Indonesia’s Economy Predicted to Come to a Standstill until 2019

• Aug 11, 2017

TEMPO.CO, Jakarta – Ari Kuncoro, Economy and Business Faculty Dean at the University of Indonesia, appreciates that the government has managed to achieve 5 percent economic growth. However, he said that it would be rather difficult to meet 5.2 percent economic growth set in the revised 2017 state budget (APBN-P). “I foresee a maximum of 5.1 percent growth this year,” he said yesterday, August 10.

Ari explained that the economy will come to a standstill since one of the driving forces for growth, i.e. the infrastructure, will only be ready by 2019. While completing the infrastructure development, the government could only rely on consumption as the driving force. As a result, the economic growth in the first quarter of 2017 only reached 5.01 percent, having been supported by consumption growth of 4.95 percent.

Indonesia’s short-term economic challenge, Ari went on, is the changing consumption trend among the upper-middle class, who prefer to travel than purchase goods. “The phenomenon is apparent now. People who go to a reunion used to showcase their cell phones or bags, they are now showing their travel photos,” he said.

Earlier, the National Development Planning Minister Bambang Brodjonegoro said that many components of consumption growth are not yet recorded. He said that over 50 million people are used to online transactions. “It’s one fifth of Indonesia’s population,” he said.

Therefore, he expects the Central Statistics Agency (BPS) to record online consumption data. Bambang said that the statistics may detect an improvement in consumption growth. He said that the huge potential is reflected in current online payment trend. The transactions are no longer limited to goods purchase but also life style, such as ride hailing services.

The BPS chairman Suhariyanto said that his office is not capable of covering all statistics. He said that sectoral statistics produced by specific agencies are already available.

The Communication and Informatics Minister Rudiantara said that the record of online transactions may only be completed by year-end. The ministry will lead a team they will oversee the online sector.

Trade Minister Enggartiasto Lukita said that low purchasing power remains under control. On retail stores that are out of business, he said that only one of them has shut down: Seven Eleven. Meanwhile, other retailers are enjoying growth. Matahari Store, for example, sees 10 percentgrowth. The same is experienced by Mitra Adiperkasa, a distributor of famous brands.

E-commerce company Qlapa CEO Benny Fajarai said that online transactions have indeed grown but they have not necessarily undermined conventional retailers. “It’s not that far. People who want to buy expensive goods in large quantity will certainly feel more comfortable visiting physical stores,” he said.

Source: https://en.tempo.co/read/news/2017/08/11/056898978/Indonesias-Economy-Predicted-to-Come-to-a-Standstill-until-2019