Yohannie Linggasari & Khara Gracia
Rising political turmoil has cast doubts on Indonesia’s economic growth, but business leaders and government officials urged players not to worry as the country’s economy is showing few signs of weakness.
The naming of Anas Urbaningrum, Democratic Party chairman, and Prosperous Justice Party (PKS) chairman Luthfi Hasan Ishaaq as suspects in separate graft cases (both have resigned), as well as Golkar Party patron Aburizal Bakrie’s rift with British financier Nathaniel Rothschild, have muddied the waters ahead of the 2014 election.
Anas was named a suspect after he was accused of accepting bribes on in the Hambalang sports center scandal, and Luthfi was declared a suspect in a beef import graft case. Meanwhile, Bakrie is trying to reclaim prized coal asset Bumi Resources.
But tycoon Chairul Tanjung, chairman of government think tank the National Economic Committee (KEN) and the recently established Indonesia Forum Foundation, is calling for calm.
“We can feel that this year, the political atmosphere is hotter than it was ahead of the 2009 election. Business players and the bureaucrats must remain calm and not be affected by the current condition,” Chairul said at the new foundation’s inauguration on Monday.
The cases have raised questions about whether major parties could maintain a pro-business climate and ensure that Indonesia meets its projected growth rate of more than 6 percent.
Bank Indonesia governor Darmin Nasution said that despite rising tensions the Indonesian economy remained intact. However, he warned that the country should start becoming a net exporter if it wanted to break into the world’s top seven economies by 2030.
“Indonesia’s economy is stably growing even though it is not the fastest-growing. We are more stable than India and China. Our economy can withstand outside impact,” Darmin said.
“Indonesia is entering its economic golden age but we tend to underestimate ourselves. Our economy is more mature now,” he added.
The economy grew by 6.2 percent last year as domestic consumption offset a current account deficit of $24 billion, compared with a surplus of $1.7 billion in 2011.
A report by the Boston Consulting Group last December said that Indonesia was an “extremely active” market for mergers and acquisitions, with a total of $7 billion in deals last year, and the number is expected to continue to rise.
Darmin said that Indonesia should capitalize on its growing economy by reviving sluggish industries.
“Our industries have been sleeping for the last 10 to 15 years. It’s time that we start to pay more attention on how to revive our industries,” he said.
Indonesia was a major industry player in the region in the 1990s, but the severity of the 1997-98 monetary crisis turned Indonesia into an importing country.
Sandiaga Uno, who controls Saratoga Capital, one of Indonesia’s largest private equity funds, said that business players must not be caught unprepared.
“Our economy is growing but so is social disparity. We have the means and opportunity to become a top seven economy by 2030, but also we need to share that means and opportunity by creating entrepreneurship opportunities for everyone,” he said.