Economist: Can The Government Return Economic Growth To 5 Percent Figures?

President of the Republic of Indonesia, Joko Widodo. (Photo: Setkab)

JAKARTA - Economist and Executive Director of the Institute for Development of Economics and Finance (Indef), Tauhid Ahmad, assessed that a large amount of energy and strong efforts from the government is needed to restore economic growth to around 5 percent.

"If the COVID-19 vaccine does not yet exist and has not been distributed evenly, the economic growth target of five percent next year is tough," said Tauhid as quoted by Antara, Monday.

Tauhid said that the economy has yet to show signs of recovery. This can be seen from the Consumer Price Index (CPI), which recently experienced deflation, indicating weak demand.

According to him, if public consumption in the next year is still weak, it will be difficult for Indonesia to accelerate the economic growth of 5 percent.

So far, public consumption has been the biggest contributor to economic growth. On the other hand, he said, it is also difficult to expect export and import to boost economic growth due to the still gloomy global economic conditions.

Investments, continued Tauhid, can actually be used as a support for economic growth. Because in the midst of the current situation, many companies have decided to no longer depend on production sources in China and plan to relocate their investment.

The problem, he said, is that the impact of investment, especially foreign investment on economic growth, cannot be direct. In addition, investors are currently waiting and seeing and are looking for the safest country to become a manufacturing production base.

The government is deemed necessary to accelerate the realization of investment, considering that regardless of the size, it will have an impact on domestic economic movements. For this reason, the government must have the courage to pick up the ball by providing various attractive incentives as well as various facilities and conveniences for potential investors.

Tauhid added that the government must also be ready to provide incentives and other facilities according to investor requests and based on each case, aka case by case. In addition, the government needs to approach global producers.

"Ask what they ask for and prepare their request," said Tauhid.

The current economic downturn has brought Indonesia to the brink of a recession. This threat certainly has multi-sectoral impacts, such as the weakening of people's purchasing power to the level of investor confidence in investing in Indonesia.

Responding to these conditions, the Investment Coordinating Board (BKPM) continues to encourage improvements in the investment climate amid the COVID-19 pandemic. Investment is expected to be able to save Indonesia when its economic growth experiences a recession.

"In the midst of a slowing economy, investment is expected to be the main driving force and stimulate Indonesia's economic growth. Therefore, BKPM will continue to work hard in attracting investment into Indonesia," said Deputy Head of Investment Planning at BKPM Nurul. Ichwan some time ago.