Apindo: If You Want The Indonesian Economy To Grow By 6 Percent, The Investment Ratio For GDP Must Achieve 47.6 Percent

Photo: Doc. Antara

JAKARTA - The Indonesian Employers' Association (Apindo) stated that if the Indonesian economy wants to grow 6 percent to 7 percent, then the investment ratio to gross domestic product growth (GDP) must reach 40.8 percent to 47.6 percent.

"If Indonesia wants to grow 6-7 percent, then the investment ratio to GDP growth must reach 40.8 percent to 47.6 percent," said Apindo Chairman Shinta W Kamdani at the Apindo Rakerkonas, in Surabaya, East Java, quoted from Antara, Thursday, August 30.

Shinta said this because Indonesia's macroeconomic and global conditions currently show that Indonesia's Incremental Capital Output Ratio (ICOR) is 6.8 which has increased from the 2016-2023 period.

ICOR is a comparison between economic growth and the investment needed to achieve this growth.

From the ICOR, it means that every 1 percent GDP growth means that Indonesia needs 6.8 percent increase in investment.

"The macroeconomic condition shows that ICOR of 6.8 has increased from the 2016-2023 period. It means that our economy is increasingly inefficient," said Shinta.

Therefore, Shinta emphasized that Indonesia must run fast in picking up high investments through several efforts to increase productivity, such as by building infrastructure.

In addition, Indonesia also needs to encourage improving the quality of human resources (HR), improving governance, as well as attracting foreign investment (PMA) and domestic investment (PMDN).

Shinta is also optimistic that the economic growth target with this investment ratio will be achieved in line with the good and close synergy between the government and the business world.

According to him, the leadership of the new President of Indonesia can be a wide space for business actors to be involved as partners in guarding thoughts and government, including in terms of regulations.

"We must be partners in continuing and perfecting economic policies for the improvement of the business and business climate," he also said.