Editorial: Land Law Passage Adds to Good News
It has been a very good week for Indonesia. On Thursday, the country received some welcome news when Fitch Ratings upgraded its sovereign debt to investment grade . That was a huge shot in the arm as far as confidence goes.
Now the House of Representatives has delivered an early Christmas present. After months of delay, legislators finally approved the long-awaited Land Acquisition Law on Friday, which is a landmark achievement for the government and the country. The new law will clear the way for large infrastructure projects as well as for new property development.
With the new law, Indonesia can now seriously get its infrastructure development plan under way. Southeast Asia’s largest economy is in dire need of new roads, seaports and airports.
The law will help resolve the bottlenecks in the development of infrastructure that have for too long held back growth in the $700 billion economy.
As has been noted by analysts, the Land Acquisition Law will boost property development not only in the greater Jakarta area, which covers Bogor, Tangerang, Bekasi and surrounding areas, but also in many other parts of the country.
It is no wonder that, as a result, property stocks rose on the Indonesia Stock Exchange on Friday.
The new law will sustain the positive economic momentum into 2012 and it comes at an absolutely crucial time. With Europe mired in a financial crisis, the United States facing economic headwinds and the giant economies of China and India experiencing slowdowns, Indonesia is in a unique position to capitalize.
Global investors are in search of returns and with few options, Indonesia stands out. Legal uncertainty has been a bugbear but the new law will help create some measure of certainty.
The government can now go ahead with its plan to spend the $150 billion it has promised to boost infrastructure over the next three years until 2014 to create jobs and achieve higher economic growth.
Ultimately it is the Indonesian people who stand to benefit from the passage of this landmark piece of legislation.