector was more affected by the domestic economic condition than the global economic condition, because all the supporting components of the industry were located in the country such as land, labor and construction materials.

As part of its business cycle, the property sector’s growth had continued downward since 2014, Harun said. During the 2008 to 2013 period, the property sector recorded a high growth rate, among the highest of all business sectors in the country. This year, the property sector is expected to see a revival in line with the improving domestic economic condition. Therefore, the elected president must maintain this growth momentum.

"At a time when economic growth is slowing, the government should be able to encourage business people to continue investing and to ensure the people can increase their consumption. We are lucky because inflation is still relatively low at about 3 percent, so even though Bank Indonesia raised its benchmark interest rate several times, the lending interest rates are still affordable," said Harun.

According to Harun, regional governments mostly still handled licensing and policy for the property sector, such as through the regional spatial plans (RTRW).

In some cases, local governments are not ready to change the spatial plan, which could hinder property development. In addition, the property sector is also affected by tax regulations, especially for the middle to upper market segments, which are subject to sales tax on luxury goods.

Separately, the president director and president commissioner of PT Tirta Anugerah Abadi Iwan Sutanto stated that the fisheries industry had great potential to drive the national economy. However, this potential has not been utilized optimally. So far, exports of fishery products and other agricultural commodities are mostly in the form of raw commodities. If the commodities are processed, they can bring added value because the prices would be higher. For this reason, the elected president needs to push the development of processing industries. At present, the processing industry still lacks raw materials.

Fish stocks were increasing thanks to the eradication of illegal fishing, but the increase in catches was not optimally utilized, he added. On the other hand, the use of technology should also be further encouraged to improve competitiveness. "The development of the processing industry and the use of technology are needed to make the fisheries sector more competitive and be able to support national economic growth," said Iwan.

Meanwhile, the president director of PT Astra Agro Lestari, Santosa, said the elected president must implement the economic agenda they promised and continue the existing programs that were still relevant.

"Most important is implementation. Whoever the winner is, he will be useless if he cannot implement the programs," he said. According to Santosa, the programs that needed improvement were human resources and infrastructure development. "If not improved, logistics will remain costly," he said. (APO/CAS/MED/ARN/NAD/FER/LKT)