Jakarta. The National Economics and Industry Committee, or KEIN, a group of advisers to the president, predicts Indonesia's economic growth rate will exceed the state budget's target, amid a global recovery in investment and trade.
The committee, comprising of economists, businessmen and representatives of consumer groups, which regularly provides the president with feedback on the industry and the economy, estimates the growth rate will reach 5.7 percent in 2018 — above the government's 5.4 percent target.
The economic growth rate was 5.1 percent last year, lower than its 5.2 percent target.
"The global economy is now improving, it is a momentum to export and attract investments to Indonesia. I'm sure we will exceed the target of 5.4 percent," KEIN chairman Soetrisno Bachir said during a seminar on Wednesday (17/01).
The International Monetary Fund estimates the world economy will expand 3.7 percent in 2018, the fastest pace since 2011, and a sign of recovery from the 2007-09 recession. Last year the growth rate was 3.6 percent. In 2016, only 3.2 percent.
A study by KEIN showed that to exceed the growth target, the government should increase exports to Rp 2.960 trillion ($220 billion), or by 5.85 percent from last year.
Arif Budimanta, deputy chairman of the committee, said the government can take advantage of China's One Belt One Road Initiative.
The initiative is an ambitious development strategy launched by Chinese President Xi Jinping in September 2013 to establish a China-centered trading network with infrastructure connecting it to 65 countries in Asia, Africa and Europe.
According to Arif, the initiative also creates opportunities to increase Indonesian exports to countries involved in the mega-project.
"This opportunity will create a new market for Indonesia's exports. The current prices of commodities such as coal, crude palm oil and crude oil, are increasing," Arif said.
The study also showed Indonesia needs to attract Rp 4.805 trillion in investment, or 6.76 percent more than last year. He said this "political year" is not as economically risky as reports had been indicating.
The timing is considered "political," as 2018 comes with simultaneous regional elections, while next year Indonesia will hold a legislative and a presidential vote.
"The elections will not disturb the investment climate. … Investors don't need to apply the 'wait and see' approach," Arif said.