Jakarta (ANTARA News) - Indonesia needs to attract more investment to enable it to boost economic growth that is vital for business expansion, particularly in the face of predicted-improvement of economic conditions beginning this year.

Economic growth is expected to improve in 2010 and to serve as a positive factor for businesses to expand, company executives say. "We will use this year as a golden year," General Manager of PT Coca-Cola Bottling Indonesia Area for East Java, Dwi Harjono, said.

Compared with that of 2009, this year`s economic conditions will be better. "In the first quarter alone, the economic growth has been ascertained to reach five percent which is good for us to apply a new marketing strategy," Harjono said recently.

However, to increase economic growth the government will need to make all out efforts to attract investment. According to Citigroup Indonesia economist Johanna Chua, the most important challenge Indonesia is facing now is to increase investment.

The government has to respond to it in order to improve its economic conditions and generate its economic growth. "The main challenge to Indonesia`s economic developments in 2010 is how to increase investment growth," Johana Chua said in a seminar on the 10th Annual City Indonesia Economic and Political Outlook 2010.

Johanna said that investment growth in 2009 was too low so that its contribution to national economy was also too small. "Investment growth in 2009 was very low, only about three percent. It should be improved in 2010," the economist said.

She said the government needed to pay attention to the investment activities in the country and issue supporting monetary polices so that investment could be more generated.

Based on a survey, in term of foreign direct investment, Indonesia is ranked 15th in the list of most attractive nation for would-be investors. "Cost of workers, short of resources and regulation issues are factors that put Indonesia in the 15th position," Johanna said.

However, she expressed optimism that Indonesia`s economy would improve in 2010 and become better than that in 2009.

"One thing that needs to be watched out is the upward trend of inflation which could take in line with improving economic conditions. Also, the government should manage well its bonds which are in the hands of foreign investors, particularly when advanced nations are adopting an exit policy strategy," she said.

In the meantime, Vice President Budiono said that Indonesia was now actually in a transitional period, which he called a demographic dividend where it could generate its economic growth.

"If the country does not make use of its demographic dividend it will miss the momentum and fail to take advantage of it," the vice president said in a meeting with students and educators in Bekasi, West Java, over the weekend.

He said that demographic dividend was a `period` product which did not always happen but now was taking place in Indonesia and would end in 2025. In a period of demographic dividend the number of those who are workers or productive groups is bigger than the number of their unproductive dependents or unproductive groups.

He said that Indonesia as a nation was undergoing a shifting generation in its history. In this case, Indonesia will enjoy the benefit of its shifting generation in its demographic developments.

"There is a kind of shifting generation in our demographic developments where the number of productive persons is higher than those unproductive ones such as children and senior citizens," the vice president said.

He said that the shifting of this generation was now taking place where old generation was being replaced by the new one. This is comparable to the flow of water in a river where in life there is birth, growth and death.

"This is a history process that could not be avoided. We will hand over the baton to children who are entering the shifting flow of the new generation," he said.

Hopefully, Indonesia will be able to make use of this transitional period in an effort to build and improve its economic conditions. After all, many observers have predicted that Indonesia`s economic conditions would begin to improve this year.

Indonesia`s economic growth in the first semester of 2010, for example, is estimated to reach 5.5 percent, driven by the consumption sector.

"I expect economic growth in the first semester to reach 5.5 percent and to be mainly driven by retail consumption," Winang Budoyo, an economist at CIMB Niaga Bank said.

Besides consumption, export-oriented manufacturing industries would also be an economic growth driver in the first half of 2010, he said. About economic growth for the whole year of 2010, Winang said CIMB Niaga Bank estimated it would be 5.8 percent or higher than the government`s projection of 5.5 percent.

Besides, Bank Indonesia (BI/the central bank) has also predicted that Indonesia`s economic growth in 2010 could reach a rate between 5.5 percent and 6.0 percent. This rate could increase further to between 6.0 percent and 6.5 percent in 2011.

"Apart from the predicted high domestic demand, improvement could also be boosted by external factor in line with the global economic recovery, as it could be observed from the positive growth of the country`s exports since the fourth quarter of 2009," BI Deputy Governor Hartadi A Sarwono said.

(T.A014/H-NG/B003/S026)

Editor: Suryanto
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